What Managing Production Means

April 27th, 2017

Much has been written over the past year about the ongoing global dairy crisis – a sustained glut of supply on the world market leading to world milk prices that are below the costs of production for most farmers – we thought it would be the perfect time to write about what managing production means here in Canada.

While other countries comb the already saturated export market to find homes for their milk, Canada, under our system of supply management, has instead chosen to focus chiefly on serving our domestic market. Under supply management, Canadian dairy farmers act collectively to negotiate prices and adjust milk production to meet customer and consumer demand. By balancing our supply of milk based on the forecasted domestic demand for our products, we strive to produce only as much as is required so that farm milk always has a home here in Canada. Furthermore, by choosing to focus on our domestic market rather than the saturated and volatile global export market, Canadian farm-gate prices remain relatively stable and our farmers are in a better position to weather the global storm, cover their costs of production and plan for the future.

The unfortunate events in Wisconsin earlier this month leading to 75 farms losing their milk contracts, which we addressed in a previous blog, are a direct result of an oversupply of milk in the United States – and worldwide. This is not just rhetoric, this is reality. Rather than collectively manage their supply, the approach the United States has taken to this problem is to offer a risk management safety net in the form of billions in generous subsidies, available through the U.S Farm Bill. Meanwhile, in Canada, no such subsidies are required, we simply manage our production and focus on serving our own back yard.

This blog is not about a right, or a wrong, approach. We firmly believe that every single country in the world has the right to food sovereignty, and to determine their own domestic policies; we would never begrudge another country for the approach they have chosen. However, if U.S Secretary of Agriculture Sonny Perdue had a suggestion box – we might just see fit to drop him a line about supply management as a potential solution to his problems. It is a Canadian policy – and it works!

Managing production is not just about weathering (and also not contributing to) economic storms, it also has many other benefits. Because Canadian dairy farmers can count on relatively stable price it allows them to continually make investments into increasing productivity and innovation, and improving best practices on the farm. Farmers also invest, with farm groups and government, into research and development, which has informed the continuous improvement of farm standards over the years. The end result is more comfortable, healthy, productive animals producing higher quality milk in a way that respects the environment.

The collective nature of supply management has also allowed Canadian dairy farmers to voluntarily impose a mandatory customer assurance and sustainability program. The aim of our sustainability program is to demonstrate and ensure that Canadian dairy farmers adhere to the highest practice standards, which goes above and beyond regulations in place at the provincial and federal levels. We have leveraged our supply management system to make the program mandatory and show that all Canadian milk follows strict, but evolving standards for milk quality and safety, animal health and care. We invite you to watch a short video we produced to explain our sustainability story.

Dairy farmers are one of only two Canada agricultural sectors to achieve full official government recognition – at the federal, provincial and territorial levels – for our auditable on-farm food safety assurance program, and we are building on that success for the other aspects of sustainability: animal health and care, traceability and environmental stewardship. Each of these investments (time and financial) are a reflection of Canadian dairy farmers’ ongoing commitment to their fellow Canadians; sustainability is important to us all. After all, some Canadian dairy farms have been operating in Canada on the same land for 150 years, this would not be possible without sustainable practices!

Finally, managing production doesn’t just work for Canadian dairy farmers, an independent poll conducted by Abacus Data, published April 25 2017, shows that supply management works for Canadians too - 92% of Canadians stated they are happy with the range and quality of dairy products available in Canada, while 77% stated that they are happy with Canada’s dairy policies as they are.

Whether you agree with our domestic system or not, the bottom line is this: it is an inarguable truth that if the entire world matched supply with demand, and managed production as we do here in Canada, the global dairy crisis would not be happening, rural communities would be in a better position to thrive, and farmers around the world would not be struggling to make ends meet, searching for homes for their milk.

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