Dairy Quota Discussion(split from CF-18 thread)

[blankall]

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.

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

It's difficult to get into the dairy business....plus you have to have 2 million bucks to afford quotas.

If the cattle stock was ever totally desimated, it wouldn't matter how much milk cost. It would be in too short of supply to obtain. With the quota system, you have the added challenge that there are only so many dairy cows to begin with, so the short supply becomes all that much more devastating.

The problems isn't with the guaranteed price, the problems is that the quotas are so tightly controlled that the price is far in excess of what it should be under even the worst market conditions.

As for Canada being "8th". Take a look at the list again. There are so many countries in the world that have the infrastructure to export pasteurized milk products. They've also grouped Europe into one big superblock. So yes, in the industrialized world we're ahead of at least 6 countries...woo.

I don't think you realize how badly our quota and import system affects our access to quality dairy. Canada has some of the the most limited selection and highest pricing of cheese in the industrialized world, and things are only getting worse. The pricing of cheese far exceeds the increases in costs:

http://www.crfa.ca/resources/electio...management.pdf

The reason, the quota isn't keeping up with population growth:

http://www.dairyinfo.gc.ca/index_e.p...ov&page=graph5

Not only are they artificially enforcing a quota, they are going out of their way to keep it low. The farmers have gotten greedy and abused the system. It's time to bring it down.

[Jake]

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.

Isn't the use of BST illegal in Canada? How would abolishing the quota system lead to the use of growth hormones if they are already outlawed?

[blankall]

Originally Posted by krynski

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

To add to this, if your click on your link you get the following:

http://www.indexmundi.com/agricultur...&graph=exports

Canadian cheese exports are 60% of what they were in 1965...that's a real growth industry there.

[opendoor]

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.

BS. I've bought tons of cheese in the US. You can get excellent organic cheese in the US for less than you'd pay for Superstore brand crap here.

In my experience, in an apples to apples comparison between imported cheeses in the US and Canada you're looking at paying about twice as much here.

[krynski]

Good argument blank.

And Jake, you are correct. I was trying to illustrate that increased competition isn't always a good thing and in this sense, could result in increased lobbying for shortcuts and other options of increasing efficiency.

[krynski]

Originally Posted by opendoor

BS. I've bought tons of cheese in the US. You can get excellent organic cheese in the US for less than you'd pay for Superstore brand crap here.

In my experience, in an apples to apples comparison between imported cheeses in the US and Canada you're looking at paying about twice as much here.

Just FYI, I was making a comparison of the average product in the states in comparison to the average product in canada. The average US cheese is NOT organic. The average US product is produced from cows given hormones to produce more milk (unlike Canada). I wastrying to get across that we pay a premium because our product is better quality (not imported cheeses, that wasn't what I was arguing about either) and that we have higher costs for pretty much everything up here.

[SebC]

Originally Posted by krynski

I wastrying to get across that we pay a premium because our product is better quality (not imported cheeses, that wasn't what I was arguing about either) and that we have higher costs for pretty much everything up here.

There might be a premium for quality, but there is also a premium for the quota. If the premium was returned to the consumers as quality, there quotas would have no value to producers (instead of $21 billion in value).

[Azure]

Originally Posted by SebC

If they want to stay in a specific career/property, that's something that they, and not the rest of society, should pay for.

For someone who seems to be a centrist, I find it quite surprising you'd favour the quota system at all.

I completely agree that dairy farmers are making a killing. I don't like the price of milk at all.

A few years ago, a farmer I knew told me that with his 200 cows under the quota system, he was making around $400,000 CLEAN per year after everything, including labor had been paid for. That is a ridiculous amount of money for such an operation. But, when you consider that the average price of quota is $25,000/cow, which means 200 cows would cost you a nice $5 million, which even if you make $400,000 clean per year, would still take you around 13 years to pay off. Of course nobody would use the full $400,000 they make every year to pay off the quota, as chances are they obtained a bank loan to fund the purchase, it would be more like 20-30 years. Which, from knowing people in the industry, is how long it takes to pay off dairy quota, once you buy it.

