The Canadian Dairy Commission said Tuesday it will recommend that the farm gate price for milk be increased effective Sept. 1 by $1.92 per hectolitre.

That increase, which works out to 1.92 cents per litre, “will partially offset increased production costs due to inflation,” the CDC said in a release, noting the costs of cattle feed, energy and fertilizer costs have risen 22, 55 and 45 per cent respectively since last August.

The CDC on Tuesday separately announced an increase to its support price for butter, also effective Sept. 1, boosting that rate from to $10.0206/kg, up from $9.7923.

The new farm gate milk prices are to become official on approval from provincial dairy authorities, which is expected in mid-July, the CDC said.

The Sept. 1 milk price adjustment translates to a 2.5 per cent increase on average for the price for milk used in the manufacture of retail and foodservice dairy products such as milk, cream, yogurt, cheese and butter, the commission added.

The farm gate price for milk is typically raised or lowered just once a year at the CDC to reflect changes in costs of production — a schedule Dairy Farmers of Canada said “creates a gap between the true costs of producing milk today and the next annual adjustment.”

DFC had said June 2 that the current “exceptional circumstances” call for a mid-year adjustment to help bridge that gap. The last such mid-year adjustment was made in 2018, the CDC said.

The CDC said Tuesday it “considered possible impacts of a price increase on consumers and demand” in its decision.

Dairy products “must remain affordable” for Canadians, the commission said, also noting dairy farmer revenue had improved in recent months on last February’s farm gate price increase as well as rising world dairy prices.

Factors such as transportation, distribution and packaging costs elsewhere along the supply chain will also play parts in the “net impact” on consumers, the commission said.

Make allowance

According to the Dairy Processors Association of Canada (DPAC), the CDC’s separate increase in the support price for butter works out to 2.3 per cent, reflecting both the mid-year farm gate milk price increase and an increase in the regulated “make allowance” of butter of 2.5 per cent.

The support price for butter is used by the CDC when buying and selling butter under its domestic seasonality program, which kicks in when regulated Canadian milk production exceeds domestic market requirements, at which point the CDC buys butter from processors at the established support price.

The make allowance, or processor margin, refers to the costs incurred to process milk into butter, including labour, packaging and other inputs.

DPAC said Tuesday it had asked the CDC, during its consultations last week, to consider making an upward adjustment in the make allowance. It cited estimates which suggest processor costs have risen more than 12 per cent since last August, mainly on prices for energy, packaging and materials as well as milk.

As for the farm gate milk price increase, DPAC said it doesn’t traditionally take a position for or against an adjustment the CDC recommends.

However, DPAC said, making a mid-year adjustment “will allow for dairy prices to increase more incrementally, and may mitigate the impact on consumers.”

The CDC said Tuesday that while the consumer price index for dairy has increased by 7.7 per cent over the last five years, it rose 14 per cent for meat, 21 per cent for eggs and 32 per cent for fish over the same period.

Over the last 12 months, it noted, farm gate milk prices in the European Union have risen by about 23 per cent. Class I (fluid milk) and class IV (butter and skim milk powder) prices in the U.S. have risen by 49 per cent and 55 per cent in the same period, compared to 6.6 and 38.3 per cent in Canada. — Glacier FarmMedia Network

CORRECTION, June 21: An earlier version of this article incorrectly stated the per-litre value of the announced milk price increase as 0.192 cents.

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The Expert Working Group on Feed Supplementation, set up by Dairy Farmers of Canada (DFC) and other industry players in February last year to review those claims, said as much Friday as it published its 84-page report reviewing the matter.

Thus, a “key recommendation” of the report is “the need for better and more consistent time series data both when it comes to the evolution of the fatty acid profile of milk and butter, and butter hardness off retail shelves,” the working group wrote.

The 13-member working group, which included reps from the Consumers’ Association of Canada, processors and farmer groups, “cannot conclude that any perceived increase in the hardness of butter be solely attributed to the use of palm-derived feed supplements,” group chair Daniel Lefebvre said Friday in a release.

“There is a variety of factors that influence the fatty acid profile of milk which is only one of the factors that can affect butter consistency. We have also concluded there are gaps in the body of knowledge that should be addressed, and we offered a series of recommendations to better understand issues related to the properties of butter while also ensuring that industry is better equipped to meet consumer expectations.”

