Manitoba milk producers will soon have a public exchange for unused quota credits.
“We’ve never done this in Manitoba, but the other provinces have always had those tools for their producers, so we’re trying to harmonize,” Henry Holtmann, vice-chairman of Dairy Farmers of Manitoba, told a meeting here last week.
Currently, producers need to actually move livestock to fill unused credits.
“So we know (an exchange) is a good way for producers to move those credits to farms that have surplus production, instead of moving cows, which affects biosecurity,” said Holtmann. “It’s much easier to move it on paper.”
The new credit exchange is expected to be up and running by December, once the provincial government changes necessary regulations.
“It was a new thing, so they had to get their heads around it and then they said ‘yeah, this makes total sense,’” Holtmann said.
But there will be restrictions on who can sell credits and how many they can put up for sale.
Producers who have had infractions will be able to sell credits, but they won’t be able to buy them.
“The reason we let them do that is because if a producer has an issue with trying to fix a quality problem on the farm, sometimes selling those credits to a farm that can fill them will help them fix that problem financially, and that’s why that’s allowed,” Holtmann said.
Dairy farmers will also be limited to trading no more that 10 per cent of their total daily quota — if they are gold-level producers. Producers below the gold level can trade up to seven per cent and standard producers with no infractions can trade up to five per cent.
“So what the exchange allows you to do, is to take a portion of those credits — per kilogram butterfat basis — and put them up for sale,” explained Holtmann. “Another fellow would come up and say, ‘you know I’m right at day zero, I have all these cows calving; what am I going to do?’ Well I can actually buy other people’s underproduction credits to cover off my bump in production.”
Unlike credit exchanges in other provinces, Manitoba will have a public system where transactions are facilitated and sanctioned by a central body — Dairy Farmers of Manitoba.
“In the other provinces it’s farmer to farmer, so they would make a deal between two individuals. Ours is what I call a public exchange, which means everyone has to participate to do this sort of exchange,” he said.
A bidding process would be used to establish price, eventually through a website. Early incarnations would rely on faxed-in information.
“We hope eventually it will be electronic, on a producer website,” said Holtmann, adding this is something producers have asked for, for a long time.