Don't expect to see Dairy Farmers of Ontario (DFO) get into the processing business.There's no money to be made, says chairman John Core, Wyoming. While the DFO doesn't have a position on getting into processing, Core's personal opinion is that it is a huge investment at this point and returns are no better than putting money into a savings account.
Core's comments came when milk committee members were asked where they saw the DFO going in the next five years. Core noted that other milk marketing boards that make up the six-province pool in eastern Canada are involved in the processing industry and admitted that DFO is unique because it doesn't have a stake.
Ault's Foods has suffered through low earnings during the last three months, and Beatrice has been going through financial pains. There's no real clue as to the financial status of the privately-owned Neilson's Dairy.
Core says Ontario's Gay Lea, Alberta's Dairy World and Quebec's Agropur started on a small base and grew. "There's a lot of equity involved," he says. But there isn't a big return on that equity when everything is taken into consideration. If people want to be dairy co-op members, Gay Lea is still selling memberships, he says. And with Agropur buying Brant Dairy, it should be possible to buy shares in that co-op as well.
"If you ever do decide to be in processing, it's a big investment." He estimates that every producer in the province would have to put up close to $75,000 on average to buy a processing company that has equity of $750 million and returns less than interest rates.
It's better to form alliances with stakeholders in the dairy industry, he says. The Moo container programs launched last fall was a good example. "Now the 22 dairies are all keen about the next thing we do together."
Milk consumption across the province rose during the promotion. - DS
World prices have peaked, report says
Farmers shipping milk outside of the quota system and into world markets, take note. Things are about as good as they get.World prices have peaked, and no one is forecasting increases, says a report prepared by Phil Cairns, senior policy analyst, Dairy Farmers of Ontario (DFO).
Steady prices are likely for the next couple of years because of decreased production in New Zealand and continued production restrictions in the European Union (EU). But the relatively strong prices producers are now getting for over-quota production are less secure because they also depend on Canada maintaining a relatively low dollar.
Producer returns are directly linked to exchange rates. And the current gross returns of $29.65 per hl for butter and skim milk powder, before DFO administration and transportation charges, equate to only $25.22 if the Canadian dollar gains strength and goes to the US$1.21 level seen four years ago. Cairns says other reasons for good prices include:
- Low world stocks of butter and skim milk powder;
- Declining production in Russia and possible purchases;
- A three to five-per-cent cut in production in the EU by the year 2001 because of GATT subsidy restraints;
- Difficulty sustaining American production increases because of higher feed costs and low milk prices.The EU sells half of the production on world markets, Cairns says, and appears to be cutting production by use of its super levy system. This has a substantial effect on world surpluses since it takes a 1.7-per- cent increase in American production to cover a one-per-cent decrease in European production, he says.
Grant MacLaren, DFO director, says there are limits on dollar totals that can be put on exports and limits as well on the volume of products that can be subsidized for export.
DFO chairman John Core says Canada did better than Europe during the last round of GATT talks when it comes to dairy subsidization. A lot of milk can be sold as powder because of Canada's history of large amounts of exports. But there is a limit to the amount of butter.
Last year, milk deliveries were up 1.5 per cent in the EU compared to 1994. In the meantime, Russian milk production was down 13.6 per cent last year compared to 1994, with reductions of between three and eight per cent being forecast for 1996. There's a heavy penalty to be paid for overproducing milk in Europe under a super levy system, says Jason Rankin, a Northern Ireland dairy farmer. European farmers are facing that penalty now as they near the end of the European Union's dairy year.
Producers get a two-per- cent grace on their quota. So farmers with the right to produce 500,000 litres of milk can produce 510,000 before they get hit for overproduction. Production beyond that level incurs a super levy, set at 25 per cent above the price for milk. So a farmer who has been getting 25 pence for each litre of milk will be fined 31.25 pence for every litre produced over quota.
The alternative to suffering through punitive penalties is either to lease or buy quota. Leasing is allowed until Dec. 15 in any given quota year, at a cost of between 12 and 20 pence per litre. The quota transfers back to the original owner after the end of the dairy year.
Purchasing is allowed until seven days after the end of the dairy year and the transfer is permanent. Costs range from 55 to more than 70 pence per litre, with prices trending upwards towards the end of the year.
But a farmer can over-produce not merely by milk volume. For every 0.01-per-cent butterfat above or below the base level, the farmer's production quota rises or falls by 0.18 per cent. Good quota management requires careful monitoring, Rankin says. Since the quota year runs from April to March "you can fine tune with winter concentrates as you get nearer the end." - DS
Pasteur's successor?
Move over Louis Pasteur; a replacement may have been found for your century-old milk treatment system.Liquid foods such as milk and fruit juices can be treated with high-voltage, short-time electrical pulses. There's no heating or loss of flavour and the system requires a mere fraction of the energy needed to pasteurize food.
University of Guelph engineering professor Gauir Mittal explains that the process works by applying voltage for one-millionth of a second to food between two electrodes. Microbial decay is caused, but vitamins are unaffected. The shelf life of food products is also extended beyond that of pasteurized foods because spores are also destroyed. Mittal is working with Guelph food scientists Mansel Griffiths and Bill Keith, along with the University of Waterloo's James Cross.
