The Dairy Farmers of Manitoba (DFM) says the lack of processing capacity in the province is hampering its ability to reach quota.
At the organization’s first fall meeting held on October 11 in Elkhorn, DFM reported being 6.4 per cent under the issued quota.
“Our lack of processing ability has created a situation where, at times, we have not been able to find a place to process our milk. So, we have been moving our milk east to Quebec and to the western provinces,” said David Wiens, chair of DFM.
“But, at different times throughout the year when their plants were filled to capacity, then our milk was backed out, back to Manitoba.”
That’s resulted in quota not being assigned to producers, even though it’s technically available.
In August of this year, Manitoba’s daily milk volumes were running at 923,557 litres per day. Market demand is 1.69 million litres per day. This created a shortage of over 140,000 litres on a daily volume basis.
“Manitoba has not been able to maintain our production in step with quota,” said Bruce Grewar, DFM producer relations’ manager. “The large challenge is processing capacity in the province and that has been the problem that we have faced for the past year and so issuing quota is one thing, but getting it processed and getting our processors to receive it is the other challenge.”
According to Grewar, DFM will continue to monitor production and may look at issuing additional quota if possible, but production capabilities will need to be addressed.
DFM has been working towards addressing the province’s processing capacity by holding producer and processor negotiations on an ingredients strategy.
This is intended to address the reality of rapid growth in demand for butter and cream and no matching capacity to process the byproducts of their production, particularly milk solids and the uncompetitiveness of Canadian products versus low-cost imports, which have been on the rise.
An agreement was reached between the two groups in July and an agreed-upon strategy is currently being reviewed by the Canadian Dairy Commission.
DFM hopes to begin implementing this new strategy, which will see investments made into upgrades and new processing facilities in the province, in February.
“We are working to create this new market environment or ingredients strategy in a way that it would allow for growth in the marketplace. It allows producers to continue to expand production and it allows processors to reinvest in processing,” Wiens said. “We feel that it is a very well-balanced program and it should answer and resolve a lot of the problems we have been experiencing in the last few years.”
According to Wiens, there is a lot of work that needs to be done in order to get the new ingredients strategy implemented but says the strength right now is that both producers and processors agree that this is the best way to move forward.
“Manitoba is one of the hardest-hit provinces in terms of the lack of processing capacity and this kind of a program will go a long ways in resolving that,” Wiens said. “At DFM we are very confident that we will resolve that issue with processing capacity within a year’s time and we want to prepare for the time that we can produce our full allocation knowing that it always has a home.”
During the fall meeting, Wiens explained to producers that implementation of this new strategy will mean the province will be able to handle higher volumes of product and DFM is hoping to increase the quota before next summer.
“We will need that production and we will have a home for that milk, and so, think about it when you are working with your breeding program and when you are looking at management decisions. There will be continual indications throughout this year that those quota increases will be coming,” Wiens said.
He says ramping up outputs by more than six per cent by next summer is a tall order but believes it will be a feasible goal once the province’s production capacity is available.
“When we talk about the challenges that we have experienced, we have been through some very difficult challenges but there is good reason for optimism,” Wiens said. “Our new market environment is going to help sustainability in the province for years and generations to come and that really opens up the door for increased growth.”