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Those Poor Dairy Guys

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    Those Poor Dairy Guys

    BSE drives call for milk price increase
    this document web posted: Wednesday, December 1, 2004 20041202p82

    By Barry Wilson
    Ottawa bureau

    To illustrate the impact that BSE has had on his bottom line, Vancouver Island dairy farmer Wally Smith produces a receipt for the Nov. 3 sale of a month-old bull calf.

    The net return after freight was $0. Before May 20, 2003, the calf could have brought in $250.

    "The BSE crisis has been a major hit for our industry, 30-50 percent off the bottom line of dairy farms," Smith said during a tour of Eastern Canada with Saskatchewan dairy farmer Juliann Blaser Lindenbach to publicize the continuing damage of the closed U.S. border.

    "And while there might be some signs of progress for other cattle sectors, there is no end in sight for dairy farmers."

    A border opening for live cattle would not affect older cull cows or breeding stock, which have been the main impact for dairy.

    Part of the dairy message to reporters during the media tour was that the Canadian Dairy Commission will have to take account of the industry problems when it announces a new support price in mid-December.

    Federal agriculture minister Andy Mitchell already has said the pricing announcement will be part of the government's reaction to the dairy impact of BSE, and dairy commission chair John Core has promised a significant increase.

    Smith said BSE alone should prompt a two-cents-per-litre milk support price increase, a three percent boost in the 64.77-cent base price. The total increase must be much larger to cover shrinking margins and rising costs of fuel and steel products, he said.

    "We've seen big increases on the cost side and a softening of income."

    Arguments like that make Stephanie Jones seethe. It guarantees a resumption of the annual battle between dairy farmers and dairy product users when the price decision is announced.

    Her organization, the Canadian Restaurant and Foodservices Association, has recommended that the support price remain frozen this year, despite what she says has been a 2.5 percent decline in the dairy cost of production during the past year.

    However, Jones expects a large increase and she said the food industry cannot afford to absorb it. She said the dairy farmer lobby has asked for an increase of more than 10 percent.

    Increases in recent years have ranged from 1.49 percent in 1999 to 3.9 percent in 2002.

    From 1999 to 2003, the support price increased more than 15 percent or 8.5 cents per L. Part of the increase was to compensate farmers for the loss of a direct government subsidy in the late 1990s.

    Before the House of Commons finance committee last week, the food service industry urged MPs to tell Mitchell he should "reject any price increase without clear justification for Canadian consumers."

    Jones acknowledges that won't happen.

    "The minister already has, improperly I believe, signalled that pricing should be part of the BSE solution," she said. "We have no objection to farmers being helped because of BSE, but raising a permanent price and passing it all onto consumers is not the way to do it."

    She said years of lobbying have not convinced a series of ministers to look at the dairy pricing issue seriously.

    She said consumers already pay a $2 billion annual tax because of what she called inflated dairy prices.

    Dairy Farmers of Canada rejects that allegation, insisting that a June 2004 study by the A.C. Nielsen company found Canadian dairy products on average 23.6 percent cheaper than comparable products in the United States.

    #2
    In addition:

    In Ontario the dairy farmers are about to have extra quota issued to them - free.

    Eaqch kilo of quota runs in the $27K area. This quota can be sold as a commodity.

    So, anyone want a cheque for $27K ??

    There are positives to the quota system I suppose.

    Sheesh!

    Bez

    Comment


      #3
      Yep, and if you want to milk cows 365 days a year go buy yourself a dairy farm. When you realise the capital investment needed they are not getting an undue reward in my opinion.

      Comment


        #4
        To say nothing of the endless relentless grind of chores. Every day of the year, no break.

        I think they earn every cent they get. At least our cows go on 'holiday' in the summer to allow us to get the hay and crop done. Imagine having them in the yard all year round.

        Comment


          #5
          Isn't it too bad if consumers have to pay a little more so the producers can make a living.It's not a perfect system but some dairy guys in my area worked hard and made a living.Good on them!

          Comment


            #6
            You folks may have missed my point completely. I was raised on a dairy farm. Pop sold out when I was in my early 20's. I should have taken over the operation when I had the chance - but I was too young and foolish - after all, is not youth wasted on the young?

