Making milk: Milk Ingredients

To dry up the flow of protein concentrates coming into the country from the United States, the Dairy Farmers of Ontario have taken the bull by the horns.

Their strategy, launched in October, supports the modernization of processing infrastructure and aims to put Canadian milk ingredients in a more competitive position to support their use on the domestic market¹. In short, this will allow for the protein concentrates that processors now buy in the United States to be made in Canada. The Ontario organization estimates that this strategy will also allow supply management’s competitiveness to improve.

DFO has submitted a request to the Ontario Farm Products Marketing Commission to create, starting February 1, 2016, a new class for producing these protein concentrates. The price of these concentrates would be competitive in comparison with the world price.

Negotiations to reach an agreement on this chapter ended, with no success, on February 5^th. Undoubtedly, they will recommence shorty.

Nick Thurler has a seat on the DFO’s Board of Directors. In his opinion, their decision is a response to a chaotic situation that has gone on for too long. “We having been trying to have a national strategy for ingredients for 10 years now,” he says. “If a national agreement is not concluded by the target date, postponed this time to April 1^st, DFO will go solo.”

“DFO has been looked down on but they have done well to raise this problem,” says Alphonse Pittet. “They’re brave. They shook the drowsiness out of us on this phenomenon of imports.”

For Claude Lavoie and Alphonse Pittet, the import of protein concentrates into the country is a deep gash in the supply management scheme. Little by little, it is dismantling the system.

Canada is a net exporter. These farmers believe that closing the border to avoid products coming in from the United States or elsewhere around the world is unthinkable.

The Trans-Pacific Partnership (TPP) and the Comprehensive Economic and Trade Agreement have sown the seeds of concern for a number of producers in the country. “Some farming operations are going to leave the ranks of dairy production,” says Richard Lavoie. “But a number of these are those who were going to go anyway.”

“This is not what we want, but Lavoie Enterprises could work without supply management and with a clearly lower price for milk,” adds Claude Lavoie. “However, we are going to have to review our ways of doing things, starting with using less machinery, among other things.”

The Pittets estimate that they could benefit from the world price, but admit they aren’t ready to face it in the short-term. The debt level of their enterprise is too high.

The three farmers agree in saying that abandoning supply management would not mean the end of dairy production in the country. But there would definitely be a crisis. “The best performing operations will find their place,” believes Alphonse Pittet.

¹ Milk Producer, novembre 2015.

In the same feature:
Making Milk: Quota & Supply Management
Making Milk : Growth & Efficiency
Making Milk: Farm Transfer