By Jamie Barrie I s the Canadian Diary industry the target of Trump’s NAFTA crusade or is his rhetoric a negotiation tactic? Only those inside his presidency know the true answer to that question. What is for certain is that his comments of late have Canadian diary farmer’s extremely worried, and they probably should be. According to the Canadian Diary Information Centre (CDIC), which is a government of Canada operated entity, dairy farming is big business in Canada. According to 2011 data nationally we had 22,005 operators with almost half of those being in the province of Quebec where there are nearly 11,000 dairy farms. The size of dairy herds in Canada has decreased modestly over the past 13 years. There were 1,065,500 dairy cows, excluding heifers, in 2003 compared to 956,900 today. That ten percent decline is partially attributed to the efficiency of farmer’s who have invested heavily in increasing their yield per cow using nutrition and technology. The only provinces that saw an increase in herd size during the period in question where Alberta, Saskateween, Manitoba and Newfoundland. That coincides with the boom of energy sector jobs in those regions leading to an influx of workers from elsewhere in Canada. The price of a milking cow at auction has risen during roughly that same period from $3,754 to $6,391. This is where it gets sticky. To have a conversation with a dairy farmer about The Canadian milk quota system can be controversial. Most people have likely heard of this system refer to as the milk supply management arrange- ment. It was developed in the 1970s to ensure that farmers received a fair rate of return on the milk they produce by eliminating overproduction. There are three basic elements of this supply management system. The first is producer pricing In the case of milk, this is the dairy farmer. It’s a complicated formula that is used to make sure that many of the fixed and variable costs associated with milk production are reflected in the price paid to producers. If this sounds like a simple process, it is not. In short, these transactions can be every bit as complicated as a trade of stock on the floor of the Toronto stock exchange with everything from butterfat content to bacteria counts influencing price. That puts the total value of Canada’s dairy herd at over $6 billion. Dairy is big business in Canada, no doubt about it.
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MAY • SPOTLIGHT ON BUSINESS MAGAZINE
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