OTTAWA – Western Canadian dairy industry leaders are close to a deal in which dairy farmers from Manitoba to the West Coast will share revenues and the advantages of growing markets.
“We have an agreement in principle to share markets and revenues but my idea is that we still have a few issues that need more work,” Bruce Beattie of Sundrie, Alta., chair of the Alberta Milk Producers’ Society, said last week.
He said the end result will be a more stable, united dairy industry that will accommodate processor rationalization into bigger plants without pitting farmers from different provinces against each other as they lose smaller, local processing plants.
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“I think the benefit will be stability,” said Beattie. “If we don’t succeed in putting together a western pool, then I think there will be a greater danger of divisions between producers.”
Already, there are growing tensions between Alberta and B.C. dairy farmers as increasing amounts of Alberta milk flow west across the border.
A western pool would mean that B.C. farmers would be able to share in the revenues from those sales.
“I just think this will be part of the evolution of the system, allowing it to react to changes in the processing business as the smaller plants get closed and the business gets more concentrated,” said Beattie. “This will make sure all producers can benefit from that.”
New deadline
But negotiations are behind schedule.
In both eastern and western Canada, new pricing, pooling and revenue sharing arrangements were supposed to take effect on Aug. 1, the beginning of the new dairy year. Instead, negotiations continue on both fronts.
Manitoba straddles both negotiations, a member of the so-called P6 group of eastern provinces and the P4 western group.
The eastern agreement, not yet implemented but likely to take effect within a few months and to be back-dated to Aug. 1, will include a common pool and an agreement to try to standardize prices between provinces.
“This will make the system more flexible, especially in view of the fact that interprovincial barriers will be going down, so this means producers in some pro-vinces will not be affected more than others,” said JosŽ Boisvert of the Canadian Dairy Commission.
Because industrial and table milk prices are blended, provinces negotiating with the eastern deal whose production is dominated by lower-priced industrial milk will see average prices increase. Quebec and Prince Edward Island will benefit the most and have agreed to pay a one-time compensation into the pool, $14 million for Quebec and more than $950,000 for P.E.I.
The other provinces, which will see their blended price lowered because of the infusion of more industrial milk pricing, will receive the compensation, including more than $10 million to Ontario and $716,000 to Manitoba.
However, Manitoba also has agreed in a separate deal to contribute over the next three years more than $2.5 million to the Nova Scotia pool.
The proposed western deal does not include inter-provincial compensation. “Our prices have been relatively close,” said Beattie.
Different systems
However, B.C., Alberta and Saskatchewan have not yet moved to a single quota as have Manitoba and eastern provinces. The revenue pool would be divided between the four provinces and then the three western-most provinces would divide their share between processing and table milk.
“I think this will help B.C.’s complaint about losing fluid (table milk) share to Alberta milk,” said Agriculture Canada dairy specialist Richard Tudor-Price. “It will not stop the milk from coming in, but B.C. will not be losing the fluid premium because they will be able to share in the revenue pool.”
