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Canadian Dairy Outlook Ron Versteeg

Canadian Dairy Outlook Ron Versteeg. CIPLE September 2011 Argentina. 9.2 million km 2. 34 million Canadians . United States: 312.1 million Americans. Source: Statistics Canada. Canadian Population of Dairy Cows. 1 million cows . US: 9 million cows .

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Canadian Dairy Outlook Ron Versteeg

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  1. Canadian Dairy OutlookRon Versteeg CIPLE September 2011 Argentina

  2. 9.2 million km2 34 million Canadians United States: 312.1 million Americans Source: Statistics Canada Dairy Farmers of Canada Annual Policy Conference February 2010

  3. Canadian Population of Dairy Cows 1 million cows US: 9 million cows

  4. Economic impacts of the Canadian dairy industry - 2009 13,214 Farms 83.8 M hl (8.4 M tonnes) delivered $6.1 billion in sales 452 Processing plants $13.7 billion in sales • Sustains 215,103 jobs • Adds $15.2 Billion to GDP • $3 Billion in tax revenues: • $1.8 billion - Federal • $0.9 billion - Provincial • $0.3 billion - Municipal EcoRessources, Feb 2011

  5. Average Canadian Dairy Farm • Average farm has 76 cows milking • (vary from 20 to 1000 cows) • One Holstein cow produces 9768 litres/year • Employs three people (FTE) Overall: • 93% Holstein cows • 23 % free-stall barns • 77% tie-stall barns • 1% organic

  6. Supply Management DEMAND minus IMPORTS TOTALQUANTITY TO BE PRODUCED Prov. Z Province Y Province X FARMERS FARMERS FARMERS ------------------------Individual quota----------------------------

  7. Matching Supply and Demand? • Supply management has 3 pillars : • Match production to demand • Establish a fair price for farmers • Limiting imports on dairy products (through tariff-rate quotas)

  8. Matching Supply and Demand • Production is managed to meet demand of Canadian consumers • This requires monitoring of Canadian market requirements and discipline by producers (quota) to maintain supply • This provides fair and stable price to milk producers • surplus production has no value • Very little exports • Price based on cost of production, ensuring farmers get “fair share” of consumer spending.

  9. The Canadian Market • Weather conditions • 4 seasons that vary greatly (-35 to +35 in central Canada) • Housing important • BC weather influenced by ocean& mountains • Estimate demand for dairy products • Quota based on butterfat demand • Seasonality has been removed from production • Mature market • Population growth is small and influenced by immigration (with different food habits)

  10. Production is stable throughout the year

  11. Dairy Processing in Canada • 3 dairy processors (Saputo, Agropur and Lactalis) own 15% of Canadian plants, buy close to 80% of farm milk • Stability of supply – marketing boards direct milk to plants, based on their demand, plan milk truck routes. • Processors not exporting, but have plants in other countries (ex: Saputo in US, Argentina)

  12. Consumption trend per capita

  13. Regulatory Framework • Agriculture, a provincial jurisdiction – provincial marketing boards (farmer-controlled) • Markets for products are national • Canadian Dairy Commission has national jurisdiction: • Determining price support • Coordinate interprovincial trade of products (pools) • Coordinates any export

  14. Regulatory Framework • Federal government • Administration of imports (quota and tariffs) • Regulations on labelling • No direct financial payments to farmers • But involved in “green” programs: food safety, research, animal welfare and transportation, biosecurity, traceability, etc. • National programs related to these topics, as well as lobby and marketing activities done by Dairy Farmers of Canada (umbrella to provincial boards, not gov entity)

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