Feb. 1, 2006, was a good news, bad news day for Canada’s dairy farmers.
The good news was that effective that day, prices for milk used in the food manufacturing sector rose an estimated 2.6 percent as an increase in support prices for skim milk powder announced in December by the Canadian Dairy Commission in December kicked in.
Fluid milk prices in several provinces rose in reaction.
While Dairy Farmers of Canada grumbled that the increase was not enough, the dairy commission said it had fulfilled a 2002 promise to see at least half of Canada’s dairy farmers receive their full cost of production by 2006. DFC said the promise had not been met.
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Still, prices did increase.
The bad news was that on Jan. 31, the Federal Court of Canada issued a ruling that DFC says will cost the industry hundreds of millions of dollars in lost milk sales.
At issue was a 2005 ruling by the Canadian International Trade Tribunal that milk protein concentrate can be imported as a “protein substance” rather than as a “natural milk constituent” that can be controlled as a dairy import.
DFC challenged that ruling in court and lost.
The dairy farmer lobby immediately demanded that the incoming Conservative government “close the loophole” by re-regulating the product used in a variety of food products.
It said that unregulated concentrate imports could displace up to half a million dollars in raw milk sales each year.
“DFC expects the government to respect its commitment to supply management and restore import measures to preserve the integrity of the Canadian dairy system,” New Brunswick dairy producer and DFC president Jacques Laforge said in a Feb. 1 statement issued from Ottawa offices.
“Unless the government acts quickly to close yet another loophole created by this decision, dairy farmers stand to lose hundreds of millions of dollars in the coming year alone.”
Don Jarvis, president of the Dairy Processors Association of Canada, agreed in a Feb. 6 interview that the decision has significant implications for Canadian producers.
“Clearly, it is an issue,” he said. “It does displace domestic milk that would be used to create concentrate and because it is concentrate, it replaces a significant volume of milk.”
Jarvis said the problem is partly the result of the current dairy pricing system. He said some concentrate is made in Canada but as long as domestic prices remain higher than world prices, imported concentrate is more competitive.
The issue, and the next response from the dairy farmer lobby, will be hammered out this week in Ottawa as Dairy Farmers of Canada holds its annual policy convention just blocks from Parliament Hill. DFC will be looking for a Conservative signal of support.
