Simple Math on Supply Management

This is not intended to address any of the philosophical “capitalist vs socialist” questions around Supply Management, but, rather to provide a simple economic comparison.

Milking cows under supply management DOES have higher capital costs due to the need to own “production quotas”. In principle, quota is a capital asset, therefore the decision to invest in quota can be evaluated based on it’s Return on Capital (R.O.C.) like any other asset. ***HUGE DISCLAIMER*** I pulled these numbers RIGHT out of the air intentionally so as not to drag actual cost of production numbers into it. Fill in your own numbers if you like.

Return On Capital (R.O.C.) Example
Non SM SM
$ Per Cow
Capital Req.
Quota $ 25,000
Land/equip.              $ 25,000   $ 25,000
Cows             $ 2,500 $ 2,500
Total ($/cow)   $ 27,500         $ 52,500  
Milk (lbs/day) 75
Milk (lbs/yr)                27,375
Cost Of Prod. COP ($/cwt)  $ 18.00
Cost Of Prod. ($/cow/day)  $ 14  $ 14 * All variable costs
Cost Of Prod. ($/cow/yr)  $ 4,928  $ 4,928
Expected Return On Cap. 5%  $ 1,375  $ 2,625
Required COP + ROC  $ 6,303  $ 7,553
Breakeven price ($/cwt)    $ 23.02  $ 27.59
Herd Size 100
Quota  $  –  $ 2,500,000
Farm/equip  $ 2,500,000  $ 2,500,000
Cows  $ 250,000  $ 250,000
Total    $ 2,750,000  $ 5,250,000
Cost Of Prod. ($/day)  $  1,350  $ 1,350
Cost Of Prod. ($/yr)  $ 492,750  $ 492,750
Expected Return On Cap. 5%  $ 137,500  $ 262,500
Required COP + ROC  $ 630,250  $ 755,250

 

The point here is that supply management does not stifle growth or create “inefficient”  farmers. The decisions about profitability and capital investment (expansion) are the same – there is just one additional (and significant) capital cost to consider when operating under SM.

Managing milk supply has been effective at minimizing price fluctuations both up and down. Therefore, from a producer perspective, the question to ask yourself is – would you rather see prices swings from $18 – $30/cwt or a steady price of $27.50? Cause, in the long run, they’re exactly the same.

  • I am not an economist, dairy farmer, or even really detail oriented. These are my thoughts and opinions. They’re free.

 

I Believe in Supply Management. I Believe in Farmers by Jen Christie.

Savvy Farmgirl

pablo (6)Whenever supply management is under pressure, the anxiety I felt as a kid during the World Trade Organization’s tariff negotiations always comes back to me.

Far too young to understand what a tariff was, but knowing from my parents’ conversations at the dinner table it could mean something bad for us, I started asking friends at school if I could live with them when we lost our farm. When my parents found out, they insisted that wasn’t going to be necessary, and I don’t really remember paying too much more attention to supply management after that.

Until university and Alfons Weersink introduced me to the economic model that is isn’t supply management. It was the first time I learned the system, which allowed my parents to steadily grow the farm and the lifestyle I was raised with, was not “normal”.

Before then, all I really knew was we had this system and my…

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Ontario Agcast – The Complete Collection

Someone recently made the very logical suggestion that by including Episode #s and Dates when posting podcasts it would be easier for listeners to search old episodes. So, if you have been just dying to catch up on the Ontario Agcast, here you go….  Somehow we have made it to Episode 34. WOW.

Episode 1- February 16, 2016

Kelly Daynard –  Farm and Food Care Canada

https://soundcloud.com/user-725843201/kelly-daynard-feb-11-2016

 

Episode 2 – February 23, 2016

Dr. Reg Clinton – Inaugural London Dairy Congress

https://soundcloud.com/user-725843201/reg-clinton-interview

 

Episode 3- February 30, 2016

Dr. Leah Dorman – Responsible Antibiotic Use on Farms

https://soundcloud.com/user-725843201/leah-dorman-interview

 

Episode 4 – March 27, 2016

Blair Cressman – Ontario Pork Congress

https://soundcloud.com/user-725843201/blair-cressman-interview

 

Episode 5- March 10, 2016

Steve Thomas – Ontario Pork Industry Council, Friends of the Foodbank

https://soundcloud.com/user-725843201/steve-thomas-interview

 

Episode 6- March 21, 2016

Amy Matheson – Responding to Animal Welfare concerns on dairy farms

https://soundcloud.com/user-725843201/amy-matheson-interview

 

Episode 7- April 28, 2016

Bruce Sargent – Agriculture Mean Tweets

https://soundcloud.com/user-725843201/brucesargent-1

 

