Mike von Massow
Is Dumping on the Dairy Industry Fair?
A TikTok video went viral this week in which a Canadian dairy farmer was complaining about dumping milk and the system that caused it. It goes without saying that it is profoundly sad when milk gets dumped. I do think that it is important to provide some context around the issue in order to have a reasonable and accurate discussion on the topic. The hyperbole and unsubstantiated claims are not productive.
Why Is Milk Being Dumped?
The short answer is that Canada has a quota system and this particular producer has produced more than his quota. But it is worth noting that not all milk that is produced over quota is dumped - in fact very little of it is.
Managing milk production is not straight forward. Producers need to manage both the number of cows milking and the stage of lactation. The vast majority of producers do this effectively.
Managing milk production is not straight forward. Cows have to have a calf to give milk (as an aside, very few Canadian consumers know that). They don't produce the same amount of milk throughout their lactations so producers need to manage both the number of cows milking and the stage of lactation. The vast majority of producers do this effectively. There is some flexibility in the system that allows producers to ship over quota for a period and then "repay" that extra milk by shipping less in future. The system allows for flexibility. If you are consistently over producing, then you need to either buy more quota or reduce the number of cows - both are viable options. There is an incentive to manage close to your quota. You can be penalized for under-shipping significantly (and you lose income) because that milk has been committed to processors. There are sometimes "incentive days" which provide producers with the opportunity to sell milk above quota when the demand exists.
If you produce too much consistently you can usually still ship the milk but you are penalized for it. Everyone with quota knows that. The milk is processed (usually into the lower classes of milk for things like skim milk powder). There are rare instances where milk has to be dumped due to a lack of processor capacity. It is not clear in this instance if there producer chose to dump the milk (to avoid penalties) or if he was told to because there was not processor capacity. Either way, a significant part of the issue is production management.
Processor capacity is not just a Canadian supply management issue. Milk dumping happens in other countries too. I saw the tweet yesterday about this farm in the US dumping 90,000 gallons of milk because their processor couldn't take it (demand is likely off).
While quotas are a uniquely Canadian thing, producers in other countries also have some limits on what they can ship. I spoke to a dairy producer in the US this morning (shameless self promotion - its for an upcoming episode of the Food Focus podcast) who told me they had shipping quotas and were penalized if they shipped over their designated volumes. Others would have to find other markets themselves or dump milk.
Why Can't He Just Give it Away?
One complaint is that the producer would like to give the milk away to a hospital or a food bank rather than dumping it. In the video he dramatically puts a glass under the draining milk and drinks it. While many dairy farmers can and do drink raw milk, it is illegal to sell it for food safety reasons. While eggs leave the farm ready to consume (I get my eggs from a farm neighbour down the road), milk must be at least pasteurized before it can be broadly distributed. It isn't being put into bottles, cartons, or bags on the farm so can't go directly to any institution directly from the farm.
Should We Be Rethinking Quotas?
Unsubstantiated claims based on rants on 60 second TikTok videos are not a good place to start. They also don't lead to a productive exchange of ideas. We need to build the discussion on a foundation of the facts. Unfortunately that isn't happening this far.
This video has reignited many calls to rethink supply management. There is always value in discussing any ongoing policy positions. My colleagues and I have regular discussions about the merits of individual policies. We don't always agree but the discussions are respectful and thoughtful. The truth is that supply management has strengths and weaknesses. It is likely not as bad as its detractors say nor as good as its advocates would argue. There is perhaps value in renewed objective analysis of the costs and benefits Unsubstantiated claims based on rants on 60 second TikTok videos are not a good place to start. They also don't lead to a productive exchange of ideas. We need to build the discussion on a foundation of the facts. Unfortunately that isn't happening this far.
Keywords: dairy, milk, dumping, supply management, social media
Recommended citation format: von Massow, M. "Is Dumping on the Dairy Industry Fair?". Food Focus Guelph (131), Department of Food, Agricultural and Resource Economics, University of Guelph, February 3, 2023.