Dairy cartels

[Moonbox]

54 minutes ago, Aristides said:

Sell their farm to who?

Whoever wants to make use of the land.  There's a reason farmland is so expensive, and it's not because nobody wants it.  

54 minutes ago, Aristides said:

How viable will they be with interest rates tripling and their other costs doubling. Who will buy a business with those fundamentals?

You speak as if this is a problem unique to dairy farmers.  

54 minutes ago, Aristides said:

We aren't subsidizing them, we are paying the actual un subsidized cost of the commodity.

No, we're still paying a premium.  New Zealand, with no government intervention has both a healthier and more competitive dairy industry but also much lower prices for consumers.  

54 minutes ago, Aristides said:

So why aren't subsidized American farmers able to compete in those markets? Why aren't they shipping all their excess production to Asia?

Because they're discouraged from competing globally when they're looked after at home through subsidization.  Regardless, the subsidies are at least a progressive model where low-income consumers aren't bearing the majority of the cost like they do in Canada.  

54 minutes ago, Aristides said:

Among other things, New Zealand has a much more benign climate. Dairy farming in a Canadian winter is not comparable. Why are no other countries competing in the New Zealand market?

New Zealand's climate is not unique.  There are similarly all-year temperate climes throughout Western Europe, among other places (including the US).  What is unique/rare is the lack of government intervention.  

[Aristides]

13 minutes ago, Moonbox said:

Whoever wants to make use of the land.  There's a reason farmland is so expensive, and it's not because nobody wants it.  

So you don't know.

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You speak as if this is a problem unique to dairy farmers.  

It isn't but no other farming is so capital intensive. Why do you think the cost of all food is going through there roof but somehow you think dairy should be cheaper.

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No, we're still paying a premium.  New Zealand, with no government intervention has both a healthier and more competitive dairy industry but also much lower prices for consumers.  

Because they're discouraged from competing globally when they're looked after at home through subsidization.  Regardless, the subsidies are at least a progressive model where low-income consumers aren't bearing the majority of the cost like they do in Canada.  

 

How much dairy do you think the world can absorb at a price that makes its production possible? Our industry is not subsidized, the whole idea behind supply management is to make the industry viable without subsidies.

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New Zealand's climate is not unique.  There are similarly all-year temperate climes throughout Western Europe, among other places (including the US).  What is unique/rare is the lack of government intervention.  

New Zealand's climate has more in common with California than Canada or Northern Europe which does heavily subsidize agriculture.

Edited February 6, 2023 by Aristides

[Moonbox]

1 minute ago, Aristides said:

So you don't know.

It's a dumb question.  The dairy industry has been consolidating for decades, so these farmers are presumably retiring and selling to bigger/younger farmers, or people who have other uses for the land.  A multi-million dollar valuation doesn't come out of thin air.  

1 minute ago, Aristides said:

It isn't but no other farming is so capital intensive. Why do you think the cost of all food is going through there roof but somehow you think dairy should be cheaper.

Farming is capital-intensive, and that's why so much additional support/subsidization is provided through loan guarantees, subsidies loans etc.  Farming loans are not the same as regular business loans.  The terms, rates, qualification and conditions are much, much better. 

As for dairy, we pay more than literally anyone else in the world, outside of a few countries with no cattle-industry whatsoever.  The idea that Canadian bureaucracy has offered up a better model than everywhere else is absurd, especially considering how our model hurts lower income families worse than anywhere else.  There's a reason why other jurisdictions are moving on from supply management, rather than adopting our system.  

 

[Aristides]

Farmers borrow from the chartered banks, just like everyone else.

 

I know one third generation farmer who is thinking of getting out. He is in his late forties and the physical punishment of working with large animals all his life has made him the equivalent of a retired football player and he wonders how long he will be able to keep it up. His father was the same, he farmed till he died because he loved it even though he could hardly walk and could only drive a tractor for his last ten years. He has been in the business all his life and has tried to steadily expand his business in order to remain competitive. The increased cost of servicing his debt, feed, fertilizer, diesel, machinery and all the other costs involved in dairy farming has him barely breaking even. Of his four kids, only one wants to farm but there is no question of passing the business on to him and providing for their own retirement at the same time. Plus, how do you give a farm worth $20 million to one child and disregard the rest and still have a place to live  and provide for your own retirement. The farm is also their home. Many farmers are finding themselves in the same position.

