A rise in consumption of fluid milk for the first time in many years is just one example of the changes wrought in the dairy market by the COVID-19 pandemic.
“It’s the first time fluid milk sales has been up in I don’t know how many years… but decades,” said Michael Barrett, president, Gay Lea Foods Co-operative. “And that’s as a result of COVID-19. Now we have to make sure that it sustains.”
Why it matters: COVID-19 has accelerated change in the marketplace through social shifts, such as working from home and eating patterns, to consumer demands for an increased social contract as they look for more food closer to home.
“The consumer is demanding a greater amount of knowledge and information and it spreads across many, many, many different avenues and venues,” Barrett said at Grey-Bruce Farmers’ Week.
“We do something called social audits now for retailers,” he said. “They look at our policies and procedures with regards to how we treat our employees.”
There has been a trend towards minimally processed foods and less fluid milk, with the exception of 2020, and an increased focus on more dairy and more fat. That’s along with a growth in dairy alternatives.
“(We need) to make sure that we have an environment that allows processors and producers to have an equitable return,” he said. “The Canadian market is small, the domestic market is small, export opportunities are limited and few. We have to have a landscape that promotes investment.”
Innovation could occur within packaging, product lines or flavours in order to provide consumers with the elements that they need while upgrading delivery models on-farm and in processing.
Hamel, who was second vice chair of Dairy Farmers of Ontario until its annual meeting Jan. 14, said due to increasing competition, dairy and agriculture as a whole need to differentiate Canadian products in quality, production methods and sustainability from other countries.
He doesn’t anticipate rising milk prices to be sustainable and said the industry needs to find profits in other areas such as efficiencies in production transportation, processing, marketing and increased market growth from the farm to the supply chain.
Throughout COVID-19 Hamel said the supply management system reacted well and there needs to be increased partnerships with P5 and P10 partners to promote and support the national system.
“We need to set the stage or optimize opportunities for new partners to enter our industry, and provide an environment that’s based on trust, transparency, integrity,” he said.
Think creatively about limiting impact
Dr. Vern Osborne, professor at the Ontario Agricultural College, Department of Animal Biosciences, said production and management over the next decade will need to incorporate farm efficiencies, economics, managing costs for labour, compatible and integrated technologies, increased automation and genomics, specifically with an emphasis on new environmentally attractive traits.
“There’s a lot of climate change policy that’s out there and the first thing they actually say is ‘eat less animal products.’ That’s the easy way out,” he said.
Osborne pointed to the vast real estate of a facility’s roof which collect water to clean the barn.
“Why are we pumping potable water to clean platforms and alleyways when we could be using rainwater and rainwater technology?” he said. “We are the largest users of water in the province.”
He suggested within the next decade or so producers will face challenges around the animal welfare of tie stalls and whether consumers will buy milk from those facilities.
On the flip side, Osborne said there’s not only a need, but great potential to create new products other than the main three that are marketed.
“Milk has 134 identified elements in it,” he said. “Your competition is going to come from synthetic agriculture, so basically artificially produced milk and milk products. It’s coming fast and furious and it’s all about the fact that you minimize the environment” impact.
In the early days of COVID-19 Premier Doug Ford said he wanted everything to be made in Ontario, which created the potential for the province to become the breadbasket to the world, said Dr. Bruce Muirhead, associate vice president of Research, Oversight and Analysis in the Office of Research at the University of Waterloo.
He said 20 per cent to 30 per cent of the provincially required PPE could be made from a by-product of milk and the industry has yet to capitalize on that.
While COVID-19 may have provided opportunities for the Canadian dairy sector to expand into non-food related products, there are a number of trade challenges ahead.
Muirhead suspects President-Elect Joe Biden will move to re-join the CPTPP sometime after he’s sworn in.
“I’m not entirely sure how the Americans would accede to it but there is some thought that they will demand the same percentage of dairy access to the Canadian market as is given to all other signatories,” he said. “That will have an immediate impact on us, because the U.S. is right next door and I’m sure they’re very happy and willing to access the Canadian market.”
If that goes forward, the U.S. will have access under the Canada, United States Mexico Agreement (CUSMA) and additional access under CPTPP.
Muirhead said grassroots dairy farmers must become more active in making the case for supply management in order to stem the potential of an ideological disagreement stemming from ideology, not facts or data, put forth by the Montreal Economic Institute, The Fraser Institute or Martha Hall Findlay’s Canada West Foundation, lest it gains traction.
“If that gains traction again, that’s a public policy area. You know all bets are maybe a little bit off in terms of the supply management,” he said, adding the Canadian supply management system has stood the test of time and been great for dairy farmers and consumers overall.
A 2019 public opinion poll of 1,143 Canadians showed 62 per cent said it was important to buy Canadian dairy and 66 per cent were willing to pay more for Canadian products if it means retaining Canadian dairy farms.
President-elect Biden has made it clear he isn’t interested in revisiting existing trade agreements but there is concern that Tom Vilsack will be the new secretary of agriculture and Vilsack recently led a complaint of how CUSMA dairy import quotas are being allocated.