Manitoba Avoids Overquota Milk Penalty – for Jul. 29, 2010

Lower production and higher milk sales have helped Manitoba dairy farmers avoid overquota penalties for the final two months of the dairy year.

Manitoba will finish 2009-10 just under the allowable 0.5 per cent overproduction limit for June and July, according to figures from Dairy Farmers of Manitoba. The official year-end date is July 31.

DFM had earlier feared it would be 100.53 per cent over quota for June, which would have meant an $86,000 net overproduction penalty for the month.

The milk board’s monthly newsletter had warned earlier Manitoba could be above the upper limit for both June and July. That would mean penalties of $100 per hectolitre, or half the blend price. Producers would also not receive payment on any overquota kilograms of butterfat.

But that was before the final figures became known, said David Wiens, DFM chairman.

DFM learned recently that warm weather in June slowed milk output. Fluid milk sales for the month were up 1.14 per cent over June 2009. Both factors helped avoid excess overproduction.

Wiens said Manitoba went 0.415 per cent over quota in June, below the 0.5 per cent overproduction limit. Production in July will be under the limit, too.

As a result, DFM ended the year on a positive note without having to pay the expected penalties.

He said excess quota utilization started to become an issue a year ago, when a cool summer stimulated milk production. Cows produce more milk during cool weather because they are more comfortable.

Production went above the 100.5 per cent limit for the first three months of dairy year and DFM had to pay overquota penalties.

DFM managed to get below the allowable limit by November and stayed there until a late-year production surge once again threatened to put the province in an overproduction situation.

Fortunately, that has now been avoided, Wiens said.

But he added DFM will watch production carefully going into the new year. The board has already decided not to implement its usual fall cover-off. (A cover-off is a temporary quota increase during times of the year when production is low, such as fall.)

“We’ll continue to have to be careful,” Wiens said.

Canada’s dairy farmers went on a continuous quota system last year which monitors milk production month by month instead of every six months, as the previous system did.

Provinces are allowed to go 0.5 per cent above quota and 1.5 per cent under it each month without penalty. [email protected]

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