Economist Al Mussell says the Dairy Farmers of Ontario
marketing board is on the right track with its new Class 6 milk pricing policy.
It aims to lower the price of milk that goes into products
such as skim milk powder so Canadian processors can match global competition.
The industry is trying to cope with an increasing surplus of
skim milk.
Mussel says the same pricing approach will reduce the
attraction for importing diafiltered milk. Imports have been surging as more
processors find it lowers their cost of making products such as cheeses and, as
some import the cheap product, others begin importing to remain competitive.
Earlier this month Agropur said it will stop importing
because the Dairy Farmers of Canada, the national supply management agency, is
lowering the price of Canadian-produced milk that goes into products now using
diafiltered milk.
Mussel says the benefits of lowering prices for Class 6 milk
outweigh the risk, which is basically that trading nations will ban Canadian
exports that are made with Class 6 milk.
He says the volume of Class 6 milk sales will be low enough
that dairy farmers won’t notice much change in their milk cheques.
Quebec farmers have opposed lowering milk prices to clear
the skim milk surplus and to offset imports of diafiltered milk.
Their approach calls for a decline in milk production to
clear the skim milk surplus, an increase in butter imports to balance supply
and demand for it, and a tightening of cheese standards to ban the
incorporation of diafiltered milk.
The different approaches have generated tensions - and some angry words - between leaders of the national agency, Quebec and the Ontario board when it chose to go it alone with the Class 6 pricing policy.
