Dairy farmers need correct market signals
Re: Class 7 replacement must wait for trade details, (WP, Oct. 18).
The dairy industry needs to start changing today.
Class 7 milk components are sold into two completely different markets:
- replacing imports of diafiltered milk
- export markets for milk powders
Canadian dairy farmers are selling more than 20 percent of skim milk production (kilograms of protein and lactose) in Class 7 and getting paid approximately five percent of our total revenue. The Class 7 price is less than our direct operating costs.
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The last few years we have been going down the wrong road, expanding sales in low-price export markets. The simplest way for a business to move from a loss position to a profit is to stop selling into unprofitable markets and concentrate on profitable markets.
Dairy farmers have the tools to change the components in milk through genetics, feeding and culling low-fat cows. But this is a slow process and will take five to 10 years. If the market requires milk with five percent butterfat to fill the Canadian market for butter, protein and other solids, without a surplus of skim solids, then we need to take the first steps today.
The price that our milk boards sell components to the processors and the price that they pay the farmer are completely separate. The total dollars are equal, with different component prices.
The realities of today’s market must be transmitted to the farm, either through a change in the (solids not fat ratio cap) or a drastic increase in the price of butterfat and a corresponding low price for protein. When farmers are given the correct market signals, we will respond.
Fred Waddy
Little River Holsteins
Colpitts, N.B.