            Be that as it may, the problem I have with this is the uneveness of the playing field. These folks have a guaranteed income. Despite the fact the calves are now worthless, the dairy farmer receives an income every month. It may be reduced from what it once was - but it it still there. Plus, the marketing board has decided to raise the price of milk and place more funds in the hands of the producer. This so the dairy producer will not suffer as much!!

            On top of this the producer will receive additional quota - based upon a pecentage of present production. This quota was originally given to farmers - repeat given - and had NO value. Now it is worth - in Ontario approximately $27,000 per kilo. The average farmer has more than 40 kilos and many are in the 100 plus zone.

            Despite the grind of chores - which is truly NOT a grind, and despite the cost of production - the dairy farmer is quite able to make a living - albeit reduced. No dairy farmer in my area is working off farm to keep his place alive. Many have a hired hand - or indeed several hired hands who do the milking.

            Now that I have come across as sounding bitter and jealous - let me return to the uneven playing field.

            Only chicken and milk producers are under a quota system. Only chicken and milk producers across Canada are in a profitable position.

            Grain and cereal producers,beef producers and hog producers are struggling and in many cases failing.

            It is time for the people in this ag world to realize that success in the ag industry is simply a matter of a level playing field - which does not exist.

            Grefer has stated that it is ok for the consumer to pay a bit more for product if the producer gets paid a bit more - or words to that effect.

            Well, when was the last time anyone went to the grocery store. I defy - and challenge anyone here - call up your local meat market and price out a 12 pound prime rib roast - pretend you are throwing a fancy party or whatever - and report back here with the total price.

            I want what the milk producer gets - nothing more and nothing less. Is that being unfair? Is that being too demanding? I want to be paid for my product - EXACTLY like the dairy and chicken folks do.

            When the beef producer gets paid for his / her product like those on the quota systems do - then I will agree with grefer. Until then, grefer's comments are not woth the paper they are written on - why?

            Because the consumer pays a little more for our product - but we get none of it!

            Look forward to the replies on this one.

            Regards

            Bez

            Comment


              #7
              Very well put Bez. The cull cow and/or little bull calves were the "gravy" portion of their business - not the core of it. They are still getting paid for their primary product which is the milk.

              This most recent price hike, in the words of John Core - Dairy Commission Chairman - achieved 2 goals 1) "...To have support prices that cover the cost of production of nearly 50 per cent of Canadian dairy farmers." 2) "Our second goal was to assist producers in dealing with the financial consequences of the BSE crisis."

              Now the consequences to them were of course the aforementioned cull cows, as well as the ability to sell milkers into the U.S. Pre BSE, dairy farmers were able to sell culls for $700, now they sell them for $150. I am wondering if that is any different than what you beef producers were/are able to get?


              Is the cost of equipment for dairy farmers any more or less than what mixed farmers must pay for all of their equipment? The dairy farmer uses his/her equipment year round - how many weeks of the year does a combine turn a wheel?

              Yes, kudos go to the people who dairy farm because it is a demanding job and I imagine it can be stressful at times. Is it any less demanding or stressful than a crop farmer who is at the mercy of the weather, drought, grasshoppers etc?

              When a crop farmer or a beef farmer decides to get out of the business, how much will you net? On a 40 cow dairy, depending on the province you are in, the quota value alone will net you well over a million dollars.

              The system is not perfect by any means because you get penalized for over and under quota - whereas with the crop farmer if there is a bumper crop it can be put in the bin and sold as needed. With milk you can't do that.

              If livestock producers would have opted for the quota system way back in the 60's when it was first offered, I'm sure agriculture would look far different than it does today, simply because we wouldn't be able to export and we would serve the domestic market only. That is likely how the small family farm could survive because a 40 cow herd would be the norm.

              It has been said many times on this site - we have bought into the notion of bigger is better, but how has that worked for us?

              Comment


                #8
                When you mention a level playing field I have to bring up my pet peve and that is the crown grazing leases here in alta where people on average getapp 100 times more than they put in , in the form of a 5/10% rate of lease fees and at a minimum of 10 times return from oil lease fees over rent paid for leases.
                The last payment on acres paid by govmt of $4/ on some land at 40 acres / cow that will pay the rent for ever not what I would call even thats $160 per cow I got app 12

                Comment


                  #9
                  Horse - I guess I am a pretty dumb guy - I did not understand one thing you just wrote. Perhaps you could explain it in a way that a layman could understand it?