DFC, for its part, said in a release Friday it “supports the conclusion of the report” and will fund further research to “address the remaining questions” the report lays out.

All that said, DFC’s recommendation to dairy farmers last February — that they “consider alternatives to palm supplements” in their cattle rations, pending the review’s outcome — still stands.

“In light of remaining unanswered questions, DFC’s recommendation that dairy farmers consider alternatives to palm byproducts supplements in feed rations remains,” a DFC spokesperson said via email late Friday.

Similarly, a request last February from les Producteurs de lait du Quebec (PLQ) — asking that Quebec producers stop using such products in their rations, and that food processors adjust their recipes accordingly — still stands, a PLQ spokesperson said separately Saturday.

The working group’s assignment came in the wake of what DFC last February described as “recent anecdotal reports regarding the hardness of butter.”

Specifically, complaints were appearing on social media from Canadian consumers alleging their recently-purchased butter wasn’t softening to a spreadable consistency at room temperature.

At that time, the working group said in its report, “consumer organizations in Canada received contacts from individuals expressing concerns about this issue; particularly as it related to the use of butter in baking. However, given other issues that were occurring at the time due to the pandemic, these contacts were not widespread.”

Butter samples

The working group, chaired by Lefebvre, the chief operations officer for Lactanet, said Friday it met seven times from March to December 2021 and “sought presentations and reports from several outside experts.”

On top of its literature review, the group also commissioned two “data collection efforts.” One was to assess, compile and analyze data on “the fatty acid composition of raw milk from across Canada.” The other involved collecting 40 samples of retail butter from across Canada and analyzing those samples’ fatty acid profile and “physical properties.”

The working group, in its report, noted there are about 400 different fatty acids in milk, so “when people first heard the term ‘palmitic acid,’ most people had limited background available to understand what it means in the broader scientific context.”

Palmitic acid, the group said, is “the predominant fatty acid in milk, regardless of what cows eat” and “is also the most common saturated fatty acid in nature. Cows produce palmitic acid naturally, along with hundreds of other fatty acids in their milk.”

While livestock feed ingredients also contain such fatty acids, the group said, “feeding cows palm-derived feed supplements is not the main factor contributing to palmitic acid in milk.”

Rather, the group said, most of the palmitic acid in milk comes from the cow’s consumption of “traditional” feed ingredients such as hay, silage, grass and cereal grains and the cow synthesizing it naturally in the udder.

Fatty acid composition of milk, the group said, is also influenced by “a variety of other factors” including — but not limited to — the season, stage of lactation and diet, which in turn is “influenced by geographic region.”

The group’s literature review showed cream handling, temperature of storage and churning are “key factors that may affect the rheological properties of final products” — that is, the melting points of butter or its firmness and perceived “spreadability.”

The group’s consultations with processors found “while there has been a significant shift in demand from the restaurant and hospitality industry to the retail sector” due to the COVID-19 pandemic, there nevertheless has been “no significant change in manufacturing processes and practices over the past year and a half.”

It’s true that palmitic acid concentration in butter is “positively correlated” with the percentage of solid fat in butter and its firmness at room temperature, the working group said, but its survey of retail butter samples found “many other” milk fatty acids are also tied, for better or worse, to the solid fat content and firmness in butter.

Further, the group said, “while the content of palmitic acid in retail butter varies across the country, this variation could not be attributed to one single factor such as feeding cows supplements that contain palmitic acid.”

The group also emphasized any feed-related increases in palmitic acid content in butter would be “modest and extremely unlikely to have human health implications.”

‘Knowledge gaps’

Ultimately, in its report’s summary, the group “observed there is no data to confirm that there has been a change in the consistency of butter over time.”

That same lack of data means it’s “not possible to test for a causal relationship, and therefore draw conclusions” on any link between use of palm byproduct supplements on Canadian dairy farms and the consistency of butter in recent years, the group said.

The working group’s report “sheds light into the knowledge gaps related to the consistency of butter and animal feed supplements containing palm byproducts,” DFC president Pierre Lampron said Friday in that group’s release.

