WINCHESTER — Some dairy farmers aren’t ready to lap up their marketing board’s medicine on milk quota prices.
Starting with a core group in the Chesterville area, those unhappy producers have formed the Ontario Quota Rights Organization in response to this fall’s controversial intervention by the Dairy Farmers of Ontario to devalue milk production quota.
Criticizing the DFO as "undemocratic," the group intends to make an appeal to the Ontario Farm Products Marketing Commission, organizers say.
The right to produce one kilogram of milk solids per day in Ontario — the output of roughly one cow —hit nearly $31,000 on the October monthly quota exchange hosted by the DFO. Later that month, expressing concern over rising farm debt levels, the DFO board suddenly cancelled the November exchange — two days before opening — and announced it was considering eventual quota-sale holdbacks or "assessments" of up to 50 per cent in an attempt to cut quota prices.
While the board unanimously scrapped that proposal Oct. 31 in the wake of a producer furor, it did approve a modified assessment regime and other tweaks Nov. 17. The changes, including a minimum 15 per cent assessment on off-farm quota sales, are effective with the resumption of this month’s exchange, which the board set for Nov. 27-Dec. 11.
But dissatisfied producers, including John and Susanna Cayer of North Dundas Township, the respective chairman and secretary of the new Ontario Quota Rights Organization, view the intervention as an equity grab made without proper sharing of information with producers.
"They haven’t shown us any documentation this assessment will meet the desired objective," Susanna Cayer told The AgriNews by telephone Nov. 29. "And they haven’t told us what the objective is, and until they do, we can’t support this.
"We’re against the lack of information."
The DFO’s approval and rollout of the new assessment scheme follows the OQRO’s written demand for more time to accommodate impact studies, "proper" disclosure of information as well as a producer vote, according to documents supplied by the organization, which has retained the legal services of Miller Thomson Pouliet. The law firm earlier put a warning letter in the hands of the DFO board as it deliberated over the initial assessment proposal Oct. 31.
With a milking herd of 44 cows, the Cayers say they were planning to exit the dairy industry in the next year or two because John, after 25 years in the business, is dealing with a health issue.
But the sudden uncertainty over quota prices had thrown a monkey wrench into the idea when the couple spoke to The AgriNews Nov. 16, a day before the DFO was due to hand down its policy decision.
"We’ll have to farm until I’m 65," John said from their North Dundas Township farmhouse, the same spot where a small group of producers gathered four weeks earlier to establish the OQRO. "I might have to work another 10, 15, 20 years."
Aside from years of extra labour to make up for lost equity, a depreciation in quota values wrought by the DFO "won’t be the end of us," conceded Susanna, seated at her kitchen table. "We can manage."
However, she foresaw a dire impact on more heavily indebted farmers, those who borrowed lots of money to buy large amounts quota at current prices, should the DFO push quota prices down. "Already, the stress on people is astronomical," she said, later asserting, "You’re going to see people committing suicide or killing somebody."
John also warned of negative spin-off effects in the broader local economy, saying he had heard of an Eastern Ontario veterinarian whose business dropped by half while farmers put spending on hold pending the outcome of the DFO’s decision.
The OQRO has attracted a burgeoning membership in very little time, according to the Cayers. "It’s more than two and less than 200, that’s what I’ve been telling people," said Susanna.
Calls are coming in from around the province, and "it’s getting bigger and bigger every day," said John. "There’s been a lot of interest, and a lot of cheques."
To defray legal and office supply expenses, the membership fee is set at $10 per kg of quota held by a producer, they said.
Back from Quebec
Founding members include Dundas Federation of Agriculture president Jackie Pemberton, who serves as treasurer, Brian Powell, Darwin Ziebarth, Jean-Marie Menard, Adrian
Wynands and retired outspoken Winchester dairyman Denis St. Pierre.
They were among 13 Ontario producers who travelled to Quebec City Nov. 14 for a joint media conference with a parallel group in La Belle Province — Rassemblement pour les droits des producteurs de lait — employing the same lawyers.
The visit coincided with the semi-annual meeting of the Federation of Quebec Milk Producers, whose members happened to vote in favour of capping quota values at $30,000 per kg that day, Susanna Cayer said.
It was unclear how this would affect plans for a 30 per cent assessment approved earlier this month by the Quebec Federation, she said.
According to DFO’s web site, the latest policy changes at the Ontario quota exchange include:
• A 15 per cent transfer assessment for quota sold at a Market Clearing Price up to $30,000, with gradually higher percentages levied beyond that price;
• An assessment exemption for same-site ownership transfers and on the last 10 kg of quota sold by a producer;
• Making buyers pay what they bid if the amount is higher than the Market Clearing Price;
• 10-year limits on the guarantee or "letters of direction" for creditors that loan money on quota purchases.
Region 2 DFO dairy representative Norma Winters told The AgriNews that the approved sliding scale of assessments applied against quota at time of sale would effectively function as a cap on the amount received for each kilogram of quota sold.
The 15 per cent holdback will rise in gradual increments when the monthly quota exchange supports a clearing price above $30,000/kg, thus ensuring the seller a maximum of $25,500/kg in all cases, she said.
"I think it’s fair to everybody," said Winters, adding the new policy appeared to be generating relatively little controversy now that producers had gotten a look at it.
But what will the DFO do with the extra money it collects from quota buyers who bid more than the market clearing price? For instance, if the per-kilogram quota price cleared at $29,000 in a given month, the buyer who bid more — say $35,000 — would end up paying thousands of dollars into DFO coffers.
"Staff will be working on that, " said Winters, suggesting the possibilities include putting the money toward research as well as the deficit in the DFO’s milk-trucking budget.
"Definitely, we want to keep it within the province," she added.
Susanna Cayer said the issue is among those being explored by the OQRO’s lawyers, including the question of whether the DFO is engaging in a form of illegal taxation by pocketing excess cash from high bidders.
News.
December, 2006
Vol. 30, No. 12
