Glut of skim milk in Ontario costing P.E.I. dairy farmers

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Ontario dairy farmers have a problem and its cost is trickling across borders all the way to P.E.I.

By Colin MacLean – Journal Pioneer
According to reports out of the Dairy Farmers of Ontario (DFO) policy meeting, held last week, Ontario dairies have produced millions of litres of skim milk that they don’t have a market for, which means they’ve had to spend more than $1 million to dispose of it.

Jim Day/The Guardian photo - A Holstein at Blue Diamond Farm in South Freetown enjoys a rotating brush that helps cows relieve an itch, gives the animals a nice shine, and even increases milk production.
Jim Day/The Guardian photo – A Holstein at Blue Diamond Farm in South Freetown enjoys a rotating brush that helps cows relieve an itch, gives the animals a nice shine, and even increases milk production.
Most of that milk has ended up in animal feed and some has gone straight to manure piles for fertilizer.

P.E.I. dairy producers, as part of the eastern Canadian milk quota body consisting of Ontario, Quebec and the Maritimes, known as the P5, are on the hook to help pay for the cleanup.

“Sharing revenue also means sharing costs,” said Harold MacNevin, chairman of the Dairy Farmers of P.E.I.

“There’s costs associated with filling the market … but there’s also costs if you don’t have a market for a (milk) component.”

MacNevin was unsure as to exactly how much the dumping will cost P.E.I. producers.

Ontario farmers have paid between 40 and 50 per cent of the cost of that disposal, which was about $1.4 million for the latter half of 2015, but the rest has been made up by the other P5 member province based on their shares of the total quota; P.E.I.’s share is about three or four per cent.

Established in 2010, the P5 Agreement is a deal where the dairy marketing boards in each of the participating province share their revenue and expenditures from the sales of fluid and industrial milk, the core concept being to ensure a stable return for producers across the region. The Canadian Dairy Commission administers the industry on behalf of farmers

Throughout the second half of 2015 the Canadian dairy industry was hit with a huge increase in demand for products produced with butterfat, leading to reports of a butter shortage going into the busy Christmas season.

To help deal with the shortage DFO diverted more milk for butterfat extraction and skim milk is a by-product of that process.

The liquid market for skim milk is minimal, but when dried into a powder, the milk is used in countless products. However, local processors were not prepared to deal with the sudden influx of skim milk last year, leaving DFO with nothing to do with its by-product but dispose of it however it could.

It’s estimated that DFO has been disposing of about two million litres of skim milk a week since Christmas and that’s expected to continue until at least May.

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