He has got to the point where he is thinking of selling everything except his land and just producing feed because the prices are so high that it is more profitable than dairy farming. It breaks his heart because he has been a dairy man all his life and loves it.

[Aristides]

18 minutes ago, Moonbox said:

It's a dumb question.  The dairy industry has been consolidating for decades, so these farmers are presumably retiring and selling to bigger/younger farmers, or people who have other uses for the land.  A multi-million dollar valuation doesn't come out of thin air.  

Farming is capital-intensive, and that's why so much additional support/subsidization is provided through loan guarantees, subsidies loans etc.  Farming loans are not the same as regular business loans.  The terms, rates, qualification and conditions are much, much better. 

As for dairy, we pay more than literally anyone else in the world, outside of a few countries with no cattle-industry whatsoever.  The idea that Canadian bureaucracy has offered up a better model than everywhere else is absurd, especially considering how our model hurts lower income families worse than anywhere else.  There's a reason why other jurisdictions are moving on from supply management, rather than adopting our system.  

 

The US and Europe heavily subsidize their agriculture and their consumers do not pay the real cost of the food they consume. How many times does this need to be said. American dairy farmers have been asking for some sort of supply management to save their industry.

The cost of land is the same regardless of what you use it for. Dairy farming puts more back into local economies than any other form of farming. The goods and services they require exceed any other form of farming. 

Edited February 6, 2023 by Aristides

[Moonbox]

6 minutes ago, Aristides said:

Farmers borrow from the chartered banks, just like everyone else.

but not on the same terms.  I know this because I use to write these loans.  The qualification criteria is very different.  There are all sorts of loan-guarantee programs, and the interest rates are much, much better than a normal business loan. 

6 minutes ago, Aristides said:

He has got to the point where he is thinking of selling everything except his land and just producing feed because the prices are so high that it is more profitable than dairy farming. It breaks his heart because he has been a dairy man all his life and loves it.

Then he should do it. Other dairy farmers are prospering and expanding.  The average dairy farm in Canada nets $170,000+ per year in profit.  

5 minutes ago, Aristides said:

The US and Europe heavily subsidize their agriculture and their consumers do not pay the real cost of the food they consume.

I've already addressed this.  The subsidies are a more equitable program than a cartel.  At least the former keeps prices low for consumers, vs prices high for farmers.  Sorting this out through the tax ladder is better than making it difficult for young families to afford milk and cheese.  That doesn't mean the US system is ideal, just that it's less bad than ours.   

 

 

[Aristides]

1 minute ago, Moonbox said:

but not on the same terms.  I know this because I use to write these loans.  The qualification criteria is very different.  There are all sorts of loan-guarantee programs, and the interest rates are much, much better than a normal business loan. 

 

 

They still take the same kind of hit when rates increase.

 

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Then he should do it. Other dairy farmers are prospering and expanding.  The average dairy farm in Canada nets $170,000+ per year in profit.  

 

No they aren't. Increases in costs have far exceeded prices.

https://twitter.com/intent/follow?ref_src=twsrc^tfw|twcamp^tweetembed|twterm^1620799272215105538|twgr^42c5e2aefb318573b2a2e2dabbb3362f58b6faa5|twcon^s1_&ref_url=https%3A%2F%2Fdailyhive.com%2Fcanada%2Fcanada-milk-gate-price-increase&screen_name=CDC_Dairy

 

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've already addressed this.  The subsidies are a more equitable program than a cartel.  At least the former keeps prices low for consumers, vs prices high for farmers.  Sorting this out through the tax ladder is better than making it difficult for young families to afford milk and cheese.  That doesn't mean the US system is ideal, just that it's less bad than ours.   

 

How is having to subsidize something you don't use more equitable than paying for its real cost. You sound like a communist.

[Moonbox]

35 minutes ago, Aristides said:

They still take the same kind of hit when rates increase.

So?  Farmers are generally starting from a much lower rate to begin with, so I'm not sure what this is supposed to tell us.  

