Dairy Quota Discussion(split from CF-18 thread)

[blankall]

Originally Posted by burn_baby_burn

It isn't, I agree that there should be laws to ensure fair competition. However, in the age of consolidation that becomes more and more difficult.

Basically what's going on is the dairy farmers are usins issues like:

-animal welfare
-milk quality
-competition
-small time business
-etc..

To push this quota system. The truth is these are all seperate issues from the quota system, and the only thing the quota system preserves is the value of the quotas themselves. You can still buy organic and/or small farmed milk in the USA, and it's cheaper than our regular milk.

[krynski]

Originally Posted by blankall

Also take into account these farmers have been reaping the benefits of vastly inflated milk prices for some time. So if they expanded their quotas, the capital to do so probably came from inflated milk prices. The price fixing we're talking about here is significant at 50+%.

The reason we have a quota system at all is because our products (in Canada) had fluctuating prices in different seasons due to the seasonal photoperiod. This was put into place to protect the consumer and the producer. Although this may be considered obsolete due to artificial insemination and bird housing techniques (regulating the photoperiod in hatching barns), the principle stands.

Regulating the prices of any product that is supply managed was meant to be a benefit to everyone. I don't think the prices we pay are too large. If you consider the proportion of income to the cost of food over the last 70 or so years, the amount of money we spend on food is below 15%, in comparison to 50% of years past. This means that food is cheaper. Inflation hasn't caused the foods to go up in price very much, but rather other commodities and goods.

The reason we pay more for our products here is for quality assurance. It costs more to run our operations than it does in the states. Yes, the profits are higher, but that is generally what you pay for a better over-all product.

[Bobblehead]

You can't use Alberta numbers as representative.

82% of Canadian dairy farms are located in Ontario and Quebec, 13% in the Western provinces and 5% in the Atlantic Provinces. The Canadian dairy cattle population totals 1.4 million and the typical Canadian dairy farm has 77 cows.

http://www.dairyinfo.gc.ca/index_e.php?s1=cdi-ilc

[blankall]

Originally Posted by Bobblehead

You can't use Alberta numbers as representative.



http://www.dairyinfo.gc.ca/index_e.php?s1=cdi-ilc

Things are changing pretty dramatically in Canada. There are currently 12,529 dairy farms in Canada:

http://www.dairyinfo.gc.ca/index_e.p...rm-ferme&s3=nb

That's down from 18,321 in 2001:

http://www.statcan.gc.ca/ca-ra2006/a...rtrait-eng.htm

Even if we have slightly, on average, smaller productions in Canada, the number of small time producers is vanshing quickly. The quota system is doing nothing to protect or encourage small dairy operations.

[blankall]

Originally Posted by krynski

The reason we have a quota system at all is because our products (in Canada) had fluctuating prices in different seasons due to the seasonal photoperiod. This was put into place to protect the consumer and the producer. Although this may be considered obsolete due to artificial insemination and bird housing techniques (regulating the photoperiod in hatching barns), the principle stands.

Regulating the prices of any product that is supply managed was meant to be a benefit to everyone. I don't think the prices we pay are too large. If you consider the proportion of income to the cost of food over the last 70 or so years, the amount of money we spend on food is below 15%, in comparison to 50% of years past. This means that food is cheaper. Inflation hasn't caused the foods to go up in price very much, but rather other commodities and goods.

The reason we pay more for our products here is for quality assurance. It costs more to run our operations than it does in the states. Yes, the profits are higher, but that is generally what you pay for a better over-all product.

1) Our prices are always above even the highest fluctuations in the USA.

2) The cost of regular milk here exceeds organic milk in the USA.

The initial purpose of the quota system may have been to stop price fluctuations, but that's not what the current effect is.

Edit: Also, I don't understand how quotas and quality assurance are related isues. If you want to regulate things like hormones, animal cruelty, etc... then do that. Yes, it might make our milk more expensive than the USA, but it would be cheaper than under our current system that adds on huge costs due to the quota system, in addition to quality assurance.

[mykalberta]

Originally Posted by Bobblehead

You can't use Alberta numbers as representative.