Lefebvre, Lampron said, has been asked to “continue to work with the industry experts in an advisory capacity to help support the design of such future research.”

The Animal Nutrition Association of Canada, which represents feed processors, and the Dairy Processors Association of Canada said Friday they will both keep working with DFC and the industry to continue research into the matter. — Glacier FarmMedia Network

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“What this conversation is about is – what is the way forward in light of some of the challenges thrown at us over the past few weeks?” said David Wiens, Dairy Farmers of Canada (DFC) vice-president.

Why it matters: In a society rife with a ‘cancel culture’ mentality, the dairy industry and agriculture struggle with how decades-old farm practices fit into social contracts. 

The DFC has launched an expert working-group with academic representatives from dairy science, veterinary medicine, animal nutrition, sustainability, food science, consumer awareness and education, human health and nutrition to cover all the angles, said Wiens.

“We heard consumers and we’re going to look into this in much more detail,” said Wiens. “A really good starting point, always, is to look at the science of it. Once we have that, we will have the reports to work off of.”

The working group will aggregate existing research and academic literature for a broad spectrum of concerns, including butter characteristics and consistency, feed composition, human and animal health, environmental impacts of dairy supplements in a domestic and global context and health and the nutritional effect on humans and animals. 

“I consider it important to have consumer confidence in the findings of the group,” he said. “If they have doubts about the work of the group, that would take away from it. So we want to be careful that that’s not going to happen.”

Wiens said results from the working group over the next few months would shape the DFC’s next steps and identify research gaps. New research over the next few years should address the gaps.

Until then, the DFC has requested dairy producers eliminate the use of palmitic acid supplements, which has sparked numerous nutritionist-producer conversations around effective and safe energy-boosting alternatives for energy-deficient early lactating cows.

“It’s something we have to look into and be very careful because (it’s a) very complex question, it’s not like one-plus-one equals-two,” said Dr. Rachel Gervais, a professor with the Department of Animal Studies, Université Laval. “There are many parameters in these equations.”

Removing palmitic acid supplements from a dairy farmer toolbox is similar to removing a flat head screwdriver, said Gervais. They may find a way to unscrew the screw, but it will likely take longer, be more complicated and sometimes won’t be possible at all.

Palmitic acid is natural, and synthesized in cows and humans, said Gervais. The majority of a PA supplement goes to filling a cow’s energy deficit with one to two per cent impacting PA levels in milk. 

“If you change the diet of the cow and don’t put palm oil in or anything,” she said, “you could see an increase or a decrease in palmitic acid that is even bigger than what you would see if you feed the cow with palmitic acid.” 

Gervais can’t say definitively if PA supplement use contributes to harder butter but research shows seasonal impacts, forage, nutrient balances within the feed or the introduction of a new ingredient show a larger effect on PA content than the supplement.

Athlete cows need energy, not just salad

“She’s an Olympic athlete. You won’t help her with salad. She needs energy,” Gervais said. “You need something that is going to be good for her and not harmful for the rumen.”

The big challenge is finding an alternative that is more sustainable, said Gervais, because raising more cows is not environmentally friendly. 

Palmitic acid is naturally occurring and is found everywhere, including in forages and cereals fed to cows and humans. PA enriched supplements remain inert in the rumen of an early lactating cow and provide easily accessible energy.  

Whether PA supplements remain in use or not, further research is required to assess the potential efficacy, safety and sustainability of alternative energy boosting supplements and how their use impacts dairy farm sustainability and environmental footprint.  

The rapid call for producers to stop using the PA supplement was a strategic error that reinforced the perception the product is dangerous, said Mike von Massow, food economist and associate professor in the Department of Food, Agriculture and Resource Economics, University of Guelph. 

“Maybe that was required under the crisis circumstances we were in, but I would have preferred to say, there may be an issue with butter, we don’t know if it’s connected to PA but let’s have a discussion about PA,” he said.

“It has moved the discussion away from the consistency of butter just to the issue of palmitic.” 

Von Massow estimates half of all Canadians know nothing about #Buttergate and the ensuing kerfuffle over PA supplements, which opens a window of opportunity for a rational discussion around the who, when and whys of supplement use in the dairy herd and its impact on human health.

