Quota limit would block dairy expansions says producer
Wednesday, September 8, 2010
by SUSAN MANN
Ontario dairy farmers’ ability to expand production would be seriously limited if a proposal to cap quota holdings at 250 kilograms per farm was adopted, says Ben Loewith, chair of Progressive Dairy Operators.
“These larger producers have economies of scale and they’re generally very efficient producers. They’re producing, on average, higher quality milk than smaller producers,” the Lynden-area farmer explains. Progressive Dairy Operators has 390 members. It’s dedicated to introducing innovative dairy technology and contributing a larger, commercial viewpoint to industry dialogue.
Loewith milks 340 cows and holds more than 250 kgs of quota.
The Renfrew Dairy Producer Committee has proposed quota be capped at a maximum of 250 kgs per farm. The proposal will be considered at the Dairy Farmers of Ontario annual fall policy conference in October. The conference, held in Alliston, is for Dairy Farmers board members and Dairy Producer Committee delegates.
Lloyd Robinson, chair of the Renfrew Committee, says the resolution “is still a work in progress.”
Robinson says he hasn’t worked on the resolution and the farmer who proposed the idea didn’t want to discuss it before it’s presented at the fall policy conference.
“It’s basically going to be an in-house discussion as to the future of the dairy industry in Ontario,” he explains.
Most of Ontario’s 4,200 licensed milk producers hold about 60 kgs of quota. About 2.1 per cent hold 250 kgs or more of quota, according to Dairy Farmers’ 2009 annual report.
Currently there isn’t a cap on quota holdings but producers must get approval from Dairy Farmers before exceeding 150 kgs and again before going over each subsequent 100 kg level.
At the other end of the scale, producers must hold at least 10 kgs to ship milk, while farmers in the New Entrant Quota Assistance program must hold at least 12 kgs of their own quota at all times to continue in that program.
Phil Cairns, Dairy Farmers senior policy adviser, says if the resolution is passed at the conference it’s sent to the board for consideration. The board reviews resolutions from the conference but it’s not required to adopt them.
Loewith says he was told the logic behind the resolution is installing a cap will keep more farms in business. To maintain the dairy industry’s political clout there can’t be a continued decrease in farm numbers.
Loewith says he doesn’t think the cap would be effective in reducing the number of farmers leaving the industry. “They’re thinking that if there’s a cap the smaller farms would be able to buy more quota because the large farms would be unable to bid on the quota and that would make more available for the small farms.”
Loewith says even when quota was around $19,000 or $20,000 a kg there were still a large number of farmers exiting the industry.
If the proposed policy was adopted and the change lowered the quota price by $5,000 to $6,000 a kilogram, “I don’t think they (Renfrew Committee members) are necessarily going to achieve their goal of keeping more farms in business,” he says. But Loewith questions whether the measure would lower the quota price.
The quota price, part of common quota policies shared by Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island producers, is capped at $25,000 a kg. BF