World milk prices take blame for

shifting returns World price a significant factor in domestic pricing, volatility


ABBOTSFORD – The world milk price now accounts for about 30% of what Canadian producers receive, BC Milk Marketing Board chair Ben Janzen told Mainland Milk Producers at their annual meeting in Abbotsford, January 11. Janzen said the fact is a leading reason for increased volatility in Canadian milk prices. Although the blend price in November 2018 was very similar to the blend price in November 2017, there was considerable fluctuation in the price over that period, ranging from as little as $75/hectolitre in April to as much as $85/hl in October. Janzen noted production continues to increase, which he says is a good thing since overall Canadian production still lags behind quota. The situation is more acute in the West than the East, as production in the Western Milk Pool is 2.7% below quota. Production in the P-5 (Ontario-East) is only 1.79% below quota. The incentive days BC issued last fall have contributed to increased production but those

incentive days were set to end in January, so production could drop again in February. Although the board wants producers to maintain their strong production, it has not yet decided whether to issue incentive days for February and beyond to help make that happen. Janzen also reported that

Canada adopted a new quota reconciliation system last October. Instead of using a one-year average, quotas will now be adjusted using only the previous month’s data. Although this will make the system more responsive to market needs, it will also make quota levels more volatile.

Quota over and

underproduction penalties have also been revised. Overproduction penalties will now only be applied if total Canadian production exceeds quota by 1.25%. If that happens, the offending group – either the WMP or P5 – will be assessed a monetary penalty of 50% of the value of the excess milk. Instead of then dividing that penalty among all provinces, the penalty paid by one group will be distributed to provinces in the other group.

Janzen notes the new system is much fairer as it does not mitigate the penalty paid by offending provinces.

While these changes could

have a significant impact at the national and provincial level, Janzen stressed the way quota is administered at the farm level will not change. He noted ensuring the right amount of milk in the

right place at the right time remains a challenge. Processing capacity has increased in BC and Manitoba but that has led to more interprovincial movement of milk, which all WMP producers pay for. Adding to the challenges

going forward is Fairlife. A fortified milk product, Fairlife was introduced into Canada

less than a year ago and is already making steady gains in the marketplace. It is currently imported from the US using supplementary import permits but there are plans to produce it in Ontario in future. Janzen said the BCMMB is trying to also get fortified milk produced in BC to prevent erosion of the province’s fluid milk market.


Patience is a virtue

Many growers, pickers and winemakers were still awaiting temperatures cold enough to allow them to harvest grapes for ice wine in January. While some growers were able to pick December 5, West Kelowna’s Grizzli Winery and nearby Rollingdale Winery had yet to see the consistent -8 degrees Celsius required by law to produce the sweet wine. Twenty wineries registered 175 acres in 2018 for ice wine. MYRNA STARK LEADER PHOTO

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