DFO annual meeting

DFO FOCUSED ON PROFITABLE, GROWING DAIRY INDUSTRY

Editor’s note: Dairy Farmers of Ontario (DFO) held its annual general meeting virtually on Jan. 19, 2022. More than 600 guests, including producers, processors and industry partners, joined DFO’s Board and staff to receive industry updates from DFO and industry leaders. This article provides a brief highlight of the presentations. To watch the year-in-review video, visit DFO’s website at https://bit.ly/3ATAtj8.

Dairy Farmers of Ontario’s (DFO) board was very engaged in tackling issues throughout the past year, with the overall goal of sustaining a profitable, growing dairy industry, says Murray Sherk, DFO’s chair in his opening address.

“We continued to execute on the immediate needs of our farms, supply chain and staff while staying focused on our longer-term vision. There were many instabilities in demand for dairy products, but there were some encouraging results last year,” Sherk says.

Some highlights in 2020-21 included dealing with the ongoing fluctuating demand for milk and adapting to a changing marketplace, ensuring there was enough milk for innovation and growth, implementing the proAction environment module, as well as working on DFO’s sustainability strategy.

Partnerships were also a key focus area this past year, with DFO increasing its collaboration with the Ontario Farm Products Marketing Commission, Ontario Dairy Council, Ontario Milk Transporters Association, the University of Guelph and Dairy Farmers of Canada.

With the effects of dramatic weather events, the pandemic, supply chain disruptions, high commodity and fertilizer prices and political tensions, it has become near impossible to forecast what’s ahead for 2022, Sherk concedes, adding the board will continue to focus on achieving sustained market growth, with particular attention on consumer buying patterns considering the recent price increase.

“Consumers today have more dairy alternatives available to them than ever before and if we want them to keep buying real dairy products, we need to be listening to what is important to them; and for many that is an emphasis of transparency, environmental sustainability and animal welfare,” he says.

Cheryl Smith, DFO’s chief executive officer, echoes Sherk’s view on providing transparency in the industry.

“This year, we will work to grow our influence and credibility, to reinforce a culture of accountability and customer service, and to increase productivity,” she says during her business update.

Canada’s supply management system has shown its resilience and flexibility to deal with market volatility during the pandemic and has put the sector in a strong position as it continues to face uncertainty, she says, adding DFO remains anchored in its objective to increase dairy consumption across the province by continuing to make dairy an inspired food choice with consumers.

Given recent data from NielsenIQ, both Ontario’s and Canada’s dairy industries are poised to continue benefitting from increased dairy consumption throughout 2022. According to keynote speaker Francis Parisien, senior vicepresident of sales for small and medium businesses in Canada for NielsonIQ, 62 per cent of Canadians are still cooking at home instead of eating out due to the pandemic, which is not expected to decrease any time soon. He adds outlook and growth opportunities remain positive for dairy categories in Canada.

“Canadians are telling us they will continue to spend on dairy products, such as breakfast categories and coffee … this is a great opportunity to get into cross-marketing opportunities in the coffee department,” he says. “Forget about going back to normal, it’s about being innovative and adapting to a changing market.”

HIGHLIGHTS OF DFO’S BUDGET

DFO’s 2020-21 fiscal concluded with a $1.6 million surplus. Revenue were favourable to budget by $600,000, of which $400,000 was from licence fee revenue increases, says Rey Moisan, DFO’s chief financial officer.

Expenses for the fiscal year came in at $1.7 million favourable to budget, but in line with 2020 results. Capital expenditures were $450,000 favourable to budget, comprising $250,000 favourable in the general fund and $200,000 in the marketing fund.

Looking at the current fiscal year (Nov. 1, 2021 to Oct. 31, 2022), DFO is forecasting a $900,000 deficit. There will be no increase to licence fees. Revenues are budgeted to increase by $500,000 due to a 3.1 per cent budgeted increase in production volumes and a small increase in interest income. However, expenses are budgeted to increase by $3.2 million to $23.2 million and capital expenditures are expected to further decrease by $200,000 to $580,000.

“There are always uncertainties in budgets. We monitor results monthly and update our forecasts,” Moisan says, adding DFO reviews risks and opportunities for both revenues and expenditures and adjusts plans accordingly.

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A MESSAGE FROM DAIRY FARMERS OF CANADA’S PRESIDENT

By Dairy Farmers of Canada CONTRIBUTOR

As we move into 2022 with its new and familiar challenges, many of us will gather virtually for our sector’s advocacy day on Feb. 1 and our 2022 annual dairy policy conference on Feb. 2 and 3. These events provide excellent opportunities to discuss some of the issues facing our sector and identify future opportunities in dairy farming. Both will feature a range of guests discussing different aspects of this year’s theme: sustainability.

Environmental sustainability is a subject that touches all of us. Last year, when faced with drought, fire and floods, dairy farmers across Canada showed great community spirit in helping those affected by these events.

Part of our support efforts included a staff fundraiser, where DFC employees pulled together more than $9,000 for the B.C. dairy fund. As well, in collaboration with brands, such as Gay Lea Foods and Lactalis Canada, DFC was proud to help cover the transportation costs for much-needed donations of milk replacer sent to B.C. farms, which provided nourishment for calves affected by floods.

