How Canadian Dairy Farms Can Adjust to New Dairy Demand
How Canadian Dairy Farms Can Adjust to New Dairy Demand
Many changes occurred around the world as a result of the coronavirus pandemic. In Canada, while schools and businesses closed, consumers flocked to the supermarkets to buy essentials.
Perishable goods flew off the shelves, resulting in limits being placed on items like dairy and poultry. The standard distribution system schedule put in place for dairy products could not keep up with buyers’ increased shopping.
While retail demand from grocers skyrocketed, orders from the foodservice industry plummeted. This has resulted in unforeseen fluctuations in the dairy market.
Hotels, restaurants, schools and eateries are closed or operating at limited capacity. As a result, there is now an enormous surplus of milk that has nowhere to go. Farmers are not equipped with storage spaces to accommodate the excess supply. Unlike agriculture products like potatoes, milk has to be sold immediately or risk spoilage.
Cows will continue producing milk, regardless of fluctuations in the market. While farmers have the option to reduce the size of their herd or change diet or nutrition, these things could prove detrimental when the market stabilizes.
The Supply Management System
A supply management system controls production quotas and imports for Canadian dairy, chicken, turkey and eggs. It was established in the1970s to coordinate production and demand while simultaneously controlling imports. By operating under this method, prices are stabilized for both producers and consumers.
A national agency represents each industry, and they are in charge of setting production levels that match provincial demand. Farmers in each province are allocated production quotas that are meant to prevent surpluses or shortages.
The original quotas were based on consumer needs pre-pandemic. As a result of these unforeseen events, farmers must now adjust to the new Canadian dairy demand. Here are four main ways farmers can adapt to the changing times.
- Dump the Milk
Producers say that discarding raw milk is inevitable at this stage. Farmers are reporting that they have been asked to take turns dumping milk. Although they’re paid for it, the waste could amount to as much as 5 million litres every week.
This disposal method is unsustainable and should only be utilized while the market is above capacity. Cows must continue to be milked to keep them comfortable and healthy, and production must continue to ensure product availability in retail stores.
- Donate to Food Banks
Rather than dumping milk, some farmers have begun donating to food banks to support Canadians in need. While this is a positive form of dispersing the milk surplus, it has the potential to overwhelm food banks that may not have the storage capacity to support this influx.
Additionally, the raw milk provided from farmers must be processed, which complicates the standard donation process.
- Improve Operations
Dairy farmers should focus on improving operations to become more efficient and cost-effective. Many producers have begun investing in updated equipment and robotics to save time and money. Competition is set to increase as a result of import growth projected for the next decade. To maintain a market edge, operations should be improved and simplified wherever possible.
- Expand or Retire
In 2019, the Canadian federal government announced an aid package valued at $1.75 billion to compensate supply-managed dairy producers over an eight-year period. The Dairy Direct Payment Program is one part of this aid package and provides $345 million payments as compensation during 2019 and 2020.
The aid package was proposed as a result of import shifts. The Canadian government has opened part of its domestic market to foreign producers as part of several free-trade negotiations. To adapt to increased competition from foreign products, Canadian producers should plan to expand their operations or retire. Larger farms will be able to sustain demand while simultaneously upgrading their methods to be constantly improving.
Smaller producers may not be able to afford the necessary production updates to keep up with competitors.
These are unprecedented circumstances. As schools, businesses and restaurants reopen, dairy demand will increase. With indoor capacity requirements and shifts in consumer trends, consumption levels will undoubtedly continue to fluctuate.
While farmers should take steps to dispose of surplus responsibly, they should not halt production or decrease their operation size.
Read more from Emily Folk
I’m Emily Folk, and I grew up in a small town in Pennsylvania. Growing up I had a love of animals, and after countless marathons of watching Animal Planet documentaries, I developed a passion for ecology and conservation. You can read more of my work by clicking this link: Conservation Folks.
