Milk Producer - April 2009 - (Page 8)

DAIRYUPDATE Harmonization arrives Ontario moving ahead with new quota policies to start taking effect this summer D airy Farmers of Ontario (DFO) will begin implementing new quota policies Aug. 1 as it proceeds with the P5 quota harmonization initiative that had been under review for the last several months. Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island, the five provinces in the P5 pool, developed the policies through a P5 quota committee. “DFO anticipates most of these policies will be implemented in the other four provinces that make up the P5, although there may be some variations from province to province,” says Bill Emmott, DFO chair. DFO’s board decided to proceed with the new policies at its meeting late March. The main policies include a quota price cap, a new entrant assistance program, a change in the over-production credit limit and the introduction of future quota increases as nonsaleable quota. DFO will also eliminate the transfer assessment, 10-kilogram exemption and pay-what-you-bid policies effective Aug. 1, 2009. Some policies, such as the new entrant policy and the upper limit on over-production credits, won’t take effect until later in 2009 or 2010. DFO mailed a letter providing preliminary details about the changes to all Ontario milk producers, and posted the information on its website. Information meetings are being organized to explain the new policies. Here is a summary of new policies as they affect Ontario producers: • The quota price cap will be reduced by $100 each month after Aug. 1, 2009 until a cap of $25,000 is reached Jan. 1, 2010. Quota exchange • All quota is to be offered on the quota exchange except for same-site transfers (family or nonfamily) and donations to a child. • Only a single bid on a quota exchange is permitted. • The monthly quota price will be the price cap or the exchange clearing price, whichever is lower. • If demand exceeds supply at the price cap, sales will be pro-rated in two stages: 1. Fifty per cent of the available quota is allocated to all successful bidders in 0.1 kg increments; 2. Remaining quota is pro-rated as a percentage of the remaining demand. • Producers are permitted to bid for up to 10 per cent of quota holdings, with exceptions for new entrants. • Successful new entrant bidders will be exempt from pro-ration under certain conditions. days for producers who have borrowed 10 days or less. Producers at or above 10 days on Feb. 1, 2010 will only be able to ship 100 per cent of their monthly quota and incentive days, if available, until they reduce their overproduction credits to less than 10 days. • Maximum under-production credit days will remain at 30 days. New Entrant Assistance Program • Ten new entrants per year will be eligible. • A maximum 12 kg will be loaned and the producer must acquire a matching amount. • Quota is returned in one-kg increments starting in year six. • Total quota must be no more than 35 kg to maintain loaned amounts. • A financial business plan verified by a certified accountant and a letter from a lender indicating agreement to finance the operation as outlined in the plan must accompany an application. • An independent third party (not the DFO board) will review applications and conduct a random draw if there are more than 10 eligible applicants in a year. • Applications will be received between Aug. 1 and Nov. 30. • Further details including an application will be provided in the July 2009 issue of The Milk Producer and on the DFO website. Non-saleable quota • All future general quota increases will be non-saleable. • Quota decreases will first come from non-saleable quota followed by saleable quota if necessary. • The non-saleable portion will be the same percentage of total quota for all producers. • When a producer buys or sells quota, a non-saleable portion will move with the saleable portion. New entrants without assistance • New entrants starting without the New Entrant Assistance Program will be eligible to bid on six consecutive exchanges for up to a maximum 35 kg of quota before being subject to the pro-ration process. Quota price cap • The price of quota will be capped at $25,500 per kg effective Aug. 1, 2009. 8 | April 2009 | MilkPRODUCER Over- and underproduction credits • Effective Feb. 1, 2010, maximum over-production credits will be 10

Table of Contents for the Digital Edition of Milk Producer - April 2009

Milk Producer - April 2009
Contents
Editor's Notes
DFO Chair's Message
Dairy Update
DFC Promotion
Industry Roundup
National Policy
Triumph Over Tragedy
Policy Update
Research
Applied Science
Ruminations
Markets
New'N'Noted
Back Forty

Milk Producer - April 2009