DECEMBER 2016 • COUNTRY LIFE IN BC Roller coaster pricing for dairy producers by DAVID SCHMIDT


ABBOTSFORD – New BC Milk Marketing Board chair Ben Janzen faced a full house of producers when he addressed Mainland Milk Producers in Abbotsford, one of a series of meetings across the province in early November. While it was his first time at the helm, Janzen is familiar to the industry, having been an elected BCMMB director from 1996 until retiring as a dairy producer in 2012. “It’s amazing what happens to the turnout when you drop the milk price,” Janzen said, only partly in jest. In June, the blend price bottomed out at just $70.37/hl, a drop of over $6/hl from the previous month. The price rebounded by almost $5/hl the following month but has slid back down again since, dropping to $71.48/hl for August and $73.25 for September, the last month for which figures are available.


Janzen blamed two factors for the lower blend price: continued imports of diafiltered milk and milk ingredients, and costs associated with an ever- increasing stock of skim milk powder. “Every $600,000 we transfer to the Canadian Dairy Commission (CDC) for powder storage costs equals $1 off the blend price,” he pointed out. “The market demand for BF (butterfat) was up 5.65% in the last


DAVID SCHMIDT


advantage for processors to bring in imports.”


MPIs and MPCs are now included in all Class 5 categories and two Class 4 categories and represent 23% of milk production.


Quota increases


Although the price is not as high as producers would like, the increasing demand means more quota for producers. Producers received another 2% quota increase at the beginning of November. BC’s milk quota has more than doubled since the turn of the century, with increases in the last three years totaling over 16%.


dairy year. I haven’t seen numbers like that in my time,” Janzen said, noting the increased demand is coming from both fluid and industrial milk classes. “High BF demand means more skim milk powder,” he added.


The National Ingredient Strategy is supposed to resolve most issues but is taking longer than expected to implement. All provinces signed the agreement-in-principle in early July with hopes of having it in place by November 1. However, the CDC has yet to approve it and Janzen expects it will be at least February before all the details are worked out.


Under the NIS, processors will be


responsible for all components of the milk they obtain, meaning the CDC will no longer buy back their surplus powder. In exchange, processors will be encouraged to turn the powder into milk protein ingredients (MPIs) and milk protein concentrates (MPCs) and allowed to use them in cheese and other products.


It is hoped this will encourage processors to increase dryer capacity and update aging plants. Although the Canadian dairy industry can’t restrict imports of MPIs and MPCs, Janzen says domestically-produced MPIs and MPCs will be priced at the world price so “we’re hoping there will be no


While that applies to mainstream milk production, there is even more growth in specialty milk categories. Janzen pointed out organic milk demand has increased 11% in the past year. As a result, four more farms were added to the organic production list in the past year and the board expects to add another four organic producers in the coming year. It also expects an increase in the demand for grass-fed milk, now being produced by only one farm.


Although it has been left to each processor to set its own grass-fed milk standards, the industry is trying to develop national standards and a national certification program to avoid a potential hodge-podge of standards.


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