Episode 8- May 6, 2016

Dr. Sylvain Charlebois – Integrity of our food system

https://soundcloud.com/user-725843201/dr-sylvain-charlebois

 

Episode 9 – May 13, 2016

Stewart Skinner – 140 characters aren’t enough. Sometimes we need to have real conversations

https://soundcloud.com/user-725843201/stewskinner-1

 

Episode 10- May 30, 2016

Jenn Christie – Everything 4-H

https://soundcloud.com/user-725843201/jen-christie-may-30-2016

 

Breakfast On the Farm – June 11, 2016

Talking to people from the city

https://soundcloud.com/user-725843201/amanda-toronto-june-11-2016

https://soundcloud.com/user-725843201/viso-interview

 

Episode 11- June 13, 2016

Sandi Brock – Sheep and Snapchat. From the barn

https://soundcloud.com/user-725843201/sandibrock

 

Episode 12- September 16, 2016

Courtney Denard – Women in Ag Conference / Adjusting to life on the farm

https://soundcloud.com/user-725843201/courtney-denard-podcast-sept-12-2016

 

Episode 13- September 20, 2016

Ken Schaus – Beef Farming Rollercoaster

https://soundcloud.com/user-725843201/ken-schaus-september-20-2016

 

Episode 14- September 27, 2016

Kevin Folta – Speaking Up for Science

https://soundcloud.com/user-725843201/kevin-folta-september-27-2016

 

Episode 15- October 11, 2016

Hugh Simpson –A Beekeeper is a Farmer Too

https://soundcloud.com/user-725843201/hugh-simpson-october-11-2016

 

Episode 16- October 18, 2016

Greg Peterson – From the Tractor – Being a Youtube celebrity

https://soundcloud.com/user-725843201/greg-peterson-oct-18-2016

 

Episdode 17- October 25, 2016

Jenni Tilton-Flood

Lover of green & yellow and black & white; Jenni Tilton-Flood!
Talking about all things agriculture and field hockey.

Check out Jenni’s blog: thedeeremilkmaid.com/

https://soundcloud.com/user-725843201/jenni-tilton-flood
Episode 18- October 31, 2016

Clair Doan- turkey farmer, 2016 Canada Nuffield Scholar and banker.
Clair talks about what it’s like to travel the world, examining poultry markets, undercover videos and what he’s wearing for Hallowe-en.

https://soundcloud.com/user-725843201/clair-doan-october-31-2016

 

Episode 19- November 7, 2016

Mark Andrew Junkin – Farm Succession Planning

https://soundcloud.com/user-725843201/mark-andrew-junkin-november-7-2016

 

Episode 20- November 14, 2016

Chelsea Boonstra – Agronomist, Dairy Farmer, Woman in Ag

https://soundcloud.com/user-725843201/chelsea-boonstra

 

Episode 21- Election Special- November 18, 2016

Trent Loos – Trump, Trade and Joe Biden Memes

https://soundcloud.com/user-725843201/trent-loos-november-17-2016

 

Episode 22- November 21, 2016

Andrew Campbell – #Farm365

Wendell and Andrew talk about farming and share a touching moment

https://soundcloud.com/user-725843201/andrewcampbell

 

Episode 23 – NY Farmer – November 29, 2016

Lorraine or better known as the NY Farmer talks to us about life as a lawyer, a farmer and an unapologetic advocate for agriculture. This is the first (and probably the last) show that we’ve used #horseswearingdiapers. Listen to find out why…

https://soundcloud.com/user-725843201/nyfarmer

 

Episode 24 – December 12, 2016

Tonya Haverkamp – Everything Eggs

https://soundcloud.com/user-725843201/tonya-haverkamp

 

Episode 25 – December 20, 2016

Amy Matheson & Stewart Skinner

Amy and Stew share way more than 140 characters and their views on supply management, family farms and online conversations.
No Stewarts were harmed in the making of this podcast.

https://soundcloud.com/user-725843201/amy-matheson-and-stewart-skinner

 

Pubcast Special- December 30, 2016

Guest from the past year join us for some drinks

https://soundcloud.com/user-725843201/pubcast-2016

 

Episode 26- January 4, 2017

Mike Pasztor – The Pickle King and running a cartel

https://soundcloud.com/user-725843201/mike-pasztor

 

Episode 27- January 10, 2017

Dylan Sher – Before the Plate. Telling our food story

Dylan, a third year Ag Business student at the University of Guelph and founder of Before the Plate, talks to us about his new initiative. Connecting urban audiences with real farmers.

https://soundcloud.com/user-725843201/dylan-sher-before-the-plate

 

Episode 28- January 18, 2017

Chris Moore – Kinburn Sheep. What can I say?

https://soundcloud.com/user-725843201/chris-moore-kinburn-sheep

 

Episode 29- January 23, 2017

Dr. Cody Creelman, Cow Vet – Telling a vets story. Graphically.

https://soundcloud.com/user-725843201/cody-creelman-v2

 

Episode 30- January 31, 2017

Yvette D’Entremont – The Scibabe is Awesome!