Canadian Federal Government Taking Measures to Reduce Impact of COVID-19 on Agriculture
11 states consider ‘right to repair’ for farming equipment
By Jesse Bedayn in Denver
DENVER (AP) — On Colorado’s northeastern plains, where the pencil-straight horizon divides golden fields and blue sky, a farmer named Danny Wood scrambles to plant and harvest proso millet, dryland corn and winter wheat in short, seasonal windows. That is until his high-tech Steiger 370 tractor conks out.
The tractor’s manufacturer doesn’t allow Wood to make certain fixes himself, and last spring his fertilizing operations were stalled for three days before the servicer arrived to add a few lines of missing computer code for $950.
“That’s where they have us over the barrel, it’s more like we are renting it than buying it,” said Wood, who spent $300,000 on the used tractor.
Wood’s plight, echoed by farmers across the country, has pushed lawmakers in Colorado and 10 other states to introduce bills that would force manufacturers to provide the tools, software, parts and manuals needed for farmers to do their own repairs — thereby avoiding steep labor costs and delays that imperil profits.
“The manufacturers and the dealers have a monopoly on that repair market because it’s lucrative,” said Rep. Brianna Titone, a Democrat and one of the bill’s sponsors. “(Farmers) just want to get their machine going again.”
In Colorado, the legislation is largely being pushed by Democrats while their Republican colleagues find themselves stuck in a tough spot: torn between right-leaning farming constituents asking to be able to repair their own machines and the manufacturing businesses that oppose the idea.
The manufacturers argue that changing the current practice with this type of legislation would force companies to expose trade secrets. They also say it would make it easier for farmers to tinker with the software and illegally crank up the horsepower and bypass the emissions controller — risking operators’ safety and the environment.
Similar arguments around intellectual property have been leveled against the broader campaign called ‘right to repair,’ which has picked up steam across the country — crusading for the right to fix everything from iPhones to hospital ventilatorsduring the pandemic.
In 2011, Congress passed a law ensuring that car owners and independent mechanics — not just authorized dealerships — had access to the necessary tools and information to fix problems.
Ten years later, the Federal Trade Commission pledged to beef up its right to repair enforcement at the direction of President Joe Biden. And just last year, Titone sponsored and passed Colorado’s first right to repair law, empowering people who use wheelchairs with the tools and information to fix them.
For the right to repair farm equipment — from thin tractors used between grape vines to behemoth combines for harvesting grain that can cost over half a million dollars — Colorado is joined by 10 states including Florida, Maryland, Missouri, New Jersey, Texas and Vermont.
Many of the bills are finding bipartisan support, said Nathan Proctor, who leads Public Interest Research Group’s national right to repair campaign. But in Colorado’s House committee on agriculture, Democrats pushed the bill forward in a 9-4 vote along party lines, with Republicans in opposition even though the bill’s second sponsor is Republican Rep. Ron Weinberg.
“That’s really surprising, and that upset me,” said the Republican Wood.
Wood’s tractor, which flies an American flag reading “Farmers First,” isn’t his only machine to break down. His grain harvesting combine was dropping into idle, but the servicer took five days to arrive on Wood’s farm — a setback that could mean a hail storm decimates a wheat field or the soil temperature moves beyond the Goldilocks zone for planting.
“Our crop is ready to harvest and we can’t wait five days, but there was nothing else to do,” said Wood. “When it’s broke down you just sit there and wait and that’s not acceptable. You can be losing $85,000 a day.”
Rep. Richard Holtorf, the Republican who represents Wood’s district and is a farmer himself, said he’s being pulled between his constituents and the dealerships in his district covering the largely rural northeast corner of the state. He voted against the measure because he believes it will financially impact local dealerships in rural areas and could jeopardize trade secrets.
“I do sympathize with my farmers,” said Holtorf, but he added, “I don’t think it’s the role of government to be forcing the sale of their intellectual property.”
