Supply Management in the Ontario Dairy Industry Essay...

The dairy industry is an integral part of Canadian agriculture. It is the third largest farm commodity after cereal grains and beef cattle. In 1979, it constituted 1/5 of total farm cash receipts. Its total worth was $2.8 billion. Of this, 60% came from farm sales of milk and cream, 30% from sales of calves and cows and 10% from federal government subsidy programs (Forbes et al., 1982). In 1988, it grew to $3.8 billion and a further $3.87 billion from value-added products (Morin, 1990). In 1979, 6.9 million kilolitres of milk were sold in Canada. Thirty- seven percent was sold for fresh milk purposes (fluid milk) and 63% for was making dairy products
(industrial milk) (Forbes et al., 1982). Dairy production is important …show more content…
Regulations in the supply management system limit expansion and the size of the operation (Schmitz, 1983). Ontario dairy producers are essentially prevented from significant expansion unless they have significant amounts of capital to cover further purchases of quota (Hamm and Nott, 1986). Canada is a relatively high-cost milk producing nation (Forbes et al., 1982). Milk production costs are higher in Canada than they are in the United States (Sauber, 1988). The productivity of Canadian dairy farms relative to other countries, such as the United States and
New Zealand, is quite low. Milk yield per cow is 15% lower in Canada than in the United States.
Ontario has the largest herd size in Canada. However, the average dairy herd in the northeastern
U.S. is 60% larger than in Ontario (Forbes et al., 1982). While Michigan and Ontario produce almost the same amount of milk (5,568 million pounds and 5,585 million pounds, respectively),
Michigan has only 6,500 dairy farmers while Ontario has 10,300. This is because Michigan, on average, has more cows per farm, and each cow has higher production than its counterparts in
Ontario (Hamm and Nott, 1986). Ontario farmers also have higher investments made per cow and per man. Per unit of milk sold, capital costs in the United States are 1/3 to 1/2 of those in
Ontario. As well, management productivity is lower in Ontario than in the United States (Forbes et al., 1982). The dairy

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