35 minutes ago, Aristides said:

No they aren't. Increases in costs have far exceeded prices.

https://twitter.com/intent/follow?ref_src=twsrc^tfw|twcamp^tweetembed|twterm^1620799272215105538|twgr^42c5e2aefb318573b2a2e2dabbb3362f58b6faa5|twcon^s1_&ref_url=https%3A%2F%2Fdailyhive.com%2Fcanada%2Fcanada-milk-gate-price-increase&screen_name=CDC_Dairy

Why are you linking me the Dairy Board's twitter page?    

35 minutes ago, Aristides said:

How is having to subsidize something you don't use more equitable than paying for its real cost. You sound like a communist.

Let's forget for a second who you sound like here, invoking "Reee COMMUNISM" (or FASCISM) depending on the day.  

There's literally nothing more quintessentially communist than central supply  management.  ?

Edited February 6, 2023 by Moonbox

[Aristides]

2 hours ago, Moonbox said:

So?  Farmers are generally starting from a much lower rate to begin with, so I'm not sure what this is supposed to tell us.  

Why are you linking me the Dairy Board's twitter page?    

Let's forget for a second who you sound like here, invoking "Reee COMMUNISM" (or FASCISM) depending on the day.  

There's literally nothing more quintessentially communist than central supply  management.  ?

All supply management does is try to ensure a stable supply at at the same time as give a liveable return for producers. Even if dairy farms do average $160K a year, that is not much for an investment of millions and an occupation that is a 365 day a year job with no benefits. A lot of people get paid a lot more for a lot less.

[eyeball]

7 hours ago, suds said:

...in order to sell milk in Canada, a farmer must have a license to produce up to a set amount (quota). Initially given away free, these licenses have been bought and sold on the open market and have an estimated worth of $32 billion (2018 figures). If the supply management system is done away with, then someone is out $32 billion. Would the government make good with the farmers who paid a pile of cash for a license for the honour of producing milk in this country? I would hope so as it would be the fair thing to do. Comments?

It sounds as bad or worse than fishing.  Licencing fisheries made sense because you're dealing with coast-wide quotas for wild species that are owned by everyone, Canadians above all.  Fishing licences, were free to until there was a need to limit the number of fishermen.  The reasons given for imposing individual transferable quotas were many.  Some of them to address safety and adding value to your catch for example made sense but much of it was hooey like the need to address the Tragedy of the Commons with market based solutions.  People somehow imagined fishermen would own the fish and take care of them better or something.  Naturally you were branded a commie if you pointed out how the rich would get richer through concentration of opportunity into fewer and fewer hands.  The last time I fished I got .15 a lb for halibut, the quota owner got $3.85 and you fine people probably paid around $10 a lb.

If cows were wild and just lived out in the woods and you had go catch them to milk them and milking crews were killed due to storms when doing so maybe it would be easier to get my head around the reasons given for creating $32 billions dollars worth of quota.

Edited February 7, 2023 by eyeball

[Moonbox]

8 hours ago, Aristides said:

All supply management does is try to ensure a stable supply at at the same time as give a liveable return for producers.

That's the story they'd like us to swallow, but supply management does much more than that, and the Soviet Union had a nearly 80 year experiment with it that didn't turn out very well.  

8 hours ago, Aristides said:

Even if dairy farm do average $160K a year, that is not much for an investment of millions and an occupation that is a 365 day a year job with no benefits. A lot of people get paid a lot more for a lot less.

That's fine return when you consider that you probably inherited the farm and you're getting sweetheart lending terms for any of your capital investments.  

 

[Aristides]

8 hours ago, Moonbox said:

That's the story they'd like us to swallow, but supply management does much more than that, and the Soviet Union had a nearly 80 year experiment with it that didn't turn out very well.  

That's fine return when you consider that you probably inherited the farm and you're getting sweetheart lending terms for any of your capital investments.  

 

You really have no clue.

[eyeball]

17 minutes ago, Aristides said:

You really have no clue.

Is it fair to say the quota system we use was imposed or is supposed to be some sort of remedy to the issue of US subsidies to their industry?  What do American farmers think about our quota system?  US fishermen were far more suspicious and resistant towards the fisheries quota system we adopted, which was basically modelled after New Zealand's so-called privatization of their fisheries in the wake of WTO prescriptions for it's failing economy at the time. US fishermen did have a quota system imposed on them but with provisions for crew not just owners with a history in the fishery to be allocated some quota.  Quota wasn't as transferable at first due to concerns over the concentration of wealth into fewer hands but I think that's withered over time.

