Dairy farmers across Canada are receiving the equivalent of 48ppl for their milk at the present time.
And they were getting roughly the same price this time last year, according to Tom Kootstra, the Chairman of Alberta Milk.
He milks 150 cows at Ponoka, which is 130 miles north of Calgary. His cows are currently averaging 9,500L per lactation.
“Canada’s milk quota system works because it builds in both a production target, to specifically meet domestic demand for dairy products, and a pricing system, which takes full account of the costs entailed in producing milk,” he said.
“Canada does not seek to export large quantities of dairy products, while imports into the country are severely restricted.”
Mr Kootstra was speaking at this year’s Calgary Stampede. He said that the EU’s quota system had not worked because it failed to deliver prices that took account of the costs incurred by dairy farmers.
“Our system delivers long term stability. This, in turn, is encouraging young people into the sector. Dairy farming is a 24:7 commitment, no matter where the cows are milked. But if there is an element of price stability available to farmers, then it allows them to invest in the future of their businesses in a realistic manner.”
Mr Kootstra admitted that the ‘buy-in’ for fresh starts within Canada’s dairy sector is pretty formidable.
“For someone wishing to develop a 100-cow unit on a green field site, the total cost will amount to ten million Canadian dollars. This includes the acquisition of quota.
“But, provided the business plan is good enough, the banks are prepared to lend money over a 20 year period.”
Kootstra confirmed that Alberta’s dairy quota threshold was increased by 7% last year.
“And we could be looking at a further 2% increase over the coming months,” he said.
“This reflects the growing demand for butter and dairy fats, not just here but around the world. So the outlook for dairy products is bright at the present time.
“Canada agreed to allow an additional 17,700t of cheese exports from the EU on an annual basis, courtesy of the recently agreed CETA trade deal. But this only accounts for about 3% of the total cheese market in Canada.
“Imports at this level will not undermine the principle of the quota system that has served Canada’s milk industry well over many years.”