Canada’s milk marketing boards are pondering
radical reforms to stem the rising tide of imports.
In a nutshell, what’s being considered is a
lowering of milk prices so Canadian processors can take back the markets
imports have captured.
The focus of the price reductions is a broad
category known as solids, not fat (SNF). The other category is butterfat.
Canada’s primary policy goal is to balance
supply and demand on a butterfat basis, and when that’s achieved, there is more
SNF than Canadians will buy.
Some is exported at $2 to $4 per kilogram,
significantly lower than the Canadian market price of $5.446 per kilogram.
Export volumes are capped by trade agreements, so what’s left is sold as animal
feed at $1 to $3 per kilogram.
By lowering the price of $5.446 per kilogram to
Canadian processors, a discussion paper prepared by the Dairy Farmers of
Ontario milk marketing board figures about 22,000 tonnes of imported protein
milk powders could be displaced.
That would reduce the current Canadian surplus
of skim mllk powder to between 46 and 60,000 tonnes per year.
Another part of the proposal is to encourage
Canadian processors to incorporate high-protein powders into their production
of cheeses and Greek yogourt.
The goal is to end up with no skim milk powder
that needs to be sold at steep price discounts.
The Ontario milk board’s discussion paper is for
meetings with processors and other stakeholders in the dairy industry.
The discussion paper notes that under
international trade agreements, imports threaten to continue increasing.
For example, under an agreement with Mexico and
the United States, imports of milk component concentrates (40 to 60 per cent
protein) and milk component isolates (85 per cent protein) are increasing.
European exporters will gain improved access
under a different trade agreement.
Canadian processors have limited capacity to
produce about 10,000 tonnes of milk component concentrates per year and hardly
any capacity to produce milk component isolates, says the discussion paper.
Both would likely increase if and when the milk
board lowers the prices it charges for the milk that goes into production of
these products.
The milk board already has lowered prices for
the production of selected products facing stiff import competition. This
policy proposal would reduce the price of milk to the international market
level for the entire Class 4(c) category
