Incentive days to temper price drop for dairymen
by DAVID SCHMIDT
VANCOUVER – After receiving a price increase in August, B.C. milk producers are facing a decrease. Effective February 1, the net price for Class 1a fluid will drop from $96.82 to $96.18 per hectolitre while the net price for Class 1b will drop from $83.95 to $83.36 per hl, B.C. Milk Marketing Board (BCMMB) chair Jim Byrne announced at the fall producer meeting in Vancouver, December 1.
Prices have dropped more in the P-5 (Ontario-East) meaning the gap between prices in the West and East are “narrowing.” Offsetting the Western Milk Pool’s (WMP) lower fluid price is the fact 55 percent of the milk in the west goes into the higher-priced fluid market while only 35 percent of P-5 milk goes into fluid.
The BCMMB has issued 13 incentive days between October and March in an attempt to ramp up production. Producers who fill their daily quota are eligible to produce the incentive days for the month without affecting either their under or over production. The incentive days are necessary as the WMP has failed to meet its quota allocations in the fall.
“We lost the opportunity to produce 88,800 kgs of butterfat because of underproduction,” Byrne said, adding there was underproduction all across the country in the fall.
“We have had a hard time producing milk in Canada,” he stated.
The incentive days are also intended to boost the supply of industrial milk for butter production as butter stocks are virtually non-existent – the lowest they have ever been.
Producers could receive even more incentive days or even another quota increase as the Canadian Dairy Commission (CDC) has announced a one percent increase in national quota allocation.
“We haven’t yet decided how to hand that out,” Byrne said.
The CDC has also agreed to extend the Domestic Dairy Products Innovation Program (DDPIP) to July 31, 2013. Any processor may apply for a special allocation of DDPIP quota to produce a “new and innovative” dairy product. If approved, the DDPIP is allocated to a province and must be produced and processed there.
“It’s not our intent to move milk across borders to satisfy DDPIP,” Byrne said.
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