Work so far has been aimed at reducing the cost of a commercial food treatment unit to $20,000 from about $100,000. But more work is still needed to prove that the treatment's safety and efficacy, Mittal says. It's unlikely that any one person's name will be as attached to this process as Louis Pasteur's was to his heat treatment method for destroying harmful bacteria. Similar research with electric pulses is going on in Japan, Germany and the U.S. France is coming on strong with its dairy breeding programs. Jean Claude Mocquot, head of the genetics and performance testing department at the Institut de l'Elevage, cites France's national technical structure. There are 1.9 million Holstein cows on milk recording in France. An agreement was signed last year with three U.S. co-operatives - Select Sires, Accelerated Genetics and Sire Power - for the companies to acquire semen for distribution throughout the U.S.
More Metzger fallout
The College of Veterinarians of Ontario (CVO) has struck a task force to look into dispensing drugs to food-producing animals in the province.The college is the disciplinary body which registers all practising veterinarians in the province and oversees their activities. It has been in the public eye in recent months because of a controversial disciplinary hearing into the practices of Linwood-based Metzger Veterinary Services. Chairman of the task force, Dr. Alex Martin, the college's second vice president, says the task force's purpose is to educate the public on current regulations governing drug dispensation in Ontario. Members of the task force are also invited to comment on the existing legislation.
The task force will have members from provincial beef, dairy, pork and poultry producer groups, the Consumers Association of Canada, the Ontario Veterinary Medical Association, the provincial ministry of agriculture, as well as associations representing swine and bovine practitioners, the CVO and the Ontario Veterinary College.
The public's interest will be the responsibility of a representative on the CVO's governing council, and the Consumers Association of Canada task force, CVO communications co-ordinator Michele Fagan says.
There will be no specific public forum, she says, but presentations will be invited from the College of Pharmacists, the Livestock Marketing Association and the Ontario Meat Packers and Processors Association. The task force plans to meet for the first time on May 8. Reports from the meetings will be reported in the college's newsletter.
While the Metzger Veterinary Services disciplinary hearing attracted wide attention in the farm press, Fagan says the college looks on this task force as "a positive, and proactive approach to educating the public" on drug dispensing in Ontario. Metzger's firm pleaded guilty to violating the college's dispensing rules.
By ROBERT IRWIN
The most common challenge I've faced, while chatting with farmers at this winter's round of meetings, goes something like: "why do I need the Internet?" If you are a dairy farmer the answer is: DAIRY-L.DAIRY-L is a listserv. It is the ultimate information source for dairymen and it is absolutely free. Unlike most experts, DAIRY-L doesn't require an appointment during business hours. Anyone with e-mail access can subscribe to a listserv. Listservs are simply mailing lists.
When you post a message to a listserv, everyone on the list sees your message. They can e-mail their reaction to the list or, as sometimes happens, they may respond to you by private e-mail.
What really sets DAIRY-L apart from other Internet resources is the wide range of public and private sector dairy experts which make up the approximately 2,000 subscribers-participants in this working group. Veterinarians are the most numerous but the group also includes producers, researchers, government officials, students, and consultants.
Some of the world's leading experts regularly field questions on topics such as genetics, nutrition, engineering, housing, and reproduction. You don't have to make an appointment or play telephone tag or figure out what time zone they're in. You simply pose your question when you have time and check your computer at your convenience for the answer.
The service really shines when you are looking for information on brand new technology or seeking ways to solve a unique management problem. Controversial topics such as stray voltage, BST and use of Rumensin in dairy feed have been discussed extensively.
A search of the DAIRY-L archives will reveal every word that has ever been posted on these or any other subjects. "Search mastitis in DAIRY-L since Feb 96", for example, is a typical search command that will put everything posted about mastitis since February in your e-mail box. As with any other listserv, courtesy demands that you check the archives to ensure that you aren't cluttering the system with a question or topic that has already been done to death.
American extension workers Mark Varner and Roger Cady launched DAIRY-L in 1990 to compensate for declining U.S. federal and state extension resources devoted to the dairy industry. Until about 1992, Internet use was restricted to a few select groups such as the U.S. military, academics and large computer companies. As the farming community gains access to Internet, and the decline in government dairy resources continues, interest in DAIRY-L continues to climb.
There is a nice Ontario connection too. Cady met his wife Mary Lynn Milne while doing post doctoral work for Dr. Ted Burnside at the University of Guelph in 1980-81.
Milne is the daughter of noted OMAFRA engineer Bob Milne who worked out of its Woodstock office from 1956 until a few years ago. And Cady wrote the first computerized system used to evaluate Ontario bulls for calving difficulty.
Several people have urged me not to mention DAIRY-L in this column. They fear that too many users or the wrong kind of person could spoil this incredible project.
Before anyone flames my e-mail, consider that DAIRY-L has already been featured on U.S. Public television and in national dairy magazines so it's too late to keep it under wraps. Besides, Varner and Cady keep the lunatic fringe off DAIRY-L, filter out junk mail and keep topics focused. In a future column I'll discuss some of the other agricultural Listservs which live in the shadow of DAIRY-L. If you are ready to join DAIRY-L, the address is listserv@umdd.umd.edu. In the body of your e-mail message type: "subscribe DAIRY-L John Smith" if you happen to be John Smith. Otherwise, insert your own name.
Do you have a favourite Internet site or computer program to share with our readers? e-mail rirwin@hawk.igs.net
Robert Irwin is Farm & Country's computer guru.