Of course, that is just a reflection of how the system has gone from protecting the smaller guy, which is did, to just driving prices through the roof, which as we all know affects the consumer the most in the end.

And because the price of buying the quota has gone through the roof, unless you have a farm that has been passed down from generation to generation and is MAKING money, chances are the small guy is getting out of the dairy business anyways, and is being replaced by huge farms with thousands of cows in a milking cycle.

Which begs the question, why don't we scrap the supply management system? Well, if the prices wouldn't be through the roof, we wouldn't be having this discussion, but its not like the Canadian Dairy Association, or the other organizations that set the prices will LOWER them, so the ONLY way to actually lower the price for the consumer would be to do away with the whole system.

Which is sad, because with quota prices that weren't through the roof, we would have a lot more smaller guys in the business. But given the way it was run, the whole system is a joke.

Fact still is that if you shut it down, you're doing away with the likelihood of a lot of guys that simply wouldn't be able to make it anymore given the high cost of feed.

Originally Posted by Deegee

Big money in dairy, big hours to put in, too.

If there were ever farm financial statements where crying poor really bothers me, it is dairy financials.

Big hours? Given how high-tech the bigger dairies have gone, the hours aren't bad at all.

[Azure]

Originally Posted by burn_baby_burn

Its the corporations in the US that scare me. A poultry farmer must sign a contract with a processing company to be able to market his product. The processing companies have gotten so big that they can pay whatever they want for the product, driving profits down. The only way the farmer can turn a profit is to build more barns and produce more birds, significantly increasing his risk.

This same aspect applies in all facets of the farming/agriculture industry when the big corporations are involved, and that Peter12, is why it is concerning.

[Azure]

Originally Posted by blankall

Then regulate that system directly and create laws that target your concerns directly. How is a quota system the only way to address these issues?

Because regulation tends to be influenced by lobbyists, and lobbyists tend to be controlled by big corporations who basically want the power to do whatever the hell they want in the name of higher profits and ridiculous bonuses. Even if it means doing it at the expense of the well being of the 'consumer.'

But yes, if properly regulated, we can still maintain a superior dairy product. That is a must.

[Azure]

Originally Posted by bizaro86

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.

The 'fixed' price of the milk or other dairy products would have to removed as well.

[Azure]

Originally Posted by bizaro86

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.

Not as simple as it sounds.

Feedlots resort to using growth hormones because that is the only way they can get an animal to slaughter in 90 days while keeping costs down.

Because the price of feed is so high, dairy farmers would struggle to maintain the milk output needed if the supply management system is removed and everything is left to the open market.

The only way to do that is by using growth hormones which result in more milk from the same amount of cows.

[blankall]

Originally Posted by Azure

Because regulation tends to be influenced by lobbyists, and lobbyists tend to be controlled by big corporations who basically want the power to do whatever the hell they want in the name of higher profits and ridiculous bonuses. Even if it means doing it at the expense of the well being of the 'consumer.'

But yes, if properly regulated, we can still maintain a superior dairy product. That is a must.

And the current system has no lobbyists in it....

Large business is already involved in the dairy industry. Dairy farms are decreasing at an alarming rate as the quotas become consolidated. As the price of a quota goes up, this problem only becomes worse. Not to mention big business controls the distribution and branding of dairy. Compare the number of brands of dairy at a Canadian supermarket vs. an American one. We have a few major brands, Lucerne, Kraft, etc.. but that's about it.

Once again, if you want to keep big business out, then limit the size of a dairy farm. The quota system is, once again, totally unrelated to these concerns and in no way addresses them.

[mykalberta]

Originally Posted by Azure

A few years ago, a farmer I knew told me that with his 200 cows under the quota system, he was making around $400,000 CLEAN per year after everything, including labor had been paid for. That is a ridiculous amount of money for such an operation. But, when you consider that the average price of quota is $25,000/cow, which means 200 cows would cost you a nice $5 million, which even if you make $400,000 clean per year, would still take you around 13 years to pay off. Of course nobody would use the full $400,000 they make every year to pay off the quota, as chances are they obtained a bank loan to fund the purchase, it would be more like 20-30 years. Which, from knowing people in the industry, is how long it takes to pay off dairy quota, once you buy it....