82% of Canadian dairy farms are located in Ontario and Quebec, 13% in the Western provinces and 5% in the Atlantic Provinces. The Canadian dairy cattle population totals 1.4 million and the typical Canadian dairy farm has 77 cows.

http://www.dairyinfo.gc.ca/index_e.php?s1=cdi-ilc

Hence the reason the quota system still exists and why the Harper Conservatives would be the only party willing to even try and tackle this issue as it loses them no votes in Quebec and minimal in Ontario.

[krynski]

Originally Posted by blankall

1) Our prices are always above even the highest fluctuations in the USA.

2) The cost of regular milk here exceeds organic milk in the USA.

The initial purpose of the quota system may have been to stop price fluctuations, but that's not what the current effect is.

Edit: Also, I don't understand how quotas and quality assurance are related isues. If you want to regulate things like hormones, animal cruelty, etc... then do that. Yes, it might make our milk more expensive than the USA, but it would be cheaper than under our current system that adds on huge costs due to the quota system, in addition to quality assurance.

It has stabilized prices. Keep in mind, everything is more expensive in Canada, not just milk. Therefore, your feed, your medical costs, everything is more expensive in Canada. It is expected that some of that cost be passed down to the consumer. Some of that cost is in regulation of a quality good.

Originally Posted by blankall

Even if we have slightly, on average, smaller productions in Canada, the number of small time producers is vanshing quickly. The quota system is doing nothing to protect or encourage small dairy operations.

Why look at only dairy operations? Take a look at pork operations, chicken operations, etc. you could even look at grains, or farms in general. The number of farms (and small-time producers) is increasing, and farms are increasing in size. This is because it's most economically feasible this way. This trend is not limited to supply managed good, but to all Canadian animal agriculture.


You don't understand the system if you don't see why quota and quality goods are related. Quota and quality goods are related because of the industry- particularly the supply management system. It's built in. I don't really have time to explain right now, but if you really want, I can gather my thoughts and post later.

[blankall]

Originally Posted by krynski

It has stabilized prices. Keep in mind, everything is more expensive in Canada, not just milk. Therefore, your feed, your medical costs, everything is more expensive in Canada. It is expected that some of that cost be passed down to the consumer. Some of that cost is in regulation of a quality good.



Why look at only dairy operations? Take a look at pork operations, chicken operations, etc. you could even look at grains, or farms in general. The number of farms (and small-time producers) is increasing, and farms are increasing in size. This is because it's most economically feasible this way. This trend is not limited to supply managed good, but to all Canadian animal agriculture.


You don't understand the system if you don't see why quota and quality goods are related. Quota and quality goods are related because of the industry- particularly the supply management system. It's built in. I don't really have time to explain right now, but if you really want, I can gather my thoughts and post later.

Your telling me it's impossible to separate a quality and quota system, but you just don't have the time to give even 1 reason for why...

And yes, things are marginally more expensive in Canada, but not to the extreme of dairy products. I'd gladly pay 20-30% more for higher quality dairy in Canada. The problem is the prices are far in excess of that.

[krynski]

Originally Posted by blankall

Your telling me it's impossible to separate a quality and quota system, but you just don't have the time to give even 1 reason for why...

And yes, things are marginally more expensive in Canada, but not to the extreme of dairy products. I'd gladly pay 20-30% more for higher quality dairy in Canada. The problem is the prices are far in excess of that.

No, i'm tellling you that seperating them is a bad idea. Seperating them is what you get in the states- A poor product for a cheap price. I have covered a variety of reasons.

[Bobblehead]

Originally Posted by mykalberta

Hence the reason the quota system still exists and why the Harper Conservatives would be the only party willing to even try and tackle this issue as it loses them no votes in Quebec and minimal in Ontario.

Over 70 of their seats come from Ontario, and most of those from the rural districts. They lose a lot of those seats if they try to tackle quotas.

[GP_Matt]

The easiest way to see the extra cost of the quota system is to look at the markup that has to be added to foreign products to make sure that they don't flood our market.

The government has set a tariff on supply managed products in the range of 200 to 300%.
This isn't a little bump to account for higher costs in Canada, this is a huge bump to protect an inefficient system.

