The marketing board that oversees Alberta dairy production has launched a new program to grow the organic sector, as demand for such products continues to increase.
The program, spurred by Alberta Milk, aims to see two new organic dairy farmers join the supply managed system.
Organic milk sales have increased by about 2.4 per cent year over year in Alberta, said Jonathan Ntoni, the policy analyst with the organization. He said if Alberta Milk loses any of its current six organic farmers, it’s possible that would hamper their capability to supply enough product.
“That is not a good way to run the industry, so we want to attract new producers to fill this demand that we’re seeing,” Ntoni said.
To encourage growth, Alberta Milk will loan new entrants three kilograms of quota for every one kg of quota they buy. They are allowed a maximum of 25 kg of loaned quota. After 10 years, the organization will take back the loaned quota at a rate of 10 percent per year.
Once the clawback period begins, farmers on the program can always buy quota so they can keep production levels up. They are allowed to produce a maximum of 100 kg per day, which equals 70 to 100 cows.
As well, the organization will pay an extra 10 cents per litre on the milk they produce for up to three years, which is the length of time it usually takes to become organic certified.
“This helps alleviate the higher costs with producing organic milk,” Ntoni said.
To be considered, farmers must provide a two-year business plan, 10-year implementation plan, a risk mitigation plan, and a signed conditional approval from a financial institution that will help finance the operation. They must also outline their path to organic certification.
Location of the proposed farm will also be considered in order to minimize transportation costs.
As well, anyone who has farmed or currently farms dairy in Canada won’t be considered. Applicants must be brand new to the sector, though if they farm grain or other livestock for non-dairy purposes, they will be considered.
Ntoni said they won’t accept current or former dairy producers because they want to prevent someone from possibly using the program as a succession plan.
“That would be a free lunch for that person,” he said.
An applicant who is accepted and gets 25 kg in loaned quota could expect to pay about $341,500 for the 8.3 kg they buy, assuming quota stays around $41,000 per kg. That doesn’t include land, capital and operating costs. Costs could change depending on what happens with the price of quota.
The organization doesn’t have a deadline for accepting new entrants, but will take applications on a first come, first served basis.