 

[Aristides]

I already posted this once.

https://www.thebullvine.com/news/could-supply-management-help-struggling-us-dairy-farmers/

[Moonbox]

2 hours ago, Aristides said:

You really have no clue.

I mean, I wrote the agr. loans, so I do, but lol okay.  

1 hour ago, Aristides said:

I already posted this once.

https://www.thebullvine.com/news/could-supply-management-help-struggling-us-dairy-farmers/

This is your big counter point?  The bullvine?  

Let us refer you back to the video in the OP as our counterpoint.  

[Aristides]

1 hour ago, Moonbox said:

I mean, I wrote the agr. loans, so I do, but lol okay.  

This is your big counter point?  The bullvine?  

Let us refer you back to the video in the OP as our counterpoint.  

The guy in the video thinks milk costs $7 a litre and that every farm in the country could produce 30,000 litres a week more without flooding the market and cratering the price he gets for his milk.

 

What do you think would happen to all this milk that has no market?

Edited February 7, 2023 by Aristides

[Moonbox]

No, he doesn't think that every farm could produce 30,000 litres more.  He think she can, and cost-effective farmers operating at scale could too.  The idea that the mom & pop dairy farmer is some holy cow that needs to be protected above all isn't something I can get behind, for any reasons. 

Regardless, the point was that your linked article wasn't any more informative or useful than the video in the OP.  You can always find someone out there looking for government protection.  

[Aristides]

10 minutes ago, Moonbox said:

No, he doesn't think that every farm could produce 30,000 litres more.  He think she can, and cost-effective farmers operating at scale could too.  The idea that the mom & pop dairy farmer is some holy cow that needs to be protected above all isn't something I can get behind, for any reasons. 

Regardless, the point was that your linked article wasn't any more informative or useful than the video in the OP.  You can always find someone out there looking for government protection.  

So he would be the only one who would get to produce whatever he wanted, every one else would have to obey the rules so he could get a high price for his milk.

The link I posted was a lot more informative, it shows how much stress US farmers are under because of oversupply.

Dairy farmers aren't hobby farmers, it is far to expensive and labour intensive.

Edited February 7, 2023 by Aristides

[suds]

 

5 hours ago, eyeball said:

Is it fair to say the quota system we use was imposed or is supposed to be some sort of remedy to the issue of US subsidies to their industry?  What do American farmers think about our quota system?  US fishermen were far more suspicious and resistant towards the fisheries quota system we adopted, which was basically modelled after New Zealand's so-called privatization of their fisheries in the wake of WTO prescriptions for it's failing economy at the time. US fishermen did have a quota system imposed on them but with provisions for crew not just owners with a history in the fishery to be allocated some quota.  Quota wasn't as transferable at first due to concerns over the concentration of wealth into fewer hands but I think that's withered over time.

 

Quotas were initially issued to all dairy farms based on production, and as such production is now controlled by a regulated quota system. It's estimated that today's quota is now worth about $30,000 per cow, meaning if you had 100 licensed head you would have about $3 million in quota that you could sell if you wished. As I understand it every province has their own rules for buying or selling quota, and can only guess that the price is based on whatever a buyer is willing to pay. So it is what it is. Everything works great for producers of either system as long as the price of milk remains high. In the spring of 2020 when restaurants were closing due to milk (as a commodity) dropping nearly 50%, US producers were dumping millions of gallons of milk per day while Canadian producers were dumping millions of gallons per week. Which proves that supply management isn't the answer for everything. In general though, if we really wanted to protect our dairy producers (especially the little guy), a system where prices paid to producers based on the costs of production would be superior than a system based on consumer demand. I will admit however that both sides have their pro's and con's.

Edited February 7, 2023 by suds

[TreeBeard]

18 minutes ago, suds said:

I will admit however that both sides have their pro's and con's.

Often people simply compare the price of milk between a Canada, with supply management, and the USA, a “free market”.   To call the USA a free market in dairy is to destroy the meaning of that term completely.

The massive subsidies that dairy farmers receive in the USA are always ignored by the naysayers of supply management.  
 