From severe weather to a global pandemic, Canada’s dairy farmers have worked hard over the past year to adjust to the unprecedented conditions of our times. However, the sharp rise in inflation caused by the pandemic is a problem for all Canadians, and farmers are not immune. To help offset these rising costs, the Canadian Dairy Commission (CDC) announced an increase in the farmgate prices for milk and butter, to be implemented this year.

Regarding compensation promised for the Canada-United States-Mexico Agreement (CUSMA), the third payment under the dairy direct payment program has become available to producers. For those who have yet to do so, you must register by March 31, 2022 to receive payment. Letters were mailed to eligible producers containing required information.

A SUMMARY OF THE CUSMA PANEL FINAL REPORT

On Jan. 4, 2022, a final report was released to the public from the CUSMA panel after the U.S. activated the dispute settlement system under Chapter 31 of CUSMA in December 2020.

The panel concluded Canada cannot establish “pools” to reserve access to tariff rate quotas (TRQs) for processors. The panel offers no opposition to the majority of TRQs being allocated to processors, only against the use of pools in administering these allocations. This means Canada cannot, in substance, ring fence and limit a reserved pool of TRQ amounts to which only processors have access.

Though it is not possible to appeal this decision, the panel was clear Canada’s administrative discretion in allocating TRQs is not at issue and the U.S. has conceded this fact. The panel has recognized Canada’s sovereignty in establishing its own TRQ allocation policy and now it is for the Canadian government to assign TRQs and demonstrate support for its domestic dairy sector.

In the meantime, we continue our discussions with government officials to secure compensation for the negative impacts to our industry in the wake of CUSMA.

Despite all we’ve faced and will face, dairy farmers are resilient, and I know we will keep striving and evolving to be our best. In this spirit, I would like to extend my congratulations to Jennifer Hayes on her landmark appointment as the first female CDC chair. We look forward to working with the CDC under her experienced leadership and trust she will continue the important work of keeping our industry competitive and innovative for the benefit of all Canadians.

PIERRE LAMPRON, DFC’s president.

Here’s to another great year producing some of the best milk in the world!

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REGULATION 121 AND REGULATION 761 UPDATES

The proposed amendments to Regulation 121: Raw Milk and Cream Quality Program and Regulation 761: Milk and Milk Products, all under the Milk Act, are now filed and in effect.

Below are the links to read the proposed amendments in full: • Amendment of Regulation 761 - https://www.ontario.ca/laws/regulation/r21901 • Amendment of Regulation 121 - https://www.ontario.ca/laws/regulation/r21902

Dairy Farmers of Ontario’s (DFO) application for use of vertical bulk tank is available in both English and French on DFO’s website, behind the producer password.

UPDATES TO THE QUOTA POLICY BOOKLET

At Dairy Farmers of Ontario's (DFO) Jan. 26 and 27 board meeting, the board approved changes to the Quota and Milk Transportation Policies book, effective Feb. 1, 2022. The changes relate to: • New Entrant Quota Assistance Program (NEQAP) and New Producer Program (NPP) applicants: the timeframe for NPP and NEQAP applicants to commence marketing milk after acquiring quota has been increased from three to six months; • New Entrant Quota Assistance Program: selection priority will be given to applicants with no previous connection to a supply-managed sector. • Shared Facilities: providers can host no more than two additional licences at one time.

To view the Quota and Milk Transportation Policies book, visit DFO’s website at https://new.milk.org/Industry/Programs-and-Policies.

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EXCITING CHANGES COMING TO MILK PRODUCER

Markets section will no longer be published in the magazine, but as a standalone publication

If you read our last issue, you likely saw the sneak peek of the redesigned Milk Producer magazine. We’re working hard to bring this evolution of our official publication to life. As we adapt and evolve, our goal is to advocate for Ontario dairy producers. Through the new Milk Producer magazine, we’ll do just that by sharing stories that are important to you, including policy analysis on decisions that impact your businesses and providing strong takeaways that highlight the Ontario dairy agenda.

Starting next edition with our Late Spring issue, watch for an updated and refreshed look, as well as a new approach to editorial content. We’ll delve into the politics of dairy with a mix of grassroots stories you can look to for inspiration, as well as interviews with some of the major players shaping the face of Ontario agriculture. We hope to give you food for thought and simple, actionable items in advance of the provincial election this June.

In addition, we’ve made a strategic decision to create a new, standalone publication that will house all markets information in one easy-to-reference document. Beginning in March, the twopage Markets section will no longer be available in Milk Producer magazine, but will be provided as a separate document. The new report will continue to be published monthly and made available in both English and French. It will also combine information on retail markets data from the monthly markets report that is currently mailed with the monthly milk cheque statement.

The publication will be sent by email and mailed to select producers, and will be posted on Dairy Farmers of Ontario’s (DFO) website, behind the producer password. Look for more detailed information on these changes in DFO’s regular communication vehicles.

We are excited about these changes and can’t wait for you to see them!