Dairy producers tackle changing consumer trends

LITTLE CURRENT—The tide has turned in favour of fat, as after years of being cast as a dietary demon, butter has regained its good name and reigns as a lost leader in local grocery stores across North America.

“The trend has really changed,” said Dairy Farmers of Ontario (DFO) Director Steve Runnals, addressing the March 10 meeting of the Dairy Farmers of Ontario Manitoulin West Sudbury Dairy Producers annual general meeting held at the Little Current United Church hall. “People want to put dairy fat back into their diets. Many stores are now using butter as a lost leader in their stores.” Mr. Runnals also noted that coffee and donut giant Tim Horton’s continues to dominate as a consumer of cream.”

While skim milk sales have seen a decline, that decline has been offset by a consumer move to an increased consumption of two percent and whole milk products. “Ice cream sales, which have seen a steady decline of four to five percent a year, actually rose by .1 percent in January,” he noted.

A bigger challenge facing the industry is that producers are having difficulty keeping up with demand. “We physically couldn’t produce enough butter,” said Mr. Runnals. “This should trigger a quota increase down the road.”

But capacity remains a big issue, with dryers to produce powdered milk aging “not just in Ontario, but across Canada,” he said. “They are quite old.”

The province has been moving forward with an ingredient strategy in the absence of action at the national level, said Mr. Runnals, but that move met with pushback. “There were a lot of hard feelings at the national table,” he said. Both Saskatchewan and Manitoba have also indicated that if no national strategy is forthcoming they will be looking to Ontario’s model.

Mr. Runnals noted that the national table has, in fact, brought forward a plan that, in the end, closely resembles the Ontario proposal.

The Ontario proposal notes that “the current market for dairy ingredients, such as proteins and skim milk solids, has not been sustainable for years. The Canadian dairy industry has shown the current infrastructure, in particular dryers, has reached its capacity. Imported proteins are increasing daily, and domestically produced protein is not priced competitively to be a viable alternative for use in the domestic market.”

Because the domestic suppliers cannot meet the demands of the market, small producers will be forced to either use imported milk proteins or go out of business.

The strategy statement goes on to note that “the issue is compounded with growing amounts of domestic solids-not-fat (SNF) ending up as animal feed while, at the same time, legally permitted imports of milk protein isolates (MPI) and ultra filtered milk ingredients in a liquid form are increasing.” Concluding that, “The capacity to dry skim milk was effectively reached in the spring of 2015. This has serious implications limiting total milk production. Our dairy industry cannot be dynamic, profitable and growing when production is limited.”

The statement goes on to read that “we have unprecedented growth in butter and cream.  The Canadian market requires more butterfat, yet the associated skim milk solids result in limitations that are no longer acceptable. An ingredient strategy directly addresses this situation. We are developing a strategy to encourage and promote investment from all stakeholders: farmers, processors and government.”

By leveraging these three legs to deal with the infrastructure shortfalls and bottlenecks in dairy industry channels, the ingredient strategy will help deal with both that and the looming loss of markets by 2020 by modernizing the industry through the creation of opportunities for processors to invest in new plants and equipment and thereby put Canadian dairy ingredients in a more competitive position.

“Currently, we are living on borrowed time,” pointed out Mr. Runnals. “It is only a matter of time before one of the aging dryers goes down.” The cost and difficulty of repairing those facilities will place a tremendous pressure on the industry.

Currently, there are too many imports of milk proteins coming into the market due to challenges in meeting the demand, he noted.

The DFO intends to begin implementing its ingredient strategy on April 1, 2016. The national meetings continue in the meantime, with the last meeting slated to take place on March 4.

Milk prices saw a fluid price increase of 2.192 percent on February 1, while an increase of 2.192 percent was implemented for industrial productions (except for special classes based on US pricing references), noted Mr. Runnals.

Under the DFO’s proAction program Animal Care and Livestock Traceability will be introduced on September 1, 2017, with validations following the current CQM cycle and a new integrated farmer manual will be issued.

By September 1, 2019 biosecurity becomes mandatory and on September 1, 2021 the proAction environmental regulations become mandatory.

DFO field representative Jean Guy Seguin delivered a report on changes to the inspection regime in the dairy industry in Ontario, with a notable change being that of returning to randomized inspections.

The “changes” were questioned by some producers in attendance, but Mr. Seguin pointed out that the Milk Act provides for the inspection regime. “It is not changing the rules,” he asserted. Although the appointment process, where the inspectors would call before showing up for the inspection, had proven to be less than ideal in enforcing the needed level of quality.

“In the past we might see four issues a month, there have been four just this week,” he said. “Where we used to see four a month, now we are seeing four a week.”

Under the new inspection regime, if a farm fails to meet grade A level the frequency of inspections will increase on a sliding scale.

Grade A farms will see inspection followups of 24 months or less, conditional Grade A will be inspected every 12 months or less, non-Grade A will see inspections every three months or less while unsanitary non-Grade A will cease production and when issues are corrected will be subject to inspections every three months or less.

Local dairy operations continue to excel, however, and Mr. Seguin was pleased to present a certificate of quality to Oshadenah Holsteins and the Anstice family and “in what has become an annual tradition” a gold certificate to the farm of Brad and Bud Wilkin of Little Current.

Elections for the 2016 board of directors were then overseen by Mr. Seguin, with all positions filled by acclamation. The new board consists of John Mooney, Alex Anstice, Alan Emiry, Bill Orford and chair Keith Emiry. Sally Orford was returned a secretary.

The committee was introduced to the new dairy educator for the region, Leslie Salo of Massey, a supply teacher with the Rainbow District School Board. Ms. Salo said that she was excited going forward, having sought the dairy educator position for several years.