At the packed hearing last week that spilled into a second room in Colorado’s Capitol, the core concerns raised in testimony were farmers illegally slipping around the emissions control and cranking up the horsepower.
“I know growers, if they can change horsepower and they can change emissions they are going to do it,” said Russ Ball, sales manager at 21st Century Equipment, a John Deere dealership in Western states.
The bill’s proponents acknowledged that the legislation could make it easier for operators to modify horsepower and emissions controls, but argued that farmers are already able to tinker with their machines and doing so would remain illegal.
This January, the Farm Bureau and the farm equipment manufacturer John Deere did sign a memorandum of understanding — a right to repair agreement made in the free market and without government intervention. The agreement stipulates that John Deere will share some parts, diagnostic and repair codes, and manuals to allow farmers to do their own fixes.
The Colorado bill’s detractors laud that agreement as a strong middle ground while Titone said it wasn’t enough, evidenced by six of Colorado’s biggest farmworker associations that support the bill.
Proctor, who is tracking 20 right to repair proposals in a number of industries across the country, said the memorandum of understanding has fallen far short.
“Farmers are saying no,” Proctor said. “We want the real thing.”
Jesse Bedayn is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.
New agri-processing tax credit to attract large-scale investment and diversify Alberta economy
Capitalizing on value-added agriculture
Alberta is introducing a new agri-processing tax credit that will help attract large-scale investment, diversify the economy and create jobs for Albertans.
As provinces and states across North America look to capitalize on the potential of the agri-processing industry, Alberta will build on the province’s competitive advantages by launching a new tax credit program in spring 2023. The program will ensure Alberta maintains a competitive edge over other jurisdictions and is able to maximize the number of opportunities that help grow the economy and create jobs.
Budget 2023 will introduce the Alberta Agri-Processing Investment Tax Credit to provide a 12 per cent non-refundable tax credit to support this growth and attract investment. To be eligible, corporations must make a minimum capital investment of $10 million in value-added agri-processing in Alberta.
“Agriculture has been a key part of Alberta’s economy for more than 100 years and I’m excited to see this tax credit program roll out so that it continues to be a key part of our economy in the future. Alberta’s agricultural producers play an important role in feeding the world and I look forward to seeing further innovation and growth in this sector.”
“Alberta has the fundamentals to take our value-added agriculture industry to new heights and meet the increasing global demand for food. The new agri-processing tax credit will allow us to attract large-scale agri-food projects that will help grow our industry, increase opportunities for primary producers, create jobs and feed the world.”
As Alberta’s oldest industry, agriculture is foundational to the province’s economy and identity. Incentivizing large capital investments will ensure the sector remains strong for generations to come and capable of adapting to the economy of the future.
“The Alberta Agri-Processing Investment Tax Credit further positions Alberta as an attractive place to do business. By supporting this quickly evolving and increasingly competitive sector, this government is further encouraging investment that will create jobs and grow Alberta’s economy.”
“With the introduction of the agri-processing investment tax credit, Alberta has positioned itself to attract more large-scale sector investments than ever before from companies like mine. This is the right way for Alberta’s agri-food sector to support diversification, create jobs, compete and win.”
“Alberta is widely recognized in the business community for its competitive tax rates, skilled workforce and strong primary agriculture sector. By offering a 12 per cent tax credit to agri-food processors making a minimum investment of $10 million, Alberta is maintaining its status as a top destination for value-added agricultural projects.”
“Population growth, a changing climate and increased costs of food are all indicators that food security will be a growing challenge. The new agri-processing tax credit program is a great incentive that will continue to highlight rural Alberta as the home of an innovative agriculture industry that plays a vital role in supporting food production.”
- Food manufacturing sales reached a record $20.1 billion in 2021 and the sector employed 22,400 Albertans.
- The food manufacturing sector was the largest manufacturing industry in the province, accounting for 23.8 per cent of total provincial manufacturing sales in 2021.
- Global demand for food is expected to increase by up to 56 per cent by 2050.
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