The Rural Voice, 1981-11, Page 8.0
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number of dairy farms is attributable to
quotas. He thinks general consolidation is
taking place, a consolidation which would
have occurred anyway.
Thompson agrees. When considering
the egg producers who sold their quota
soon after supply management was
adopted there, he thinks many egg
producers didn't have a viable operation
in the first place and were still not viable
with quotas. "One thing the quota system
normally does is reduce supply of the
product to hold the price up. By reducing
supply they have to reduce the production
of each grower, "he says.
"Some then were not viable and chose
to sell off their operation. These were
probably not viable before or after quotas.
In the early years of implementation you
find the number of producers drops and it
takes a number of years for the production
system to adjust to the point where it
stabilizes."
Frayne says quotas make it easier for
banks. But he finds such an approach
short-sighted. He says in the end, the
money has to come from somewhere and
one can't keep on guarantteeing everyone
a fair return on their endeavors in a normal
functioning free enterprise system.
Ray Hanna, a former dairy farmer of
Auburn, in Huron County is bitter about
what the supply management system did
to him.
He was dairying when the quotas were
first issued. This first quota was free.
However, when he had to suspend
operations because of sickness, he had to
turn back his quota when he sold his cows.
After recovering from his disability. he
found the quota he had given back, free of
cost, now had acquired a value. To get
back into the business he had not only to
buy fresh cows, but also a quota. This he
couldn't afford and it put him in the same
position so many young farmers find
themselves in today. The dairy industry is
effectively closed against them.
Frayne thinks this is one of the
problems the milk boards have to address
themselves to: "If a young man wants to
enter, his father or his family has to absorb
some of these costs. This also keeps the
average size of the dairy herd small." he
says. "The average US herd is compar-
ably larger than ours."
In the first ten years, Frayne doesn't
think quota was a significant factor in
dairy cost of production. In the last year
and a half quota price has gone up
dramatically and now is restrictive in
capitalizing and operation. But the true
effects are still to come.
Emma Franken , who farms with her
sons in the Auburn area, is also concerned
about the cost of quota. She finds that a
young fellow has a hard time getting
PG. 8 THE RURAL VOICE/NOVEMBER 1981
started in dairy. "Olikof my sons is in that
position. He's renting everything, land,
some machinery and quota, and he's
having a heck of a hard time trying to make
ends meet. But he's also had to buy some
machinery. So, even if he had free quota,
he'd still have a hard time making ends
meet."
Mrs. Franken says you have to be
efficient. "If you have a cow that milks
only 7 or 8,000 lbs. a year, you have to feed
a lot more cows than when you have 14 or
15,000 lbs."
She has her doubts about the milk board
statements that the cost of quotas is not
reflected in the cost of production formula.
"If you buy your land and your cattle and
your quota, that will have to be paid out of
your milk too."
This is exactly what the ECC people
said.
Both Mrs. Franken and Les Frayne
agree the increase in the size of dairy
farms is mostly because farmers want to
have some time off. In a two family
operation this is possible.
Comparing supply management
systems with free enterprise systems like
beef and hogs, Frayne thinks the financial
difficulties in those commodities are
partly the result of the freedom those
farmers enjoy. Freedom to produce;
freedom to market; freedom to pursue the
industry in the way they prefer.
"Not everybody is going to be success-
ful in a wide open system like that."
Changes will have to be made, he
maintains, but not necessarily to supply
management. It could well be that the
high cost of grain fed to cattle may not be
justified on economic grounds. And that
the dropping consumption of beef signals
to the industry that people are not going to
pay a disproportionate amount of their
income for beef.
Frayne welcomes the studies going on
in the marketing of cattle and he thinks
that beef marketing problems are on the
brink of being sorted out. But he thinks
production methods have to be looked at
first. If grass-fed cattle can be made
acceptable to consumers, perhaps a
marketing board is not necessary. First
things first.
Commenting on the attitude of the ECC.
Mrs. Franken sums it up: "I think this
country has the wrong philosophy on
producing food. We could produce so
much of our own food here if we wanted to.
It gives a lot of work to a lot of other
people. I know a teacher who thinks we
would be much better off if we didn't have
any farmers and just imported it (food)
And that's such a stupid philosophy for a
world that is already so short of food.
Canada has all this land and can grow so
much. It is the same thing if we closed the
teachers' colleges and imported the
teachers."