If you buy milk in Canada, you’re paying an additional amount due to the supply management system.   
 

In the USA, if you’re a taxpayer, you’re subsidizing dairy farmers whether you buy dairy, or not.  

https://www.newswire.ca/news-releases/american-dairy-farmers-depend-on-government-subsidies-673374473.html

Edited February 7, 2023 by TreeBeard

[eyeball]

23 minutes ago, suds said:

It's estimated that today's quota is now worth about $30,000 per cow, meaning if you had 100 licensed head you would have about $3 million in quota that you could sell if you wished.

Each cow over it's life span can produce this much in value plus the costs of production and a profit for the farmer? It's hard to believe.

Do you have to be an owner-operator to own quota? If no, and the industry is supporting a bunch of armchair farmers who are getting richer at the expense of producers and consumers alike then I take no sympathy whatsoever for anyone involved and I only care about myself and getting the cheapest milk possible.

BTW $10 says the hardest lobbying group in the herd are the armchair farmers.

 

 

[Moonbox]

2 hours ago, Aristides said:

So he would be the only one who would get to produce whatever he wanted, every one else would have to obey the rules so he could get a high price for his milk.

What?  ?

He'd compete with his peers and they'd all produce what they could, probably driving many out of farms but consolidating the industry into a more competitive market.  

2 hours ago, Aristides said:

The link I posted was a lot more informative, it shows how much stress US farmers are under because of oversupply.

The link you posted was from 2019, from a group of farmers in Wisconsin who'd fallen on hard times, and included a reference from a large California dairy farmer who completely disagreed with them.   

2 hours ago, Aristides said:

Dairy farmers aren't hobby farmers, it is far to expensive and labour intensive.

Nobody said they were.

[TreeBeard]

13 minutes ago, Moonbox said:

He'd compete with his peers and they'd all produce what they could, probably driving many out of farms but consolidating the industry into a more competitive market. 

Would it really?  A far more likely scenario would be that the inflated price for milk would be replaced by subsidies to help milk producers who can’t compete stay in business.   
 

Currently, it could be argued, that the subsidy is paid by people who choose to buy dairy.   Replacing the supply management system with subsidies would mean the burden of uncompetitive milk producers is put on taxpayers in general.  

[eyeball]

1 hour ago, Moonbox said:

What?  ?

He'd compete with his peers and they'd all produce what they could, probably driving many out of farms but consolidating the industry into a more competitive market.

I suppose... When it was us DFO called it fleet rationalization but we experienced it as fleet cannibalization.  They allocated less and less fish until there were fewer and fewer of us.

They finally brought in a licence buyout program that's still running.

There's really $32 billion worth of milk quota out there? Jeez that's a lot of cheddar.

[Aristides]

3 hours ago, Moonbox said:

What?  ?

He'd compete with his peers and they'd all produce what they could, probably driving many out of farms but consolidating the industry into a more competitive market.  

The link you posted was from 2019, from a group of farmers in Wisconsin who'd fallen on hard times, and included a reference from a large California dairy farmer who completely disagreed with them.   

 

Competitive with who? You really don't think farmers do everything they can to remain profitable?  I posted an aerial photo of a So Cal dairy farm, it wasn't an isolated example. We used to spend several months every winter in a place called Hemet CA. There are more than a half dozen farms just like it on the north side of the city and when the wind is out of the north you can smell them on the south side. If you don't believe me go  to Google Earth and look. Cows would never survive one of our winters in conditions like that. 

2019 to early?

https://pbswisconsin.org/news-item/wisconsin-loses-more-dairy-farms-in-2021-with-total-down-by-a-third-since-2014/

https://qz.com/1832063/covid-19-has-us-cheese-and-milk-industries-on-the-brink

https://www.theguardian.com/environment/2021/jul/21/small-farms-vanish-every-day-in-americas-dairyland-there-aint-no-future-in-dairy

 

What do you think has changed since then, they got more subsidies? This has been going on for decades.

That's my biggest beef with your lot, you compare a subsidized price with one that isn't and claim they are the same.

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Nobody said they were.

You seem to think they are ripping you  off. I'd like to see you spend one day working on a dairy farm, getting up at five and not having dinner until 8 in the evening, 11 at night if you are  harvesting.