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According to a recent news article:

Canadian dairy farmer is speaking out after being forced to dump thousands of liters of milk after exceeding the government’s production quota.

In a video shared on TikTok by Travis Huigen, Ontario dairy farmer Jerry Huigen says he’s heartbroken to dump 30,000 liters of milk amid surging dairy prices.

“Right now we are over our quotum, um, it’s regulated by the government and by the DFO (Dairy Farmers of Ontario),” says Huigen, as he stands beside a machine spewing fresh milk into a drain. “Look at this milk running away. Cause it’s the end of the month. I dump thirty thousand liters of milk, and it breaks my heart.”

Why does this quota exist and does it benefit the consumers of Ontario?

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  • A "quota" would be a set required minimum production. This is a maximum instead. Commented Feb 4, 2023 at 11:58
  • 26
    @KarlKnechtel The word "quota" is used for in both ways. E.g. an immigration quota is a limit, but a diversity quota is a minimum.
    – Barmar
    Commented Feb 4, 2023 at 15:25
  • 3
    politics.stackexchange.com/questions/31456/…
    – Jontia
    Commented Feb 4, 2023 at 21:35
  • JIT inventory systems normally provide higher efficiency but require just the right amount and at just the right time. Cows can't ramp down production, so there will be too much, and it's better not to waste gas trucking around product that that can't be consumed or stored before expiration.
    – dandavis
    Commented Feb 6, 2023 at 22:42

2 Answers 2

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Canada has an agricultural policy called the Market Sharing Quota, which sets a national yearly milk production target. It's part of their broader framework for controlling supplies of dairy, poultry, and eggs, and the intention is to keep prices of these products stable, avoiding random periods of overproduction (lower prices, bad for producers) and underproduction (higher prices, bad for consumers).

The Canadian Dairy Commission sets national dairy policies such as the quota, and according to their Vision, Mandate and Values page the purpose of the Commission is:

Fair compensation

Provide efficient producers of milk and cream with the opportunity to obtain a fair return for their labour and investment.

Efficient supply

Provide consumers of dairy products with a continuous and adequate supply of dairy products of high quality.

And from their What we do page:

Since the introduction of supply management in the dairy sector, the Commission has administered support prices and the national marketing quota. Each year, the Commission sets the support price for butter and skim milk powder after consulting industry members. These prices provide a benchmark and are used by provincial marketing boards to set the price of milk in each province. The Commission also continuously monitors national production and demand and recommends necessary adjustments to the national milk production target.

Although the Dairy Commission allots a portion of the Market Sharing Quota to each province, it's up to each province to decide how to handle their quota allotment. Through the Dairy Direct Payment Program dairy farmers are paid automatically for their in-quota products, based on the target prices the government sets, but are not paid for excess products.

For Ontario specifically, Dairy Farmers of Ontario is a regulatory body that, among other things, handles splitting Ontario's quota among farmers. DFO's Quota and Milk Transportation Policies document from February 1, 2023 details how they handle the quota, and what happens if it is exceeded.

There's a lot of stuff in that policies document, but the gist is:

  • Ontario farmers can only market milk through DFO
  • DFO determines how to split the quota, and may allow above-quota production depending on the market situation
  • Farmers can exceed their quota, but not by much and only if DFO approves
  • If a farmer exceeds their quota by a lot, they a fine based on the volume exceeded as well as other potential penalties

Some of the relevant policies from the document:

  1. General Licensing and Quota Requirements

(a) Quota is the property of Dairy Farmers of Ontario (DFO). It is fixed and allotted to producers on such basis as DFO considers proper and is subject to the terms and conditions of DFO’s quota policies.

...

(g) No person to whom a quota has not been fixed and allotted for the marketing of milk or whose quota has been cancelled shall market any milk.

  1. The Right to Adjust Quota

If necessary, DFO will adjust the quota held by all producers on an equal percentage basis to meet Ontario’s share of the national and/or P5 market requirements

  1. Maximum Quota Levels

(a) Producers are required to obtain approval from DFO before they can exceed 150 kg of quota and again before they can exceed each subsequent 100 kg level (i.e. 250, 350 etc.).

  1. Overproduction Credits

Overproduction credits allow producers to occasionally ship slightly above their monthly quota at domestic prices, with the intent that overproduction credits will be paid back by under-quota production in future months, subject to limitations the Board may place on credit use.

  1. Over-Quota Milk

(b) For milk marketed above 100 per cent of a producer’s quota and available credit and incentive days, or above such level as determined appropriate by the Board, the producer will receive an over quota penalty of $20 per hectolitre (hl) and will be subject to the normal deductions.

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  • much better and detailed than my - now deleted - answer. Not least because it digs deeper into our Canadian supply and purchase bureaucracy system. Commented Feb 4, 2023 at 3:39
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    OK, um... I see a lot of details about what and how the quota is administered. I don't see anything about WHY the quota is in place. I'm looking for things like "the quota was put in place to achieve such-and-such." I'm not the OP, mind you. But the OP did say why does it exist? And how does it benefit consumers?
    – BillOnne
    Commented Feb 4, 2023 at 5:30
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    It looks like the regulation doesn't require the farmer to dump the excess milk, they can just pay a fine. But I guess the penalty is set to be more than the price they can charge for the milk.
    – Barmar
    Commented Feb 4, 2023 at 15:28
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    @BillOnne the answer does address this in the first paragraph; of the goals listed it's the prevention of overproduction that creates a dumping scenario like this. If the regulation has been well calibrated to that aim, the farmer should still have more milk to sell than he had planned for. Selling all the surplus instead of dumping some would clearly benefit him, but make it harder for other farms to sell their milk at a price that covers their costs if they didn't have similar surpluses.
    – Will
    Commented Feb 6, 2023 at 15:35
  • @Will maybe in a sensible system the milk would be sold to market at the usual price, and the revenue would be donated to charity or something (including whichever farmers had shortfalls) Commented Feb 7, 2023 at 17:15
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This article reports on remarks by two dairy farmers from Ontario in explanation of the advantages of the milk quota system.

The basic ideas are these.

  • Stability of supply
  • Stability of price
  • Uniformity of quality levels
  • Collective bargaining on behalf of the producers

The claim is that without the quota system, suppliers would be unable to depend on the price and consumers would be unable to count on the supply and the quality. And the board acts as agents to get good deals from retailers and dairy companies. Additionally, they claim that these require the Ontario laws in support of this process for it to be successful.

In other words it is claimed that, without some such scheme, dairy farmers would vacilate between huge amounts of money and going broke. Dairy product consumers, both dairy companies and individuals, would see large shifts in price from very high to very low. And quality would be unreliable.

Here is where I point out that I am only supplying the claims, not evaluating them.

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    yes, and we might clarify, if just theoretically, that the motivation for those goals is to take staple foods as basic needs that all should have access to, rather than only a source of profit
    – Mike M
    Commented Feb 5, 2023 at 17:40
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    @MikeM Actually, such concerns are no part of stated reasons as to why marketing boards are suggested. The participants pretty much always are in favor of profit.
    – Boba Fit
    Commented Feb 6, 2023 at 14:24

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