The problem is that guy was likely given the quota for free. He very likely didnt pay 25K/cow.

Yes, will there be some pain for the few people who have purchased quota sure - but thems the breaks when a government breaks up an extremely corrupt and mafia type industry.

[blankall]

Originally Posted by mykalberta

The problem is that guy was likely given the quota for free. He very likely didnt pay 25K/cow.

Yes, will there be some pain for the few people who have purchased quota sure - but thems the breaks when a government breaks up an extremely corrupt and mafia type industry.

The price is closer to $20k/cow, which is about 400mil. 400k per year is 10% return, which is huge, as the quota system enforces a low risk market.

So the guy is getting a massive return on something that should hold no value, if it wasn't for some totally articificial and non-sensical currency system the government created. The reason the prices per cow are so high now is due to lobbying preventing new licesnces as the population grows. The expenses are past along to the consumer as our dairy prices continue to rise.

[Azure]

Like I said I don't agree with the quota system, but if we disband it, there absolutely have to be regulations in place to first of all stop lobbyists from using their power to influence the regulations to begin with, and that rules are in place governing the use of GH and steroid products to enhance milk production.

Flooding the market with more quota would allow the price the go down if the government allows it.

I think the tariffs should be thrown out tomorrow.

Phase out the quota system as it is right now over 10 years, moving to a system where quota is more freely available, allowing the price of milk to go down. That also means allowing the market to dictate demand.

But it still needs to be regulated.

[GGG]

Originally Posted by Azure

Not as simple as it sounds.

Feedlots resort to using growth hormones because that is the only way they can get an animal to slaughter in 90 days while keeping costs down.

Because the price of feed is so high, dairy farmers would struggle to maintain the milk output needed if the supply management system is removed and everything is left to the open market.

The only way to do that is by using growth hormones which result in more milk from the same amount of cows.

If growth hormone is illegal than the price of milk goes up. So the laws will determine drugs used in Milk production. If you got rid of the law prohibiting GH in dairy but left the quota system in place farmers would begin using GH because they would make more money. Quota system or not farmers will look after themselves.

If it was too expensive to produce milk without quotas or GH. The US wouldnt be able to do it.

The link between quality of the product and the quota is false. Regulation and consumer demand determine quality. The quota just adds to cost.

[Azure]

17% of dairy cows in the US are injected with GH.

My point still stands. High cost of feed and an extremely low milk cost leads to the eventual use of GH in dairy cows because that is the only way dairy farmers will stay afloat unless they sell out to the big guy.

If the quota system is removed and the market is allowed to determine the price, which I think should happen by the way, chances are the corporations that will be involved in the dairies in Canada will lobby the government to legalize the use of GHs to enhance milk production.

My condition of doing away with the supply management system, which involves more than just dairy products, is that under no circumstances should GH be legalized for use on dairy cows. If that can be guaranteed, I have no problem with disbanding the quota system. But it can't be, because we can't control the influence corporations have on the government. And the government, especially the PCs, have a ridiculous habit of randomly listening to lobbyists, especially those in the US like the MPAA, and trying to push through laws that they recommend. Like the Copyright Law.

We area also forgetting the fact that the supply management system involves laying hens as well, which is even more screwed up in the US.

[JimmytheT]

I keep seeing this 20,000 per milking cow thrown around on this thread.

Alberta does not have a cap on quota, so the price for a unit of quota (1 kg of butterfat per day) has been between $36,000 to 39,000 for the past twelve months (depending on the month).
So for an average producer in Alberta to increase production by 1 unit per day, it will cost him/her over 36,000 dollars to milk approximately one more cow in their barn.

The Quebec and Ontario Milk Boards have capped Quota at $25,000 making 80% of the countries production even more inefficient than it was previously.

And do not just pick on the dairy farmers; remember that Chicken production, egg production and turkey production are also under systems of supply management in this country.

[Azure]

I do believe the $25,000/cow was the average price in Canada as per Andrew Coyne.

Makes the 10% return on investment even less.