A perfect example is frozen vs fresh pizza. The cheese on a frozen pizza has a much lower tariff than fresh cheese on a non-frozen pizza. The same fresh pizza will cost twice as much as the frozen pizza that can be made with US cheese.

[bizaro86]

Originally Posted by krynski

I agree in some respects. yes, it does control the market and assume higher prices than if it was not supply managed. However, I believe we should protect the producer as well as the consumer. This system provides the opportunity for producers to produce products that are quality assured and assumes stable welfare for the animal.

The current system only protects the guy who already has quota. Anyone young/new trying to get into the game has to come up with millions of dollars to buy quota, which is bs. Basically, the higher prices get capitalized in the quota value, and become part of the quota owners net worth.

Originally Posted by krynski

If we consider abolishing the quota/supply management system, we would also likely be opening the door to GH being given to cows (like in the states) and in essence, a poorer regulated product- a poorer product.

This has nothing to do with quota. You can have regulations on quality without a quota system. Like, you know, every other country in the world.

Originally Posted by krynski

If by hurting Canada's international credibility you mean by producing a Hormone-Free product, good animal welfare, and a Value product, than no.

No, I'm talking about how we can never get free trade agreements with important countries because they want free trade on milk/eggs to be part of the agreement. That hurts every other industry in Canada because they pay higher duties when they export. Our dairies are so inefficient and bloated by quota costs that they can't export.

Originally Posted by krynski

Milk production in the states is so intensive that a lot cows only produce milk for 1 or 2 seasons before being culled out for slaughter for Udder issues. Hormones (GH) given to cows have been increasing the burden on a cows udder and destroying the integral structure of the udder.

This is a non-sequiter that has nothing to do with the discussion.

[bizaro86]

Originally Posted by krynski

It has stabilized prices. Keep in mind, everything is more expensive in Canada, not just milk. Therefore, your feed, your medical costs, everything is more expensive in Canada. It is expected that some of that cost be passed down to the consumer. Some of that cost is in regulation of a quality good.

The only costs anyone is suggesting be removed from the chain are the costs of purchasing quota. If new dairy farmers didn't have to buy quota, they would have lower costs.

[GGG]

Originally Posted by krynski

No, i'm tellling you that seperating them is a bad idea. Seperating them is what you get in the states- A poor product for a cheap price. I have covered a variety of reasons.

How long is it until the dairy co-ops in quebec push for more allowences to us GH? To argue it is small business is a falsehood when thousands of farmers have a co-op to sell their milk through. There is no competition between the small farms. No benefit to the buyers of the product.

You don't actually get a poor product out of the US. You get a choice of cheap milk with GH and anti biotics in it, slightly more expensive but still cheap mik without GH or anti biotics in it, and milk priced the same as our milk that is Organic, GH, and anti biotic free milk.

There is choice available in the US system and the choices are clearly labled. They do not have ONLY low quality milk there what they do have is cheaper milk at every quality point.

[bizaro86]

Originally Posted by GGG

How long is it until the dairy co-ops in quebec push for more allowences to us GH? To argue it is small business is a falsehood when thousands of farmers have a co-op to sell their milk through. There is no competition between the small farms. No benefit to the buyers of the product.

You don't actually get a poor product out of the US. You get a choice of cheap milk with GH and anti biotics in it, slightly more expensive but still cheap mik without GH or anti biotics in it, and milk priced the same as our milk that is Organic, GH, and anti biotic free milk.

There is choice available in the US system and the choices are clearly labled. They do not have ONLY low quality milk there what they do have is cheaper milk at every quality point.

And if we're still absolutely opposed to growth hormones, make/keep milk with growth hormones illegal in Canada. It's not like farmers are going to say "Now that I'm allowed to produce as much milk as I can produce/sell I'm only willing to do so if I have hormones in it." If GH aren't allowed, then they won't be in our milk.

[Bill Bumface]

Dairy Quota Discussion..... split from CF-18 thread. This one continues to blow my mind. I almost don't want to venture into the CF-18 thread to figure out how this happened... savor the mystery just a while longer...

