Ian Petrie

Two groups of business people have been receiving a lot of attention in the media. Both work in heavily regulated industries that shield them from international competition. Both sell products that Canadians depend on. One group are legitimate billionaires. The other, if you listen to the media, must be too.

The Rogers family are living through a Shakespearean tragedy. The ailing king tries to protect his empire but has doubts about the natural successor, his son. He sets up a complicated share structure to retain family control and limit the influence of the son, and ends up tearing the family part. Dairy farmers are more focused on the present, milking twice a day, monitoring the heath of their herds, hoping for good weather to get late crops properly harvested.

The attention milk producers are getting is rooted in an 8.4% increase announced by the Canadian Dairy Commission that will come into force next February. We’ve seen the headlines: “The Canadian Dairy Commission has picked a terrible time to milk consumers” from the Globe and Mail, “'That's too much': Highest price hike to milk in recent memory sparks criticism of supply management” from the Leader Post and so on.

There have even been accusations of a lack of transparency in dairy pricing even though the increase was announced months in advance and is based on something very real: increased costs of production which dairy farmers are eligible to recover under supply management. Feed costs are the main culprit, and that’s tied directly to the drought in Western Canada which has cut production of grains and oil seeds used to feed both livestock and humans. Livestock farmers and the rest of us will all be paying more.

CBC Radio’s As It Happens had PEI’s own Ranald MacFarlane on to answer questions from Carol Off and, not surprisingly, he held his own: “It costs money to make protein.. and to make food… the cheaper imports, the subsidized imports that come from other countries aren’t good quality.. and you can get it cheap now but if there’s ever a hick-up in the system like COVID the stuff stops coming.”

If you do see cheaper American dairy products on store shelves please remember that American farmers received $6.4 billion in direct subsidies from Washington from 1995-2020, and some studies say much more. This makes up more than 70% of dairy farmers incomes with the remaining 30% coming from the market. Canadian farmers get no direct government support. American farmers are also permitted to use a growth hormone rBST to push cows to produce more milk. This has been banned in Canada.

Again on the issue of transparency, Ranald MacFarlane told Carol Off that his farm is one that has been used to establish the cost of production (an accountant used by the CDC goes through his books) and he’d be happy to show them to anyone else.

There are consequences from this increase especially for the many families struggling to pay for food on PEI and elsewhere. Fortunately for primary and secondary students on PEI, there’s the School Milk Program that ensures the lowest possible price, and milk free one day a week. This goes along with the School Meal Program where students pay only what they can afford.

As for adults there’s a huge selection of plant based dairy products, and if demand for dairy goes down because of the price increase, then quotas will be cut, and farmers will pay a price after slashing production. This is a different response than what happens in the U.S. Surpluses there are sold below cost in export markets, often unfairly disrupting dairy production in the importing countries.

While no one is saying this outright it seems pretty clear that the expected 12% increase in butter is tied directly to the campaign to stop dairy farmers using feed additives coming from palm oil. Palm oil production is linked to the destruction of rain forests in Indonesia and elsewhere. Dairy farmers have stopped using it (right decision I think), and their costs have gone up. Again there are cheaper alternatives for butter available.

Canada's supply management system does have flaws. Originally the quota was supposed to be owned and controlled by the federal government. At some point banks started lending money using the quota as collateral and ownership essentially reverted to farmers. Now without a substantial amount of capital to invest it’s impossible for someone new to get into dairy, and the trend is definitely for smaller farms to cash out and larger farms to get bigger.

The Maritimes continues to have mostly small and medium sized herds and, even more importantly, dairies here like ADL are able to compete in national markets and survive because all processors pay roughly the same price for milk.

I await the interview with someone from Rogers on why Canadians pay the highest cell phone charges in the world, or why the company is using less than 30% of its available bandwidth even though there are huge sections of rural Canada with totally inadequate hi-speed internet service. I don’t see any transparency on pricing from telecommunications companies. In the end a family feud story is always more interesting.

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