The SciBabe, Yvette D’Entremont knows her science AND has a sense of humor.
0:15 On being Acadian, not French
2:45 The most embarrassing SciBabe story ever
3:50 Rules for Facebook – don’t be a dick
8:00 How one becomes the SciBabe
11:45 Visiting the Evil Empire
13:45 Health nut word association
18:20 We are not the same as bugs
21:20 Naked and Afraid – Nature wants to kill you
25:40 When good people do stupid things
29:30 Yvette and Wendell sing Kumbaya and tell Kevin Folta stories
33:54 Bonus footage – the part you really don’t want to miss!

https://soundcloud.com/user-725843201/the-scibabe-is-awesome

 

Episode 31- February 5, 2017

Aussie Farmer James Stacey

1:08 Reasons you might punch a kangaroo in the face
5:23 Aussie supply management deregulation for dummies/Wendell
9:25 Wendell makes a fairly obvious comparison
12:55 Chasing export markets – Myth or reality
20:30 How a politician answers a loaded question
23:10 Poke machines have nothing to do with Pokemon
27:20 Australian farmers have the same problems as Canadians

https://soundcloud.com/user-725843201/ausie-farmer-james-stacey

 

Episode 32 – February 21, 2017

Farm and Rural Ag Network Launch

Podcasts are the fastest growing information platform out there. At #OntarioAgcast we are thrilled to partner with Tim Hammerich, Rob Sharkey and Donnarie Hales to change the way people listen to ag podcasts. Have a listen – This is not your Dad’s ag radio!

https://soundcloud.com/user-725843201/farm-rural-ag-network-launch

 

Episode 32 – February 24, 2017

Philip Shaw – Farmer, Economist, Speaker, Generally Good Guy

0:50 Why Canadian sugar beets are processed in the US
3:10 Phil explains why Ontario farmers grow better corn than most US states including Illinois
9:00 Consumers really just want cheap food
13:50 Food is not like Uber
18:50 And……. Trump
24:50 Phil tells us his cat story
27:30 Some countries actually have food safety issues without making stuff up

https://soundcloud.com/user-725843201/philip-shaw-farmer-economist-speaker-good-guy

 

Episode 33 – March 1, 2017

Maegan MacKimmie & SteveMcCabe from Grain Farmers of Ontario
1:15 Maegan’s job at GFO is not just babysitting Steve. 2:45 From now on, Steve would like to be referred to as “The Silver Surfer” 5:10 Shout out to the Tavistock Hops Company and craft breweries. 10:40 Social Licence – of course Maegan wants to talk about this. 16:30 Pushing back against over-reaching regulation. 20:40 Even soybeans have some limitations. 23:45 Steve and Wendell claim to not know who the bachelor is. 29:00 Wendell gives Maegan some mint new marketing ideas for GFO which Steve mostly shoots down.

https://soundcloud.com/user-725843201/gfo-maegan-and-steve

 

Episode 34 – March 9, 2017

Kevin McArter – Nobody has a Better Voice than an Auctioneer

1:30 Why beef farmers and bankers make good partners
6:40 Western cattle- Ontario or bust!
9:50 Senior A Hockey- if you’re not Canadian you won’t understand
11:50 Wendell accidentally buys a steer. And overpays
16:15 Lubricating the auctioneer- with scotch
19:30 Alberta- it’s a dry cold
22:00 Kevin calls Wendell a big, dopey dog
26:30 Kevin has come up with the perfect Friday night

https://soundcloud.com/user-725843201/kevin-mcarter-nobody-has-a-better-voice-than-an-auctioneer

 

 

 

 

 

 

So Long 2016 and Good Riddance

 

The Internet has no shortage of memes and gifs about how 2016 has been full of tragedy with so many celebrities taken from us way too soon. Apparently aging pop icons are now discovering that fame and fortune buys them no exemption from time and age any more than the rest of us. While this will be the common theme online as 2016 comes to a close, it’s very low on my list as I reflect. The past year has been a bit of a rollercoaster and I’ve hesitated to share my thoughts because some things are still pretty bitter and raw, but here it goes….

