An export program for dairy products has left a sour taste in the mouths of Manitoba dairy farmers.
Canada’s Optional Export Program is viewed as confusing and frustrating by Manitoba Milk Producers, the provincial marketing board.
Marketing board chair Neil Van Ryssel said changes are needed to make the program work better for producers.
Created in 1996, the OEP offers an option for those wanting to sell milk above their quota limits in Canada. Provincial milk marketing boards can negotiate the sale of surplus milk to dairy processors, which then convert that milk into cheese, butter, ice cream and skim-milk powder for export.
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Manitoba Milk Producers saw the need for such a program due to falling trade barriers between members of the World Trade Organization. The removal of those barriers offers more access to foreign markets, but it also approved the import of more dairy products.
Problems with the OEP arose during the 1997-98 milk year, Van Ryssel said. The biggest problem is that some eastern provinces aren’t abiding by the rules and intent of the OEP.
“The original intention and parameters agreed upon went right out the window. It became a glorified surplus removal program that pitted one province against the other.”
During the 1997-98 milk year, Canadian dairy farmers produced more milk than was needed for domestic markets. Prices for milk sold through the OEP tumbled as provinces competed to sell milk through the program, said Jim Wade, general manager of Manitoba Milk Producers.
“The processors used one province against the other to drive the prices down. That’s not working for the producers at all.”
Brian Palas, a dairy farmer at Oakville, Man., agrees. Palas said he would be interested in committing some milk to the program if it offered better prices.
“There’d be a lot of people who would be interested in some, but right now there’s not enough money in it.”
The program is now under review. To get better returns for producers, milk marketing boards need to work in unison when selling milk into the program, Wade said.
“We have to make sure we’re going to make a buck. There’s no sense at all in producers committing milk in a situation where they’re going to lose money.”
Wade sees merit in the program. However, he believes the rules need to be more flexible. Those rules allow no more than five percent of a province’s total annual milk production to be sold through the OEP. No more than 10 percent of a producer’s total yearly production can be committed to the program.
Wade said that limit puts smaller provinces at a disadvantage. The competitive edge is given to provinces such as Ontario, which can work within the OEP limits and still offer large volumes of milk to dairy processors targeting the export market.
“As far as we’re concerned, those limits that are there today are not appropriate,” Wade said. “We have to review them and we have to change them.”
