6


Lack of processor capacity limits


quota increases Milk has nowhere to go even as dairies fail to exceed quota


by DAVID SCHMIDT ABBOTSFORD – Not only


have milk producers in Western Canada been unable to keep up with all the recent quota increases but, more important, neither have the processors.


BC set a new production benchmark in February, producing almost 2.3 million litres of milk per day. Despite record production, BC had underproduced its quota allocation by 1.28% at the end of 2017. “Cumulatively, the Western


Milk Pool is 5.83% or 5.3 million kgs under its combined allocation,” BC Milk Marketing Board chair Ben Janzen told producers at spring producer meetings in


early March. Despite that, the Western


Milk Pool (WMP) has no plans to make up the shortfall. Just the opposite in fact. The four western boards recently agreed to limit production to producers’ CDQ (continuous daily quota). They also agreed not to issue any quota increases or incentive days before August. The reason: there’s no place


for the milk to go. Although two plant expansions were recently completed in BC and a new plant opened in Manitoba last fall, Janzen noted “it’s not enough.” “We’re utilizing all the


processing capacity available in the Western Milk Pool but we’re still skimming 800,000


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COUNTRY LIFE IN BC • APRIL 2018


FILE PHOTO


litres of milk per week,” he reported. “It’s becoming a real challenge.” He told producers the WMP is in ongoing discussions with investors to build new dryers or other new processing plants. Even if negotiations are successful, Janzen said it would take at least two more years before a major plant is operational. It would also bring a new set of challenges for processors. A new plant would require up to 300 million litres of milk per year, more than any one province could supply. Although the WMP is already sharing revenues and transportation costs, having multiple provinces supply a single new plant would add a whole new set of costs and logistics to the mix.


That may not be good


news for BC producers, who have seen pooling expenses climb from about $15 million four years ago to over $35 million in the 2015-16 dairy year. Expenses were just over $29 million on the last dairy years. Producers have also seen tremendous variability in their month-to-month blend


price in the past two years, although Janzen insists the average blend price has remained almost identical for the past two dairy years. BCMMB director of policy and industry affairs Zahra Abdalla-Shamji also announced several quota policy changes resulting from the Farm Industry Review Board Quota Tools Assessment Review. “We were able to achieve something significant in the review,” she told producers. Effective March 1, LIFO


(last-in, first out) has been eliminated and transfers/sales of any conventional, new entrant (NEP), specialty and cottage industry quota will be subject to a declining 10% assessment for the first 10 years and no assessments after 10 years. “This will allow growth to


transfer on the exchange more freely,” Abdalla-Shamji stated. As well, growers who “right-


size” their farm by selling any of their quota will not be eligible for any new growth quota for 12 months following the sale. Each producer meeting


ended with a lengthy discussion of potential changes to the new entrant program. The consultations began last fall and are expected to wrap up in June. “Our goal is to announce the new program in July or August and have new entrants start in 2019,” BCMMB manager of policy and communication Vicki Crites told producers. She noted that FIRB’s QTAR


report nixes any possibility of making new entrant quota non-transferable, as the NEP advisory committee had previously recommended. Still open for discussion are the amount of quota a new entrant will receive and whether or not it could be increased through a matching (e.g. buy one, get one) program.


Crites and BCMMB director


Jeremy Wiebe say the NEP will not specify where new producers choose to locate nor what type of milk to produce but will give priority access to new entrants able to start in regions where milk is needed or willing to produce for underserved specialty markets.


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