JANUARY 2018 • COUNTRY LIFE IN BC


Dairy production meeting quota increases Annual meeting discusses quota allowances, eligibility of new entrants


by DAVID SCHMIDT VANCOUVER – BC milk producers


have done a good job ramping up production to meet unprecedented quota increases, BC Milk Marketing Board chair Ben Janzen told producers attending the board’s annual meeting and fall producer meeting in Vancouver, December 8. Although quotas increased 9% in the 2016-17 dairy year, BC ended the dairy year only 1.31% behind their allocation. This compares favourably to the rest of the Western Milk Pool, which was almost 5% under its allocation. At the end of July, there were 484


registered producers and 38 dairy plants in the province. Production increased from 732 million litres in 2015-16, to 758 million litres in 2016- 17. Revenues increased by $23 million but changes in equalization payments increased producer payments even more.


The increased production challenged both producers and processors. “We had challenges finding a home


for the extra volume but we’ve been able to do it,” said BCMMB market supply and development manager Woody Siemens, adding heavy snow in winter and intense fires in summer added to the challenges. “Our capacity is good but we’re concerned about overall capacity in the WMP,” noted new BCMMB controller Dan Poelman. “Hopefully, the new MPC plant in Winnipeg will help.” Since butterfat demand is leveling


off, Janzen told producers not to expect future quota increases to match those of the past two years. “We expect about 3% growth this


year,” he said. Implementation of the National


Ingredients Strategy (NIS) and the new Class 7 has had the desired effect of reducing Canada’s skim milk powder


FILE PHOTO


(SMP) stock. The NIS means processors can now use milk protein concentrates (MPC) and SMP in many of their products. “Every product has a ratio” of MPC’s and/or SMP, Janzen explained. Those ingredients are sold to processors at the world price. “This is a big change,” he said, noting it resulted in SMP stocks dropping from 122,000 tonnes last year to virtually zero this year. Janzen warned producers their monthly milk payments will continue to fluctuate due to the variability of transfer and equalization payments. In the past year, those payments have varied from just over $1 million in January 2017 to more than $7 million in September 2017. “Each $600,000 in transfer payments translates to $1/hl in the producer price,” he stated.


Quota exchange The BCMMB held its first quota


exchange since June at the beginning of December after changing the policy to clear buyers instead of sellers. Instead, sellers are prioritized, with the


highest priority going to producers who have ceased production. “We had three priority sellers who had quota sitting on the exchange for months,” said BCMMB director of policy and industry affairs Zahra Abdalla-Shamji. Buyers are also prioritized, with new entrants in the first position. The new rules allowed the exchange to clear just over 70% of the available quota. Since not all available quota was cleared, the BCMMB planned to hold a second exchange in mid-December, with the price reduced to $38,500/kg.


New entrants The board used the last half of the


producer meeting to begin its consultations on a new New Entrant Program. Abdalla-Shamji said the board’s aim is to have a second round of consultations at its spring producer meetings with an aim of finalizing the NEP in June. She expects the board to start inviting NEP applicants in fall. As a first step, the board established a New Entrant Program committee. After considering various options, that committee recommended the board


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ALEXANDER KNIVES VERTICAL KNIVES


give new entrants 35 kgs of incentive quota but require them to buy 15 kgs of quota. The 35 kg of incentive quota would be non-salable forever but both the purchased quota and any quota earned through growth would be salable. New entrants would be allowed to merge their quota with existing quota but only if the incentive quota is returned. New entrants would also be required to submit a five to 10-year business plan and have training in dairy. “We have set a high bar for applicants,” Abdalla-Shamji said. Producers generally supported the committee’s recommendations. “The 15 kg purchase is not an obstacle if the new entrant gets 35 kg,” one group noted. “We want new entrants to have skin in the game,” another added. Most producers agreed although


one group suggested the incentive quota should be increased to 50 kg, giving new entrants “a greater opportunity to service the debt.” Another suggested 10 kgs of purchased quota and 40 kgs of incentive quota might be more doable for new entrants while a third group suggested a variable scale depending on a new entrant’s financial capability. Most groups agreed sons and daughters of existing quota holders should be eligible, although one suggested non-farm family applicants should be prioritized. Everyone agreed on the need for a


selection committee to vet applicants, acknowledging that would put a lot of pressure on members of that committee. One group suggested the committee should include bankers, agrologists and non-dairy persons while another stressed the need to include current producers. “They need to be on the committee because it is their quota which is being given to new producers,” the group pointed out.


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Nic Barker | Western Canada Territory Manager Cell: 403:393-9864 email: nbarker@jaylor.com


Bert Slomp | Western Canada Territory Manager Cell: 403.331.1150 Fax: 403.381.4508 bslomp@jaylor.com


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