Peter Ruiter is a 34-year-old dairy farmer with plans to expand, a herd
that exceeds provincial average productivity and an absolute conviction
that the existing dairy cost-of-production formula has to be improved.
“The COP just hasn’t kept up,” he said in an interview on a farm that
lies inside the boundaries of the City of Ottawa, on 400 acres rented
from the federal government. “I’m above average productivity and it’s
tough. It’s worse for guys with more average production levels. The COP
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should be more realistic to real costs.”
Ruiter milks 35 cows and hopes to increase that to 44, although quota
can cost up to $20,000 per kilogram of butterfat, roughly the
equivalent of one cow’s output. The cost of quota is excluded from the
COP.
He has a total herd of 100 head and grows commercial corn, soybeans and
wheat on half his land.
Still, with a debt of more than $1 million and the regular costs of a
capital intensive business, Ruiter feels the squeeze.
He breaks down his costs this way: out of an average price of 61 cents
per litre of milk sold, he pays 16 cents for feed, eight cents for
bedding and other barn supplies, 10 cents for land costs, five cents
for debt servicing and seven cents for fuel costs.
Those costs take 46 of the 61 cents, leaving 15 cents to cover labour,
return on investment and other less tangible costs including management.
“I work 365 days a year, 55 to 80 hours a week and I am not getting the
return you would in other sectors for that amount of work, investment
and responsibility,” he said.
For economist Rick Phillips at Dairy Farmers of Canada, the issue is
that the cost-of-production formula has fallen out of step with costs
on the farm.
Critics of that argument insist that dairy farm costs of production are
actually falling, but that is not reflected in prices set by the
Canadian Dairy Commission. In fact, acting comission chair Louis
Balcaen said the latest small increase in the industrial milk support
price could have been a decrease if the CDC had stuck strictly to the
formula. An increase was announced to reflect inflation and a
recognition of farmer calls for an increase.
“It was a judgment call. It could have been a decrease.”
Dairy farmers say that merely shows the formula is flawed.