[krynski]

Originally Posted by bizaro86

The current system only protects the guy who already has quota. Anyone young/new trying to get into the game has to come up with millions of dollars to buy quota, which is bs. Basically, the higher prices get capitalized in the quota value, and become part of the quota owners net worth.


This has nothing to do with quota. You can have regulations on quality without a quota system. Like, you know, every other country in the world.


No, I'm talking about how we can never get free trade agreements with important countries because they want free trade on milk/eggs to be part of the agreement. That hurts every other industry in Canada because they pay higher duties when they export. Our dairies are so inefficient and bloated by quota costs that they can't export.


This is a non-sequiter that has nothing to do with the discussion.

Holy crap. Yes, the little guy trying to get into the business will have trouble. That is the same with every industry. How would you like to try and start up your own tele-communications company? Or maybe create your own operating system? Or regulate utilities? Fact is, this scenario is happening in every type of farming and many other industries- not just dairy. So look at the entire agriculture sector as well.

The way that Canada's supply is marketed, separating regulation and quality without quota would have implications on the industry. At least with the quota system, the farmer that has been farming throughout his life has a guaranteed price for his product. This is a big reason why there is a diminishing number of farmers/ranchers in other agricultural areas, such as beef, and pork (particularly pork). If something like avian flu cuts through and decimates an industry, at least we will have something here to protect them.

Yes, the quota system is built and regulated by province to produce as much as the province is required. It's not feasible to export milk. It isn't. Cheeses have a different clause and it makes it easier to cross borders. The quota system was not built for exporting. The quota system was to have a guaranteed price for product and having a stable consumer price. If you take away the quota system, the price will be variable, the producer will not receive adequate compensation, and chances are, the little guy will get cut out a heck of a lot more. This is where the producer tries to take as many shortcuts as possible, and your product ends up as poorer quality.

Canada is 8th in dairy exports- i dont't think that's all that bad.
http://www.indexmundi.com/agricultur...&graph=exports

[SebC]

Originally Posted by hulkrogan

Dairy Quota Discussion..... split from CF-18 thread. This one continues to blow my mind. I almost don't want to venture into the CF-18 thread to figure out how this happened... savor the mystery just a while longer...

Spoiler!

They both tie into free trade negotiations.

[GGG]

Originally Posted by krynski

At least with the quota system, the farmer that has been farming throughout his life has a guaranteed price for his product.

How is this reasonable. I have been an engineer all my life I demand that the government guarentee a price for my services. That statement is ridiculous. And its just as bad for Dairy.

Our import tarrif on Milk and milk products is over 200%. That means that of the $5 per gallon I pay $1.33 for the milk and 2.66 in subsidy for the farmer. I buy 3 gallons a week of milk so 7.50 per week or over $350 per year just so a milk farmer can continue to be inefficient.

I have linked a study below comparing New Zeland to Canada. In both New Zealand and Canada the net worth of Milk farmers is 2 million dollars. The average net worth of a Canadian famliy per the study is 300k. So I ask why is the average Canadian subsidising the wealthy Canadians.

http://www.ifmaonline.org/pdf/journa...d1_Painter.pdf

[GP_Matt]

Originally Posted by krynski

Holy crap. Yes, the little guy trying to get into the business will have trouble. That is the same with every industry. How would you like to try and start up your own tele-communications company? Or maybe create your own operating system? Or regulate utilities? Fact is, this scenario is happening in every type of farming and many other industries- not just dairy. So look at the entire agriculture sector as well.

In every industry there are start-up costs as there is with dairy. The difference is that the only way to start dairy farming is to pay someone else to stop farming first. McDonalds doesn't need to pay Burger King to shutter a store if they want to grow, they need to evaluate the market and decide if it is economical.

Every business has barriers, but with dairy there is an extra artificial barrier preventing any competition.

According to this article from Andrew Coyne http://www2.macleans.ca/2011/08/15/the-25000-cow/
The dairy quotas are worth about $21 billion dollars. That is how much farmers are willing to pay to have a monopoly on milk sales in Canada. It seems obvious that if they are willing to pay that much for the monopoly it is only because they think they can extort more than that back for the Canadian population through increased prices.