“We got caught, in this circumstance, in a crisis, and we’re starting from a different point than if we were just having a regular discussion,” said von Massow. 

Consumers employ a certain amount of willful ignorance about how an animal-based product arrives on their plate or in their glass, but there is growing consumer interest in animal welfare and management protocols on the farm. 

The agricultural industry should proactively provide information and a new level of transparency, which is easily accessible rather than be caught on their back foot when a crisis arises, said von Massow. 

What’s the consumer ‘line in the sand’?

If the industry addressed the ins-and-outs of PA supplement use in dairy cows – including highlighting its safety, usage, impacts on milk and milk products and whether it was transparently certified as sustainably sourced — it would likely have de-escalated the crisis into a rational discussion, von Massow said, 

“The industry could have said ‘Look, we’ve been open and honest about this all along (instead of) ‘ Look, we weren’t hiding it, we just didn’t say anything’,” he said. “In 99.9 per cent of the cases consumers are going to go ‘Oh, I get that and I’m okay with (it)’.”

With PA supplements, the remaining vulnerability lies in whether consumers would endorse social license to use certified sustainable palm oil products. 

“It’s good (the DFC) are not just looking at the science. Science can give us insight, it can’t make decisions about what we should do,” said von Massow. “In the end, the consumer may state, ‘No, that’s our line in the sand.’”

At that point, the industry has a choice: change or lose the consumer, he said. 

Von Massow said while farmers rail against the fear of consumers dictating how they farm, they failed to recognize consumers share the same concerns about farmers dictating how they should eat. 

“What we didn’t do is say, ‘yeah, we believe you that something’s happening (in butter), let us work to find that out’,” he said. “I think we missed that step as an industry, and frankly, I was guilty of it too.”

By acknowledging consumer concerns and by providing transparency, the industry will ultimately build stronger relationships with consumers and have more opportunities to shape the discussion. 

This openness is effective in combatting rhetoric from animal rights activists because, von Massow said, activists will have those conversations regardless of whether the industry engages. 

“We need to (engage) before we get to a crisis so we have more control of the narrative as we move through it,” he said. “We might not win every argument, but if we’re not in the discussion, we won’t win any of them.” 

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The 13 members of the working group include experts in nutrition, both human and dairy cow, fatty acids and their composition, along with milk handling.

Why it matters: Concern expressed by consumers about the hardness of Canadian butter and the link the feeding of palm fats became news around the world.

“The working group will set the scope of its work, not industry associations, and will follow the science wherever it may lead, so that consumers can have the utmost confidence in our work,” says Daniel Lefebvre, chief operating officer of Lactanet and chair of the group.

The working group will cover a wide range of topics including:

• Confirm whether there are or have been changes in the characteristics of butter,

• Review the literature to assess current science as it relates to Feeding of palm fat supplements to cows, milk composition, milk handling and processing techniques; and health and safety of supplements (palm),

• Identify any gaps in data or research,

• Review of the level of sustainability of various types of palm fat supplements, including by-products, and

• Assessment of role and nutritional value of palm fat supplements for dairy cows.

Working group members include:

• Daniel Lefebvre, of Lactanet,
• Anthony Hanley, nutritional sciences professor from the University of Toronto,
• Richard Bazinet, nutritional sciences professor from the University of Toronto,
• David Kelton, department of population medicine, University of Guelph,
• Rachel Gervais, department of animal science, Université Laval,
• Yves Pouliot, department of food sciences, Université Laval,
• Jean-Francois Ménard, life cycle analysis expert,
• Elaine Scott, Consumers’ Association of Canada,
• Mathieu Frigon, president and CEO of the Dairy Processors Association of Canada,
• Ed Friesen, DFC board member and dairy farmer from Manitoba,
• Bita Farhang, research and development manager, Dairy Farmers of Ontario,
• Woody Siemens, BC Milk Marketing Board,
• Chantal Fleury, assistant director of economic research, Quebec Milk Producers.

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To recap:

Food sector pot stirrer Sylvain Charlebois of Dalhousie University is a master at bringing issues into the media spotlight. He’s authoritative and articulate and as such is a good interview for media, both in TV and in print.

Most of this started by an online poll Charlebois posed in which half of the respondents agreed that it seemed like their butter was harder.

