I had first written about this almost 2 years ago, and you could sense it wouldn't end well.
December 2015
A Shortage of
Butter: Not Good News for Dairy Farmers
This is a classic
case of a loophole, big business capitalizing on any chance to improve the
bottom line, and serious unintended consequences. The impact of what appeared to be a minor
bureaucratic decision is being felt in
Canadian kitchens, food processing plants,
and disturbingly, could do serious economic damage to Canada’s dairy
farmers.
A few years ago
Federal officials were trying to decide where so called “protein isolates”
would fit into the stiff tariff schedule that limits imports of cheaper dairy
products like yogurt and cheese. These high tariffs maintain the integrity of
Canada’s supply management system that tailors milk supply to Canadian demand
using quotas, while assuring farmers a fair price. Protein isolates are essentially raw protein,
like the whey protein used as a dietary supplement. Think of whole milk with the
fat and minerals stripped out. The
bureaucrats decided the isolates are a protein “substitute”, not necessarily a dairy
product, so they come into Canada tariff-free.
No one paid too much attention then,
but slowly, over time, a trickle
of cheaper protein isolates, almost all from the United States, has become a tidal wave. Now Canada’s largest dairy processors like Parmalat, Saputo, and Agropur, are helping their bottom line by
using the cheaper protein in their cheeses and other dairy products. But there’s
a wrinkle, the processors still need the
fat from whole milk to mix with the raw imported protein to produce their
cheeses. This is happening at the same time that
dieticians and doctors are telling Canadians it’s OK to eat butter again. So over the last year butter, and butterfat, are again in big demand,
and for some, short supply. Farmers
nationally have stepped up production by more than 7% on a butterfat basis to
meet the shortfall, but because there’s no additional demand for the protein in
the whole milk (usually made into skim
milk powder), farmers aren’t paid the full cost of production price for this
additional milk, and a lot of the surplus skim milk is being dumped or fed to
livestock.
That’s
unfortunate, but the more serious impact I think is that it’s given the
business media a fresh opportunity to attack supply management. “Supply management falls butter-side
down” in the Globe and Mail, and
“Supply management is expensive, irrational — and doomed” in i-Politics
amongst others. What especially
irritates me about these articles is that they blame dairy farmers (and always the
articles are accompanied by shots of
Holsteins) for lobbying to protect a “broken” system, when it’s large
multi-national dairy processors that have created the problem. There’s no
benefit flowing back to dairy farmers from
the importation of this cheap protein (other than Quebec farmer-owned
Agropur, shame on it. Parmalat is owned
by a large Italian dairy, and Saputo by a Montreal family).
Here’s some better
news. As Islanders, we can celebrate the fact that PEI’s dairies, ADL and
Purity, do not use this imported protein.
And let’s also enjoy the world recognition ADL cheeses have received
recently: ADL, using a recipe from Cows,
produces the Avonlea Clothbound Cheddar that won SuperGold at the World Cheese
Awards in England in late November. And
ADL’s own labeled cheddars won several awards at the British Empire Cheese Show
in Ontario in mid-November. I’m not an
expert, but maybe the fact that only PEI whole milk, rather than a tasteless
imported protein isolate, is used to make these cheeses had something to do
with these successes.
One more thing for
consumers to watch for. There is a symbol:
that says 100% Canadian
milk. That’s your guarantee too that
there’s no imported protein in the dairy products.
Unfortunately for
farmers the trade in protein isolates won’t
end quickly. The U.S. dairy industry would launch a trade investigation before
the ink was dry on any new government regulation trying to control it. The big multi-national dairies themselves are
playing a game of economic chicken saying they’ll stop only if the others
do. As well they’re getting ready for
more competition from cheaper European cheeses if the big EU trade agreement is
ever ratified. So consumers will have
to step up if there’s going to be any solution. On PEI at least that’s easily
done.
