Canadian Dairy OutlookRon Versteeg

CIPLE September 2011

Argentina

Dairy Farmers of Canada Annual Policy Conference February 2010

2

34 million Canadians

Source: Statistics Canada

9.2 million km2

United States: 312.1 million Americans

Canadian Population of Dairy Cows

3

1 million cows

US: 9 million cows

Economic impacts of the Canadian dairy industry - 2009

Sustains 215,103 jobsAdds $15.2 Billion to GDP$3 Billion in tax revenues:

$1.8 billion - Federal $0.9 billion -

Provincial $0.3 billion -

Municipal

13,214 Farms83.8 M hl (8.4 M tonnes) delivered

$6.1 billion in sales

452 Processing plants

$13.7 billion in sales

EcoRessources, Feb 2011

Average Canadian Dairy Farm

Average farm has 76 cows milking (vary from 20 to 1000 cows)

One Holstein cow produces 9768 litres/yearEmploys three people (FTE) Overall:93% Holstein cows23 % free-stall barns77% tie-stall barns1% organic

DEMAND

IMPORTS

minus

TOTAL QUANTITY TO BE PRODUCED

Province X Prov. ZProvince Y

FARMERSFARMERS

Supply Management

FARMERS

------------------------Individual quota----------------------------

Matching Supply and Demand?Supply management has 3 pillars :

Match production to demand Establish a fair price for farmersLimiting imports on dairy products

(through tariff-rate quotas)

Matching Supply and DemandProduction is managed to meet demand of

Canadian consumersThis requires monitoring of Canadian market

requirements and discipline by producers (quota) to maintain supply

This provides fair and stable price to milk producers surplus production has no value Very little exports Price based on cost of production, ensuring farmers get “fair

share” of consumer spending.

The Canadian Market

Weather conditions4 seasons that vary greatly (-35 to +35 in central

Canada)Housing importantBC weather influenced by ocean& mountains

Estimate demand for dairy productsQuota based on butterfat demandSeasonality has been removed from production

Mature marketPopulation growth is small and influenced by

immigration (with different food habits)

Janu

ary

Febr

uary

Mar

chApr

ilM

ayJu

ne July

Augus

t

Sept

embe

r

Oct

ober

Nov

embe

r

Dec

embe

r0

400,000

800,000

Canadian milk pro-duction

('000 litres)196019762010

Production is stable throughout the year

3 dairy processors (Saputo, Agropur and Lactalis) own 15% of Canadian plants, buy close to 80% of farm milk

Stability of supply – marketing boards direct milk to plants, based on their demand, plan milk truck routes.

Processors not exporting, but have plants in other countries (ex: Saputo in US, Argentina)

Dairy Processing in Canada

11

Consumption trend per capitaDairy product Trend

Milk

Cream

Cheese

Yogurt

Ice cream

Butter

Agriculture, a provincial jurisdiction – provincial marketing boards (farmer-controlled)

Markets for products are nationalCanadian Dairy Commission has national

jurisdiction:Determining price supportCoordinate interprovincial trade of products (pools) Coordinates any export

Regulatory Framework

Federal governmentAdministration of imports (quota and tariffs)Regulations on labellingNo direct financial payments to farmersBut involved in “green” programs: food safety, research,

animal welfare and transportation, biosecurity, traceability, etc.

National programs related to these topics, as well as lobby and marketing activities done by Dairy Farmers of Canada (umbrella to provincial boards, not gov entity)

Regulatory Framework