With more Canadians turning to higher-fat dairy products, dairy farmers are looking at long-term solutions for balancing production with consumer demand.
“We want to satisfy this demand with Canadian butterfat or Canadian cream, but as you know, at this point we are all just trying to catch up with this marketplace,” said Brent Achtemichuk, Dairy Farmers of Manitoba general manager. “The last thing you want to do is short this market and have to go to a substitute product, so in the interim… we have been allowing for imports of cream to fill this market.”
That said, Achtemichuk noted growing demand for butterfat is a good problem to have.
“We’re seeing phenomenal growth with butter over the last three, four years, and certainly it’s something we don’t see slowing down any time,” he said.
Demand for fluid cream has increased 4.4 per cent over last year, while demand for yogurt and ice cream is up 2.4 and 2.6 per cent respectively. Cheese demand is up 5.6 per cent and demand for butter has increased by 4.5 per cent.
In no small part that’s because the stigma of fat being unhealthy has begun to dissipate as new research comes to light.
“Fat is certainly not seen as the enemy anymore,” said Achtemichuk. “Fluid milk of course is down about 1.3 per cent, that’s a challenge, that’s something we have to work on, but this is not just a Canadian phenomenon; the United States is seeing that as well.”
Overall demand for butterfat in Canada was pegged at about 345 million kilograms last July. The Canadian Dairy Commission expects demand will reach 359 million kilograms, an increase of about four per cent, this July.
“Certainly, the demand has been particularly high on the butterfat side,” said Dairy Farmers of Manitoba chair, David Wiens. “But of course we produce milk, we produce all of it, whether it’s butterfat or protein.”
That means more skim milk is also being produced, which can be more difficult to find markets for and that can create surpluses that must be disposed of. Producers hope a proposed national ingredient strategy — which will create a lower-priced class of dairy ingredients known as Class 7 — will encourage processors to use more skim milk.
Within the quota system, value is also shifting away from protein and onto butterfat to encourage production and signal a change in the market.
“The higher-fat milks, creams, cheeses, higher-fat yogurts, it’s really consistent right across the board, that’s where the biggest growth is, so in our pricing structure for our milk components, together with the Western Milk Pool, we will be shifting more of the value onto the butterfat, because that is where the greatest demand is,” Wiens said.
There was a time in the 1990s when the dairy industry expected demand for dairy protein to outstrip demand for butterfat, but Wiens said that never actually happened.
“It actually went the other way, to the extreme,” he said. “Then a few years ago, we did a little bit of kind of tweaking on the pricing signals for butterfat versus protein, and now together with the Western Milk Pool we are really having a very close look at what does that signal need to be so that producers are going to be absolutely encouraged to produce a higher-butterfat milk.”