The Rural Voice, 1980-03, Page 21Over the farm gate
Marketing boards
for consumers too
Dear Consumer,
Much criticism has been levelled at farm
marketing boards by editorial writers and
by politicians, and, to a lesser degree, by
consumer organizations.
Because of this, many consumers have
the impression that farm marketing boards
are created by the government in order to
rip the consumer off.
People who should know better have left
the idea with consumers that farm
marketing boards deliberately restrict
production in order to drive up prices and
to give farmers an easy and rich life.
Let us take a look at one of the most
criticized boards, the Ontario Milk
Marketing Board.
In the sixties, dairy farmers lived in
poverty, receiving about $3 to $4 for 100
litres of milk. The milk was carried in cans
to the side of the road, where trucks from
the dairies would pick it up.
There could be pick up runs by three
different dairies on the same road.
Poverty was common among dairy
farmers. And when it became unbearable,
the farmer sold his cattle, to go into some
other product.
As a result, a shortage of milk came
about, and the remaining farmers received
more for their product, because dairies
competed for it. This yo-yo price effect did
farmers as consumers no good and was
clearly unacceptable in a country with a
growing prosperity, like Canada.
So the farmers got together and said:
"Let's form a joint selling organization.
Then we can estimate what the amount of
milk needed for the market will be, and
we won't produc a more than is needed."
This is, of course, the same business
method that any manufacturing corpora-
tion practices. No widget company will
make more widgets than it can sell.
The new organization was called the
Ontario Milk Marketing Board (OMMB).
Once it was determined how much milk
was needed, the OMMB divided the share
each farmer could produce among the
farmers who had remained in business
when the going got rough, on a percentage
based on previous production.
This share is called a "quota".
Once it became clear that there was a
profit in milk production (for the marketing
board figured the cost of producing the
milk in setting the sale price,) many
farmers didn't mind the seven
fourteen -hour days. They now wanted to
get into dairy production, and offered
quota - holding farmers money for that
quota.
That quota value has been a headache
for the OMMB ever since, and it has tried
different methods to keep that value at a
minimum.
The OMMB did more to improve the
dairy industry. Slowly it worked to elimi-
nate the practice of shipping milk in cans,
with its potential for contamination. The
bulk cooter is now a compulsory feature in
the milk house, and the consumer is
assured a clean, healthy product. The
added cost of production has been passed
on to the consumer and been accepted as
reasonable.
The inefficient pick-up service by the
various dairies has also been eliminated,
and one bulk tank truck pumps all the milk
on a certain route, and takes it to a dairy
designated by the milk board, decreasing
the cost, and that decrease is also passed
on to consumers.
The planned production necessitated a
share system for dairies as well, and soon
there was a quota value developed too. The
result was that many small cheese factories
sold their quota to larger dairies, a move
bemoaned by many as a bad result of
OMMB policies.
The sometimes levelled accusation
against the OMMB, that these cheese
factories went out of production because
they couldn't get enough milk, doesn't
bear out.
Lately, there has been a demand from
processors in Ontario for more milk,
because of markets for more cheddar
cheese. The fact that more milk was not
available wasn't so much because the
OMMB restricted milk production, but
because dairy farmers produced five per
cent less milk than they had quota for. The
OMMB wants farmers to produce their full
quota, for then Ontario can get more of the
market share in Canada as a whole.
The milk producer is a bit leery though,
for it is not so long ago that he produced
more than the market could bear. The
resulting mountain of milk powder had to
be stored at the farmer's expense, and sold
on the world market at a loss, also at the
farmer's expense.
As you have seen farmers wanted to
regulate production to fit the market, and
not the government, as is so often
assumed.
It is the farmers, through their board,
who calculate prices, and it is the
government who watches this, so you
won't be ripped off.
The marketing board insures clean,
uncontaminated milk at a steady price that
must be justified before the government
allows any price increase.
If a farmer produces more than his share
of milk, he not only won't get paid for it,
but he may have to pay for hauling it away,
and for selling it below cost. If there is any
money left over, he will get it. This may or
may not cover the cost of trucking.
Many outsiders don't understand that an
assured income promotes efficiency. It's
simple; the farmer who knows that he can
pay for her will be able to buy a higher
producing cow, while uncertainty of
income will leave him with a poorer one.
Since the cost of production is adjusted
every few years to that of the average
efficient producer, the consumer gets the
benefit in the long run.
In consolation, you should know that
only the producers of milk, eggs, broiler
chickens and turkeys have quotas on food
production.
All the other products, although some
have marketing boards, such as hogs,
cattle, vegetables, wheat and you name it,
do not tailor production to consumption.
Therefore these products change drastic-
ally in price from one year to the next.
I hope that this explanation has cleared
up some misunderstandings. If you have
any questions regarding this topic, please
drop Rural Voice a line, or give us a call,
Sincerely
Adrian Vos
— CLAY
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LOWRY
FARM SYSTEMS
at Amberley
[R.R.#1, Kincardine]
Phone 395-5286
THE RURAL VOICEIMARCH 1980 PG. 19