It must be noted that Charlebois, an economist, is a noted opponent of supply management in its current form.

He usually comes to an issue armed with data, as his group at Dalhousie does some excellent research on food trends.

But in this case, I’ve yet to see any data, other than a Twitter poll, that anyone is particularly concerned that their butter might be a slim percentage harder.

Others in addition to Charlebois have noticed as more people return to baking with butter.

It makes sense that butter will be harder when the feeding of palm fat is so prevalent on dairy farms, especially in Western Canada.

We know that fatty acids have an effect on dairy end products. A big effort once went into boosting the levels of Omega 3 fatty acids in milk.

Anyone who grew up on a dairy farm knows that there are subtle changes in milk composition based on feed and seasons. The butter has always been harder on the counter in the winter. There’s actually less variability now as dairy cattle are fed more consistent rations than they once were.

What bugs me is that none of this is new. Farmers have used palm fat in dairy rations for decades and it’s common around the world. This is not a Canadian issue. It’s also not just a dairy issue as one of the major sources of palm oil products in diets is butter-alternative margarine.

The margarine in our house is billed as “olive oil” margarine, but the volume of olive oil in the product is less than the volume of palm oil. I don’t see anyone exposing the margarine industry for mislabeling their palm oil margarine as olive oil margarine.

So is it fair to pick on dairy?

Butter is a cherished product with specific qualities that have made it work beautifully in pastry and baking and messing with that raises attention.

But there’s no doubt, this was a manufactured “crisis” by anti-supply management activists. Charlebois was on many TV programs and then followed that all up with a column that questions the “social contract” of the dairy sector with Canadian consumers.

The unwritten social contract is that dairy farmers supply the market with cost-effective, high-quality products in return for stable pricing.

Canadian butter remains high quality as it always has been, albeit with a slightly different melting point, similar to most of the rest of the butter in the world. The use of palm fat means about five per cent fewer cows are needed, which reduces the environmental impact of dairy, according to a balanced report on the issue in The Globe and Mail.

Using palm fat also helps keep the price of dairy products down.

The use of palm fat is common in all competing markets, so tearing down the walls of supply management would mean the need for more imports – from countries that also use palm fat.

Decreasing the use of palm oil derivatives in dairy rations is a laudable goal. It will reduce environmental impact at source (native forests are destroyed to grow palm plantations in Asia) and a return to expected melting points for bakers.

But it also will have an increased environmental impact due to the increased need for dairy cows, and costs to consumers could increase due to lower efficiency in the dairy system.

It’s never as black and white as activists make an issue seem and this issue is a good example of the ability of people with an agenda to use their developed megaphone to their advantage.

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Dairy Farmers of Canada on Thursday asked its farmer members to “consider alternatives to palm supplements” pending the outcome of a review of “issues that have been raised by consumers.”

The review comes in the wake of what DFC on Feb. 11 described as “recent anecdotal reports regarding the hardness of butter.”

Among those, Dr. Sylvain Charlebois — director of the Agri-Food Analytics Lab at Halifax’s Dalhousie University and a columnist appearing in GFM publications — has taken to social media recently with a stack of consumers’ complaints alleging recently-purchased butter isn’t softening to a spreadable consistency at room temperature.

DFC on Feb. 11 said it was “aware” of those anecdotes and sector officials would work with experts to assess them further, but added it was “unclear whether these refer to imported or domestic butter.”

Furthermore, DFC said at that time, “there has been no recent data to show that the consistency of butter has changed, and we are not aware of any significant changes in dairy production or processing.”

Granted, “many different factors” can affect butter’s taste, texture and melting point of butter in subtle ways — factors including dairy cattle rations.

‘Not new’

Lactanet chief operations officer Daniel Lefebvre, in DFC’s release Feb. 11, said palmitic acid — the naturally dominant type of saturated fat in butter — normally fluctuates within “an expected range” on seasonal and regional variations in dairy cow diets.

That fluctuation, he said, “can influence the properties of the milk fat, which can affect the temperature at which butter will melt,” but he said “routine analyses of the fatty acid profile in milk do not indicate any increase in the proportion of palmitic acid in the past year beyond what would normally be expected.”