                  As for quota - well, them that has .. gets. Plain and simple.

                  Interesting comments about closing down an operation.

                  A fellow up the road about 2 miles from us decided to stop milking cows and sold off over 1.5 mil in quota. About a month and a half ago. Not a bad retirement scheme - even managed to keep all the land and equipment for future consideration.

                  Not too many beef guys could do that.

                  Bez

                  Comment


                    #10
                    Eugene Whalen offered us the same deal for beef back in the late sixties! We sure should have taken it, but unfortunately we all had some sort of mad dream we were going to be cattle barons or something? Big free enterprizers...didn't want any of that commie crap! And today we lick the governments boot to survive!
                    So instead of a stable cow herd every man and his dog was able to go in and out of cows whenever the prices went up or down!
                    When the government dropped the ball on grain the flood of newcomers into cows was amazing! These Johnny come latelies quickly put us into a position where we needed to export in a big way. And so today we reap the benifits of a very incompetent government and our own greed? The dairy guys did the right thing.

                    Comment


                      #11
                      If the dairy guys did the right thing ,why are all of the small dairy guys "cashing in the chips"? It looks to me like the 40 head "family farm" will be soon gone, if not gone already. Thats what makes quota worth so much. If you can make a living on 40, why not go to 200? The same economics of scale still apply.
                      I don't know anything about the chicken buisness as there isn't any barns around here anymore. I think the small "family farms" cashed out to the corprate operators 10 or 15 years ago. They went out with the cream cans.
                      Bez, I'm sure you have a different view of "quota" as it makes the world turn east of the river there.

                      Comment


                        #12
                        The 40 cow herds are disappearing because they're hard for the next generation to take over. Not big enough to support two while the transition takes place (barely enough work for one person full-time in a lot of cases) but the father wants to do less work and have the kid there for chores all the time, and not many off-farm employers will go for a schedule that lets you do chores every 12 hours.

                        Comment


                          #13
                          Bez and Cowman, I agree completely with your comments regarding quotes but I'm afraid the chances of a quota system for the beef producers is next to zero. I have been suggesting a quota system for our industry though many different threads on this forum with very little support.
                          In my humble opinion most cattlemen are just too darn stubborn and proud to get out of their own way.
                          If we really want a sustainable, producer-owned industry, it's quite simple---run it like the dairy guys where we contol production and own the processing facilities. Like I said in a previous post, ask the government to support a cull of excess cows through a subsidy then leave us to supply the domestic market. It would be cheaper to the government in the long run than all these crazy programs.
                          That's it fellows--it's a way to get ourselves a decent living for a long time to come and a way for us to get off this boom-bust treadmill and all work together for a solid indistry future. But my bet, Bez, is that there will be a lot of people taking shots and not too many supporting a quota system. All I can say is that it makes me laugh to watch everybody moaning and complaining and organizing rallys to get more government support for our industry and crying the blues about the producer not getting a decent price for the product or being used by the packers AND at the same time not wanting a quota system because it's anti free enterprise.
                          You guys are going to have to make up your minds sometime--if you want free enterprise than you're going to have to swallow it when the packers get as much money as they can out of you or when you have to take low prices because there's a glut of calves on the market. Can't have it both ways--capitalism cuts both ways.

                          Comment


                            #14
                            kpb

                            Hear! Hear!

                            Bez

                            Comment


                              #15
                              The fact is any kind of quota system isn't ever going to happen in beef. Whether so-called voluntary or government sponsored? The new trade rules would make it impossible? If you tried to match supply to demand in would come the imports!
                              Of course the dairies are getting larger and the smaller ones are packing it in? Is there any industry in North America where that isn't happening...especially in agriculture? But don't forget that small dairy farmer is walking away with a pretty decent check in his pocket? Not sure what quota is worth but a couple of years ago a dairy farmer neighbor told me his quota was worth $9 million and he milks around 300 cows, so I would assume quota is worth in that $30,000 per cow range? If that is the case then that small 40 cow dairy farmer has quota worth $1.2 million? If that is correct then I would definitely say yes, the dairy farmers got it right?

                              Comment

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