MARKETS Quota reduction takes effect L imiting the accumulation of surplus butter stocks is one reason producer quotas in Ontario were reduced by just under one per cent effective Dec. 1. The reduction is needed to help bring producer quotas in line with the province’s actual quota holdings and market requirements, says Phil Cairns, Dairy Farmers of Ontario’s senior policy advisor. “The reduction will also allow us to better manage production in the coming months in light of the increasing production trend and the surplus butter stocks that have been and are being accumulated at the national level,” says Cairns. The reduction applies to nonsaleable quota. Part of the P5 harmonized quota policy agreement, the adjustment removes quota DFO issued to producers more than a year ago to encourage production in the aftermath of poor feed quality from the 2008 harvest. Producer quotas in Ontario and the other four provinces in the P5 pool were over-issued for most of the 2008-09 dairy year, and did not reflect actual market demand. Cairns notes producers could see further quota reductions early March or April, after the Canadian Milk Supply Management Committee meets late January to review current production trends and the butter stock situation. Incentive days ended Fall incentive days of two days per month ended in November. Starting Dec. 1, producers must ship within their monthly quota and credits to receive within-quota prices. Producers are also reminded overproduction credits are being reduced from 20 days to 10 days effective P5 and Western Milk Pool blend prices* The graph below shows the 12-month blend price for the P5 provinces and the Western Milk Pool (WMP). *There is a two month lag reporting these figures. Solids non-fat to butterfat (SNF-BF) ratio This graph shows Ontario’s SNF-BF ratio for the last 12 months in relation to Ontario’s target SNF-BF ratio of 2.2840. 2.45 76 74 72 70 68 66 P5 $71.89 WMP $74.18 2.4 SNF-BF Ratio 2.35 2.3 2.25 2.2 2.15 2.2436 Blend price in $/hL Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 April 2009 May 2009 June 2009 July 2009 Aug 2009 Sept 2009 P5 blend price WMP blend price Ontario’s SNF-BF ratio 44 | December 2009 | MilkPRODUCER Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 June 2009 July 2009 Aug 2009 Sep 2009 Oct 2009 Target SNF-BF ratio
Table of Contents for the Digital Edition of Milk Producer - December 2009