Dairy’s milky future

Dairy farmers are optimistic the industry will stabilize and thrive now that the 
Trans-Pacific Partnership agreement has been signed. Economists think it’s the beginning of the end. Who’s right? By ED WHITE, WINNIPEG BUREAU

Now is the time to tackle the unsustainable trends of dairy supply management, say leading agricultural economists and farm leaders.

It might not be the sort of thing a new government relishes wading into, but some think that if supply management doesn’t set itself up for the future, it might not have much of one.

“I think there’s a real opportunity to take a hard look at this,” said Canadian Federation of Agriculture president Ron Bonnett, who supports supply management.

“I think it’s one of the critical issues going forward. If we don’t get this together, we’ll have bits and pieces banging up against each other.”

In a surprise to many, Canadian dairy and other supply managed sectors will be allowed to keep the system within both the European free trade and Trans Pacific Partnership deals signed by the former Conservative government.

Each deal loosens supply management’s stranglehold over Canada’s domestic market, but the fundamentals, the system’s “three pillars,” survive.

Related: Dairy farmers undaunted amid threats to supply management

Related: The big squeeze

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The Dairy Farmers of Canada proclaimed in a tweet when the TPP deal was announced that the deal meant “no negative impact and supply management preserved for the next generation.”

Many individual dairy farmers weren’t happy to see 3.25 percent of Canada’s milk market handed over to TPP nation imports, following the increased cheese imports that were agreed to in the Canada-European Union free trade deal, but the present basics of the supply management system can continue indefinitely, including controlled supply, managed prices and tough import controls.

However, economists say that isn’t necessarily a good thing for almost anyone. The Canadian dairy market is stagnant, with only tiny marginal growth and little reason to believe that will change much.

Farmer numbers have been falling, as in many agricultural sectors, with perhaps only half as many farmers likely to still be in the business in 20 years.

Yet unlike other Canadian farm industries, Canada’s supply managed sectors cannot expand production and bring money into Canada through large scale exports because Canada has agreed to not export supply managed goods beyond tiny amounts.

In 20 years, the industry could consist of a handful of farmers in most provinces, serving a dwarfed processing industry and becoming more and more irrelevant to the wider economy and population. The industry’s ability to keep public support and higher prices at that point might be critically undermined.

University of Saskatchewan agricultural economist Murray Fulton thinks dairy farmers need to ensure their structures remain relevant for today’s situation and sufficient to match long-term trends.

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“Farms and farmers are very different today than they were in the 1960s and 1970s when supply management was being formulated,” said Fulton.

“These changes will eventually, I believe, affect what farmers want from policy and what society is willing to accept in terms of policy.”

Fulton said he expects to see changes in supply management policy in the next few years and perhaps even an increase in the number of farmers who fight back against the constrictive system, as happened with the Canadian Wheat Board.

“And society will, more and more, I expect, look for other things from policy,” said Fulton.

“Precisely what these things are, only time will tell.”

Bonnett said he wants to see a clear vision about where supply management can evolve to offer farmers and Canadians confidence that the industry has a sustainable future and provides an industry Canada wants to protect.

“There’s been huge value in the marketplace (from supply management),” said Bonnett.

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“We don’t want to get into the situation where industries suddenly collapse.”

  • Small Flockers

    Already, Canadians pay 38% to 300% more than what most of world pays for Supply Management foods (chicken, turkey, eggs, and dairy).

    It will soon get worse.

    This week, the Food Institute at the University of Guelph announced that food inflation in Canada is the highest in the world, topping 4.1% in 2015. It will be more of the same for the near future.

    The household savings rate of Canadians has dropped from 30% in 1980 to virtually zero for the last 10 years. In BC. they run at a -7% savings rate.

    More and more Canadians have to make the tough choice of starve or freeze, as they can’t afford to solve both problems simultaneously.

    The 17,000 SM farmers have stolen the rights and freedoms of consumers and all other farmers so that their SM special interest group can become millionaires.

    For example, the 60,000 or so small flock poultry farmers in Canada is one group that suffers under the despotic control of the SM system, so that 2,700 SM chicken farmers (just 4.3% of all chicken farmers) can rule the roost. See our Blog for the scary details.

    As Canadians are squeezed more and more, do the SM farmers think they will find continued support for their ridiculous price gouging, or the arcane rules of SM?

    Between 1990 and 2014, NZ’s non-SM dairy system enjoyed 17 times greater growth than Canada’s SM dairy system, primarily due to the export restrictions attached to our dysfunctional SM system by trade treaties. That has cost Canada and Canadians thousands of jobs and millions of dollars in lost tax revenue.

    If Canada’s SM system was efficient and effective, it might be worth all these excessive costs. However, SM chronically runs from mediocre to dangerous.

    For example, 40% to 80% of Canada’s chicken sold at retail stores is contaminated with deadly bacteria, viruses, or other pathogens. Canadian chicken farmers have a feed efficiency 25% behind the world leaders. Somatic cell counts and bacteria in Canadian milk swing wildly from acceptable to terrible, but on average Canadian milk is 21% worse than US milk for somatic cell counts (ie. puss in the milk).

    Fortunately for SM farmers (and unfortunate for consumers), few Canadians understand the propaganda and trickery used to keep them asleep and in support of SM.

    When some crisis finally wakes them up, Canadians will be shocked at first, then upset that this cheating, corrupt, and dysfunctional SM system was allowed to continue as long as it has.