However, DFC on Feb. 19 announced it would set up a working group of “stakeholders and experts to assess current literature (and) gaps in data, and look into issues that have been raised by consumers.”

The organization’s move came as the discussion of palmitic acid content turned toward dairy farmers’ use of feed supplements with palm byproducts.

Palm products, DFC said, are sometimes added to rations in limited amounts to increase energy density in cow diets if needed. Dairy farmers in the U.S., U.K., New Zealand and Australia also use such products to “help provide energy to cows, and no undesirable effects have been identified arising from its use in cows’ feed rations.

DFC emphasized the use of palm fat in dairy feed “is not new and is a safe ingredient” approved by the Canadian Food Inspection Agency.

Palmitic acid, DFC said Feb. 19, is a naturally occurring part of the fat of many plants and animals in various levels and is “different from palm fat.”

When supplements of palm fats are fed to dairy cows in Canada, DFC said, the typical amount is small and the increase in the palmitic fatty acid profile of dairy fat linked to the feeding practice is “less than three per cent.”

‘You have questions’

By Thursday, however, DFC said its farmers “have listened attentively to the concerns expressed by consumers in recent weeks over the use of animal feed supplements containing palm byproducts” — and it asked farmers to consider alternatives pending the outcome of its review.

“It is essential that decisions be made on a factual basis and that science guide our sector, hence the creation of a working group of experts,” DFC said Thursday. It reiterated that “all milk produced in Canada is as safe as always to consume and is subject to Canada’s robust health and safety standards.”

Alberta Milk concurred, in a separate statement to consumers Thursday, saying that while supplements with palm byproducts are “used globally and (are) CFIA-certified… you have questions about how it may affect your butter.

“The most important thing to our farmers, and farmers across Canada, is ensuring that we meet or exceed your expectations.”

Les Producteurs de lait du Quebec (PLQ) went half a step further in a separate release Wednesday, calling on Quebec producers to stop using such products in their rations, and asking that food processors adjust their recipes accordingly.

The Quebec organization also demanded that governments and processors impose reciprocal standards on all imported dairy goods and ingredients.

That said, PLQ added it would closely follow any recommendations from the DFC working group on the matter and “adjust accordingly.”

Beyond the butter complaints, PLQ also acknowledged some consumers have separate concerns over the environmental impact of palm production.

PLQ emphasized that the ingredient used in dairy cow rations isn’t pure palm oil, but rather a byproduct — but it also called on the food processing sector to pay attention to the wide use of palm oil in foods. — Glacier FarmMedia Network

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The CDC on Monday announced the farm gate price of milk will increase by $1.46 per hectolitre (100 litres) effective Feb. 1, 2021, pending approval by provincial dairy authorities early next month.

“This year, because of various factors such as the COVID-19 pandemic, the usual pricing formula was not applied,” the commission said in a release.

“The rise in producers’ revenues will partially offset losses incurred due to the COVID-19 pandemic and market trends which have caused revenues to remain below the cost of production.”

That increase is expected to translate to a two per cent increase in the price for milk used to make dairy products for the retail sector and the restaurant industry, the CDC said.

The CDC rendered its decision on the price adjustment of milk based on its own consultations, as it’s allowed to do “under certain conditions” for a given year in which an industry stakeholder asks that the formula not be applied.

The CDC said Monday it won’t change its butter storage fees, which it charges for its storage of a “certain quantity” of butter to guarantee adequate supplies throughout the year and prevent shortages.

That said, the commission added that it recognizes a two per cent increase in butter processing costs, which apply to the butter manufacturers sell to the CDC “in the context of its storage programs.”

To reflect that increase, the CDC said Monday, its support price for butter used in its storage programs will increase effective Feb. 1, to $8.7149 per kilogram from the current $8.5524, itself down 5.1 cents from the adjustment made Feb. 1 this year.

The support price is the price at which the CDC buys and sells butter through its domestic seasonality program, to balance seasonal changes in demand in Canada’s supply-managed domestic market. Provincial marketing boards also use that price as a reference point in pricing industrial milk.

How these adjustments ultimately affect retail prices will depend on “many factors,” the CDC said, such as manufacturing, transportation, distribution and packaging costs.

