New rules that come into play in December will govern exchanges of dairy quota taking place on or after January 1, 2025.
The changes, which aim for an exchange model that reflects current market conditions, were approved by BC Milk Marketing Board on September 6 and announced in a bulletin to producers this week.
A key change is the ditching of a rule that set price increases based on a formula linked to demand over three consecutive quota exchange periods.
The length of time required to trigger changes in price was seen as restrictive. By ditching the rule, the new quota exchange system promises “the economics of supply and demand will determine the movement of the monthly quota transfer price.”
The board has also removed the requirement for producers to offer a minimum volume for sale, again to ensure a more responsive exchange model.
A policy regarding priority sellers – producers exiting the industry – has been removed to accommodate producers who want to sell quota for any reason, again allowing the quota exchange to reflect actual market conditions in terms of the amount of quota available for purchase.
The removal of the minimum volume and priority seller criteria underscore the desire for a more flexible quota exchange model for producers trying to right-size their operations in the face of ongoing cost of production pressures. The changes were discussed at producer meetings last winter, with a majority of producers in favour of an exchange system that was more responsive to the market forces of supply and demand.
The new exchange model will adjust pricing by no more than $1,000 each month within a core range of $30,000 to $40,000 per kilogram, determined by reviewing transfer prices over the last 14 years and forecasting future values that could support the longevity of the dairy industry.
Transfer prices outside the core range will adjust by $100 as they diverge from the core range and then by $1,000 when prices start heading back towards the core range.
The changes will be discussed at the BC Milk Marketing Board fall producer meetings, which begin October 24 in Nanaimo and wrap up November 7 in Prince George.
An online discussion will be held November 1 via Zoom.
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