Organic dairies get production incentive -
Dairy Farmers of Ontario is trying to encourage more production to met the demand

By Frances Anderson, Ontario Farmer staff
Tuesday, January 31, 2006

The demand for organic milk continues to outstrip supply.

"There's no foreseeable way that we'll have a surplus over the next decade," said Ted Zettel, of Chepstow, who is a producer, and president of Organic Meadow Inc.

"We've been using the surplus in Quebec, and it's starting to reverse itself." So, he said, "We have to supply our own market here with our own milk."

Dairy Farmers of Ontario granted organic producers three production incentive days a month, beginning Dec. 1, 2005 and continuing through May, 2006, to bring forward more milk.

This is a temporary measure until new organic producers can come on stream, explained DFO chairman Bruce Saunders. Organic dairy farms take three years to be certified.

The incentive days enable organic dairy farmers to ship ten per cent over quota. DFO expected that organic producers would fill 60 to 70 per cent of that additional quota, which would bring 350,000 litres more milk into the system over the six months period.

And producers have responded. Even with no advance notice, producers shipped seven per cent more milk in December.

"We were just overjoyed with that," said Zettel, adding OntarBio has "worked very hard with producers to help them find cow sand help them find feed." The co-op is also working hard to recruit new organic producers.

Zettel said his conversation with producers suggests the premium for organic milk needs to be higher and the company is capable of supporting that, so he expects an increase "sometime this spring."

But Zettel cautioned there's a fine line between providing an incentive that's enough to reward farmers for the extra expense and risk of producing organic milk, but not so much as to encourage conversion to organic production by people who aren't called to the system.

Currently OntarBio offers a 16 per cent premium for organic milk and the potential for dividend payment from ownership of the processing and marketing of the milk. However, Zettel said the co-op has been in a growth phase and most of the earnings have been reinvested in expansion.

At the November blend price of $67.68/Hl, a 16 per cent premium would have been 10.8 cents.

Quebec's marketing commission recently raised the premium for organic milk to $24/Hl for fluid, and $20/Hl for industrial organic milk.

OACC gratefully acknowledges Ontario Farmer for permission to post this article on our website.