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A look at the past, present and future of Canada’s dairy industry

Progressive Dairyman Editor Karen Lee Published on 31 July 2017
Cows being milked

To commemorate the 35th anniversary of the Western Canadian Dairy Seminar (WCDS), John Kennelly, University of Alberta; Mike Southwood, Alberta Milk; and Bruce Beattie, Alberta Agricultural Products Marketing Council decided to take a look at how the industry has changed throughout those years.

They summarized their findings in two words: consolidation and collaboration.

“The past 35 years have seen many dramatic changes in the Alberta and Canadian dairy sectors. A dramatic decline in the number of producers has been accompanied by a new era of collaboration, provincially and nationally,” they wrote in their conference proceedings report.

At the time of the first WCDS in 1983, Alberta had about 4,300 farms shipping milk and cream, and Canada had just dropped to fewer than 50,000 dairy farms. Heading into the 2017 conference, the province had 531 farms shipping milk, and there were 11,280 dairy farms across Canada.

During his presentation at the 2017 WCDS in Red Deer, Alberta, Bruce Beattie said he had milked cows for 35 years.

“I can certainly can see the evolution over the time period I’ve been involved,” Beattie commented.

He came to Alberta from Ontario and started milking with 25 cows and shipped his milk in cans in the back of his half-ton pickup truck.

“Things have come a bit of a way since then,” he added.

Beattie mentioned a lot of the developments that have occurred in the industry since then, in relation to policy, nutrition, education, etc., were led by two classes of people. The first group of people was dairy farmers.

“I think that really is the strength of our industry,” he said. “Our industry and the policies that have been developed have been developed by people who have had knowledge about their industry right from the ground, who milked the cows, who understood those things and then took the time to come to the board table and develop policy that, in many cases, did get pretty complex.”

The second group of people was those who were devoted to the industry but did not milk cows. People like Richard Doyle, Beattie noted, who led Dairy Farmers of Canada for nearly 30 years, as well as researchers and many others who had a hand in shaping the industry into what it is today.

“I always was impressed, whenever we had the opportunity to visit with the research farms and meet with the researchers, how dedicated they are to our industry,” he said.

Beattie served as an Alberta director for Dairy Farmers of Canada (DFC), chaired the research committee and represented DFC on various research councils.

Marketing and revenue sharing

“It’s been an interesting voyage through marketing and revenue sharing,” Beattie said.

In 1983, the National Milk Marketing Plan (NMMP) and Memorandum of Agreement – signed by all provinces except Newfoundland – replaced the Interim Comprehensive Milk Marketing Plan that had been in place since 1971, both of which focused on industrial milk.

The issues that surround sharing quota and sharing markets are not unique to the dairy industry, Beattie said. It took several years to reach an agreement to allocate quota on a 90-10 basis (90 percent on historical shares and 10 percent on population growth).

This was accomplished in 1989 and then revised to 10-90 in 2000. A year later, Newfoundland joined NMMP.

An amendment in 1995 allowed the Canadian Dairy Commission to operate revenue-sharing pools. All provinces, except Newfoundland, which joined in 2001, signed an agreement on special class pooling to share equitably the revenue from products in the special classes.

That same year, the All Milk Pooling Agreement involving Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Ontario and Manitoba (P6) came into effect.

The Western Milk Pool formed two years later after a gentlemen’s agreement between processors on the fluid milk pricing differentials in British Columbia and Alberta began to break down. Manitoba operated in both pools until 2003 when it with withdrew from the P6.

“It took a lot of work and a lot of good negotiations to achieve those [agreements],” Beattie said. “And an awful lot of really strong commitment to an industry from the national leaders who realized that, in order to keep supply management, they also needed to make sure they were united and they had a system that was fair for everybody across the country.”

Trade

The regional pooling agreements were driven by the negotiations for the formation of the World Trade Organization, where the exemption for supply management was lost and tariffs were introduced.

“At the national level, our advisers said, ‘You’re not going to be able to collect levies anymore; you’re going to have to have this pooling process,’” Beattie said.

Supply management was excluded from the Canada-United States Trade Agreement, which later became the North American Free Trade Agreement when Mexico joined in 1992.

The Comprehensive Economic Trade Agreement between Canada and the EU was reached in 2013 and has yet to be entered into force.

The Trans-Pacific Partnership was signed in 2016. It is off the table for the time being, but “these things have a habit of coming back,” Beattie said. “I don’t think as an industry we can afford to be complacent in understanding all of these trade issues.”

He continued, “That’s where Dairy Farmers of Canada really comes to the fore, and it’s really important we have a strong voice at those tables. Even if we’re not in the room, we’re in the hallways, and I think that’s extremely important for our industry.”

Industry concerns

“It wasn’t that long ago we were trying to come up with ways to get rid of butterfat because we had too much, and now of course it’s the very opposite; we can’t get enough butterfat,” Beattie said.

At the same time, the industry is concerned with milk solids-not-fat and has been for a long time.

According to Beattie, the producers, not the processors, are charged with looking after any surplus milk produced, and this has resulted in a lack of new processing facilities.

“There hasn’t been a new plant built in Canada for a very long time,” he said.

A number of policies were enacted in 2004 to help deal with the amount of structural surplus at the producer level. This included a minimum butterfat policy of 3.25 kilograms per hectolitre, reducing the price paid for protein and shifting it to the price paid for butterfat, and introducing the solids-not-fat to butterfat ratio.

In addition, each province was required to meet fixed year-end and mid-year accountability levels. This had its challenges, and a national continuous quota system at the provincial level was adopted in 2008.

Quota management is always a big topic, and it’s not unique to dairy but is a concern for all industries operating with a quota.

“If you think we have a complex system, look into the other industries as well. They are extremely complex and have the same issues we do,” Beattie said.

“From my perspective, they haven’t dealt with them near as well as the dairy sector because we have gradually moved to this much more integrated system, one not only integrated across the province but integrated nationally. I think that is one of the strengths and why it’s difficult for government to dismantle it – because it is so integrated and so well put together.”

License to operate

The Canadian Quality Milk program was one of the first programs designed to address growing consumer demands.

“If we didn’t do it, then the processor or the customer was going to do it for us,” Beattie said.

Canadian Quality Milk was developed by farmers under the guidance of DFC and introduced as a voluntary program in 2002. It became mandatory in 2009.

As consumer demands continue to grow, DFC developed the proAction initiative, which is being implemented through provincial organizations. It encompasses six key elements: milk quality, food safety, animal care, livestock traceability, biosecurity and the environment.

While some of the programs have been in place for some time, others are in the process of implementation or development with the goal to have the entire program implemented by 2023.

The future

Beattie said the Canadian supply management system has been under attack ever since it was adopted, and it still remains firmly in place.

“We’ve been pretty successful. If you look around the world and see all the other countries that have lost their system of orderly marketing and what that’s done – the impact it’s had on the producer and that there’s been no measurable improvement to the price for the consumer,” he said.

Beattie continued, “I think if producers remain united and continue to be involved with their boards supply management will last for a long time because it makes sense for the industry, for the consumer and for the producer. At every level, it’s good deal, and it’s a good deal for government.”

Given the amount of technology in use on today’s dairy farms, it is difficult to predict what the industry will be like in five or 10 years. Consolidation is likely to continue, and collaboration will be necessary moving forward, just as it was these past 35 years.

“I think it will still come back to dedicated producers who are dedicated to their industry,” Beattie said.  end mark

PHOTO: Cows being milked. Photo by Karen Lee.

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