However, the commission said, “it should be noted that the consumer price index for dairy products has risen by only two per cent since 2015, whereas the index for food in general has risen by 10 per cent.” — Glacier FarmMedia Network

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Regular quota increases and general enthusiasm in the dairy industry over growing demand, has led to significant milk production increases in eastern Canada.

Why it matters: Dairy farmers have been given strong signals to expand milk production, including significant quota increases in 2017. The March 8 announcement is a brake being applied to that expansion.

There will also be no more new incentive days added after the end of March.

In a statement, the P5 (including Ontario, Quebec, Nova Scotia, PEI and New Brunswick) says that production is increasing faster than projected market growth within the P5 provinces. Ability to skim milk is at maximum capacity.

The P5 boards’ announcement says that if production isn’t curtailed, other measures will be taken to lower milk production. In the supply management system, quota increases or decreases are used in order to keep milk production close to demand.

Milk production has been increasing across the country since a new class of milk, called Class 7, was put in place which encouraged the processing and sales of protein concentrates from an excess of skim milk. The new class encouraged hundreds of millions of dollars in new investment in milk processing facilities across the country.

Demand for higher butterfat products like butter have also driven increasing need for more milk in the country. More than 20 per cent more quota has been issued to farmers in the past three years in Ontario, although much of that new milk has been at the lower Class 7 prices and has driven down the price that farmers are paid per litre for milk.

Butter stocks have been chronically low for several years, including some well-publicized shortages around Christmases. However, due to the high production of milk, as of Jan. 31, 2018, butter stocks hit more than 29,000 tonnes and are projected to hit the target stock level of 35,000 tonnes by Aug. 1. Cream requirements are already being met, says the P5 report.

Dairy Farmers of Ontario officials said at its annual meeting that it expected to need another six per cent increase in milk production in 2018 in order to fill new processing capacity scheduled to come on stream. Farmers responded to that and other signals and are producing more milk.

The P5 committee is also concerned about the large number of underproduction credits that some farmers have available to them, and filling those credits could create even more milk supply.

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The commission announced Friday it would maintain the per-kilogram support prices it sets for butter and skim milk powder at $8.0062 and $4.5302 respectively as of Feb. 1.

The support prices for butter and skim milk powder are the prices at which the commission buys and sells those products through its domestic seasonality programs, to balance seasonal changes in demand in Canada’s domestic market.

Provincial marketing boards also use those prices as reference points in pricing industrial milk. The prices producers get for fluid milk are worked out in a separate process.

The support prices have gone unchanged since Sept. 1, 2016, when both were increased in what the commission said would amount to a 2.76 per cent increase in dairy farmers’ overall revenue from industrial milk sales.

That increase had followed a 2.2 per cent hike on Feb. 1, 2016; a decrease of about 1.8 per cent effective March 1, 2015, by way of a boost in the skim milk powder support price alone; and increases of 1.5 per cent in 2011 and 2012, 0.9 per cent in 2013 and one per cent in 2014.

“Despite a small reduction in the cost of producing milk in Canada, we feel that for the sake of the industry’s stability, it is best to leave the support prices of butter and skim milk powder where they currently stand,” CDC chairman Alistair Johnston said in a release Friday.

The margin received by processors for butter purchased by the CDC under the domestic seasonality program will remain unchanged.

Carrying charges, collected by the CDC to pay for the storage of normal butter stocks, also go unchanged, the commission said Friday. — AGCanada.com Network

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The P5 dairy farm boards, representing Quebec, Ontario, New Brunswick, Prince Edward Island and Nova Scotia, announced the quota increase Friday.

The one per cent increase in producer saleable quota is effective Nov. 1.

One incentive day per month — the ability to sell one additional day worth of milk, based on a dairy farm’s current quota — was issued for each month from November until March.

The quota is not cumulative, meaning that there is only one day for each month.

The industry has set a goal of 35,000 tonnes of butter in stock, which has not yet been met.

Organic farmers also got a significant boost in milk-producing potential, but they will have to wait for a while for it to kick in.

Organic dairy farmers will have three incentive days per month from April 2018 to March 2019. The incentive days will not be cumulative.

— John Greig is a field editor for Glacier FarmMedia based at Ailsa Craig, Ont. Follow him at @jgreig on Twitter.

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