    Glenn Black, President
    Small Flock Poultry Farmers of Canada
    http://canadiansmallflockers.blogspot.ca/

    • ed

      The product in Canada is 300-400 percent better as well so it is well worth that extra little bit. You can enloy your cheap two day old green chickens hanging at the market in the hot sun some where in Mexico and a little extra money for a Hummer but most Canadian value their health above money, a sweet ride or a cheap thrill.

      • Small Flockers

        I agree there is a wide range of quality, including black market foods that can endanger your health. Unfortunately, the official Canadian system set up by the government and the SM bosses isn’t much better, and in some cases, its much worse than what is available elsewhere in the world.

        You say “The product in Canada is 300-400 percent better…”. To what are you referring? Let’s get specific.

        In Canada, SM dairy quality runs from mediocre to shocking, based on data from our Federal Government’s Canadian Dairy Information Centre (see http://www.dairyinfo.gc.ca/index_e.php?s1=dff-fcil&s2=farm-ferme&s3=ssbc-clbt ).

        For somatic cell counts (ie. puss) in the milk from Jan. to June 2015, Manitoba had the worst milk in Canada, 17% worse than the Canadian average. BC had the best milk, which is 14% better than the Canadian average somatic cell count. The worst month for a Province was 45% more contaminated than the best month.

        For bacterial contamination in Canadian milk from Jan. to June 2015, the monthly variability across all Provinces is 48%, which shows an out of control situation, indicating poor dairy management. Nova Scotia had the worse milk, 208% higher bacterial count than the Canadian average. New Brunswick had the best milk, which is 57% lower than the Canadian average bacterial contamination. The worst month for a Province was 13 times worse contamination than the best month. Again, totally out of control. This poor quality milk wasn’t dumped, it was sold to unsuspecting consumers. Thank God for pasteurization.

        The earliest available Canadian milk quality data is 1998. For somatic cell count from Jan-June 1998, the minimum contamination has gotten 5% worse between 1998 and 2015, but all of the other statistics are somewhat better in 2015. For bacterial contamination, everything is significantly worse in 2015 as compared to 1998. If SM dairies cared about consumers, they’d be doing continuous improvement; not resting on their 1998 mediocrity.

        How can Canadian dairy producers argue they need to retain their dairy monopoly under Supply Management when they charge 38% to 300% more, but produce poor quality products that are significantly worse now than 17 years ago. Unfortunately, SM dairy farms and/or processors seem to feel there is no need to improve when your customers are forced to buy SM dairy products.

        Glenn Black, President
        Small Flock Poultry Farmers of Canada

        • ed

          So are you saying that the cheaper the milk or chicken is at the farm gate, the higher the quality and safety rating will be, with near free being the best case scenario. …

          • Small Flockers

            It appears you make a sarcastic remark so as to confuse and distract. No, you self serving exaggerations are not what I’m saying.

            I believe there are 9 main categories upon which competition can be based. The most basic of these 9 factors is price.

            Quality of Design (eg. product specifications, features, etc.) and Quality of Implementation (eg. compliance, consistency, repeatability, reproducibility, verification, validation, etc.) are two of the most important competitive factors.

            By the government issuing a monopoly to just 17,000 SM farmers (0.05% of Canadians), this special interest group has stripped all Canadian consumers of their right to choose the products they would like to buy and consume.

            The SM gang also ensures that the SM specifications are kept at the point of maximum profitability for themselves, regardless of the consequences of poor nutrition, unaffordable food, food pathogens, the range of products consumers prefer to buy, or any other important issues for consumers.

            The SM gang (I often refer to them as the “SM Mafia”) has been getting away with their tyranny for almost 50 years. They have lasted this long through the capture of the governmental bureaucracy with their lobbyists whispering into the ears of the politicians and mandarins, and the use of propaganda advertising funded by their ill-got gains from price gouging.

            At the Canadian economy worsens, Canadians will soon wake up, and will no longer tolerate the damage and excesses of the SM system.

            Change will come quickly after that awakening.

            Small Flock Farmers and Canadian consumers will soon have their freedom restored by the removal of SM.

            Glenn Black
            Small Flock Poultry Farmers of Canada
            http://canadiansmallflockers.blogspot.ca/

          • ed

            Well, you are partly correct. Change will come quickly. The price of poultry will drop until it kills off any remnants of supply management. The price will continue to drop for what seems like no reason as corporate barns are set up. The price will continue to drop at the farm gate as small producers get larger, build modern barns on that quarter close to the highway and temporarily self subsidize what is predicted to be a only a short term loss cycle, by borrowing from Grandma, selling the camper or cabin at the lake, and taking on as much off farm income as humanly possible. Prices drop some more, eliminating and handing over some quarter sections and good barns to satisfy debt by all but a few tenacious individuals that are determined to succeed what ever the cost may be. Mean while the price at retail goes up and up for smaller portions making the windfall profits large enough to pay large dollars to corporate CEO mathematical and human behavior master minds, large share holder dividends and back door subsidize their own fictional/intentional barn losses to keep weakening the hold outs. It is a brilliant strategy and works almost every time once the stars align. Getting rid of supply management is one of the early first steps in that alignment process. It worked almost flawlessly with the pork industry. It definitely gets a lot of people confused and distracted.

          • ed

            There appears to be no opposition to this logical tried and true path. It has recurred too many times already.

  • ed

    Dairy farmers would be well advised to sell immediately to some optimistic neighbor that wishes to expand and is not too clued up on things. First out wins. Move on.