Canadian dairy farmers say it’s unlikely that Aug. 1, the first day of
the new dairy year, will be the good-news day they were hoping for.
Despite promises to the contrary, producers seemed resigned to the fact
that the Canadian Dairy Commission would not be making an announcement
today revealing a higher support price for the industry’s producers and
concrete proposals on how the cost-of-production formula could be
changed to give dairy farmers a better bottom line.
“There will be no price increase on Aug. 1, no announcement,” acting
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CDC chair Louis Balcaen, a Manitoba dairy farmer and
government-appointed producer representative at the commission, said in
a recent interview.
“We just don’t see the justification.”
In lieu of an announcement, dairy farmers will have to wait until late
December to find out where skim milk powder and butter support prices
will be pegged, effective Feb. 1, 2003.
Last winter, it seemed the new dairy year would begin on a different
note.
During his first speech to a Dairy Farmers of Canada convention, new
CDC chair Michel Pagé, a former Quebec agriculture minister, drew a
thunderous round of applause when he promised changes beginning Aug. 1.
He told delegates they would be “happier” after Aug. 1.
In Ottawa, officials involved in dairy policy were caught off guard by
the comments. Eventually, Pagé sent a letter to DFC leaders admitting
he had “unwittingly sown a certain amount of confusion” by promising
something that had not been approved. This summer, Pagé resigned after
little more than a year on the job.
Balcaen said the commission is still committed to establishing a new
pricing formula by 2006. Once in place, the formula will return full
costs to at least half the country’s dairy farmers.
“We have pledged to honour Mr. Pagé’s commitment.”
Balcaen also suggested falling on-farm costs may be as important to
achieving that goal as higher prices.
“There are various ways to work toward that goal,” he said.
Balcaen’s words, and the lack of an Aug. 1 price increase, are likely
to land the quiet-spoken Manitoban in even more hot water with the
dairy farmer lobby, which he once led as president.
Dairy Farmers of Canada had been calling for an Aug. 1 price increase.
Provincial associations in Quebec and New Brunswick have called on the
federal government to replace Balcaen with someone more effective.
“How is it,” one Quebec producer asked in April when Balcaen appeared
before the Quebec Federation of Dairy Producers, “that a dairy producer
with the experience you have cannot understand producer’s need?”
Balcaen’s response to such criticisms is that he does understand the
needs of the industry and it includes processors and retailers as well
as producers. If prices are too high, demand weakens, consumers resist
and industrial purchasers of milk and cream get squeezed.
And to remind him of that balancing act, the CDC is regularly attacked
from the other side of the industry by processors and retailers who
complain that the weight is too much to farmers.
“It is absolutely a competitive issue for us,” said Stephanie Jones of
Toronto, vice-president of the Canadian Restaurant and Foodservices
Association. “The price went up 3.5 percent in 2002. That’s $65 million
for my members and we have a very limited ability to pass on costs.”
“We have to compete with product from the United States,” added
processor Jim Sherlock, chair of the dairy committee for the Food and
Consumer Producers Manufacturers of Canada. “Prices to us have gone up
22 percent since 1994 but we have had little ability to raise our
prices.”
It remains one of the most intractable conflicts in Canadian
agricultural policy.
The dairy farmer lobby insists that the present cost of production
calculation is out of date, returning full costs to fewer than three in
10 dairy producers.
“It doesn’t mean farmers are going bankrupt but it does mean they are
being squeezed and seven out of 10 are not receiving the same returns
that other Canadians with that kind of work and investment could
expect,” says Dairy Farmers of Canada economist Rick Phillips.
Jones of the restaurants association said that is absurd.
“Farmers are doing them a disservice by not having a broader view of
the industry,” she said. “To meet their goal would require an increase
of 15.5 percent at least. You can imagine what that would do to our
sector where margins already are tight.”
Balcaen and other CDC commissions have pledged to walk the tightrope
between those two camps during the next four years, looking for a
pricing formula that includes a greater portion of farmer costs but
does not further alienate processors and retailers, the dairy
industry’s customers.