I have a great family and a job I love. I don’t fight 401 traffic, I’m proud to represent the company I work for and I have a passion for the industry I’m in. I started 2016 with some exciting new projects both professionally and personally, which I tackled, characteristically, with more enthusiasm and energy than attention to detail. Then, one Sunday in July we got a call from my brother-in-law asking if we could watch their 3 and 1 year old while he took my sister to the doctor because she wasn’t feeling herself. We only live a few blocks away so it wasn’t long until we got there, but by then it was obvious something was seriously wrong. At the hospital, I was worried, but I was also thinking about the jobs around home that I was going to get to that pleasant, summer afternoon and my schedule for the upcoming week. Then a doctor spoke and everything came crashing down around me. Less than 24 hours later, my youngest sister died, 2 months shy of her 40th birthday.

A very matter of fact doctor explained that my sister had been living with a ticking time bomb in the form of a brain aneurism. No injury, no cause and nothing that could have been done and so she left behind a husband, 2 beautiful little girls and a long to-do list of partly finished projects and crafts. I have read that losing a loved one is like getting hit with a brick, but for me it was more like being thrown into a lake, treading water and trying not to drift too far from shore. There were calls to make to family, awkwardly blurting out the news. There were arrangements to make always trying to honor my sister’s wishes, but feeling like it was a farce and a show for everyone else. I tried to cling to something normal. Someone told me recently that normal, day to day chores provided her with an anchor as she struggled with health challenges and I found that to be true as well. Even in the first days, I needed those calls to work and the moments of normalcy and talking to strangers and not leading with “My sister just died….”

My initial reaction to the funeral process was that we were simply satisfying the required traditions and going through the motions required by convention and society. What I found was that, at least going through the motions was a task that allowed some direction and eases you into conversations where you say things like “my sister was…” rather than “my sister is…” That week I would catch myself making sure there were 4 chairs for me and my siblings and then remembering we only needed 3. As I talked to more and more people who thought very highly of my sister, I realized there was a lot about her I didn’t know. To me, she was always my bratty, little sister, who needed me to look out for her. Even though, rationally, I knew how smart and successful she was, hearing it from a crowd of strangers impacted me more than I would have guessed.

The return to a normal pattern was gradual and it was little things that would trip me up – posting on Facebook and realizing that she wouldn’t comment, scrolling through text messages and reading a running conversation I was having with her, stumbling across the last picture I have of her and the kids. As life goes on some things are new – my sister would love that we have a close relationship with her girls and that makes me a both happy and sad. The grief is still there, obviously, but it’s become a manageable thing and it’s most present at family events like birthdays and holidays, but it sometimes surprises me and I’m not sure why.

I’m not a deep thinker and writing this has not been easy, but I want to share because I have learned some things this year. It turns out that some of the moral lessons we have be taught are not nearly as cliché as I thought – don’t take people for granted, live for today, don’t sweat the small stuff – turns out not just catch phrases. One of the things that became important to me in 2015 was to be a positive supporter of farmers and agriculture in general. I have questioned, at times, if what I do has any real impact or if I’m doing it right or even if it’s my place to speak up. But, what I have decided is that it’s important to me and I don’t care what other people think. I enjoy doing a blog and a podcast, I enjoy the people I have met as a result and it has fostered my passion for agriculture. My resolution is this – I’m going to be myself and I’m going to keep learning and growing. So 2017- what you see is what you get, but it’s all me.

Buzzwords Most Likely to Start a Fight

There are some new words and phrases used in everyday conversation that bother me. Some of them are primarily used by my teenage children, but I probably have a better chance of changing public perception of animal agriculture than I do of enforcing “appropriate” behaviour of my kids at this point. The catch phrases I’m referring to are things like “carbon footprint”, “ethical consumerism” and “sustainability”. In any other industry, it’s accepted – and even taught in universities – that improving efficiency uses less resources, cuts

cost and minimizes waste, yet these principles are frowned on in food production. In 1800, each farm produced enough food for themselves and one other family. Fast forward 200 years and that same farm grows enough to feed 125 people. Even though that seems like amazing progress, consumers are increasingly asking for food grown using traditional, inefficient farming methods and calling that “sustainable”.

Hipsters and the urban elite believe that modern livestock farms are causing climate change and would like us to farm “sustainably” like our grandparents did. However, giving back the tremendous productivity gains we have made would, in reality, have a catastrophic environmental impact. Consider that in the 1940s US dairy farmers produced 53 billion kgs of milk from 25 million cows. Zoom ahead to the turn of the century and the output is now 84 billion kgs milk with only about 9 million cows! That’s a 400% increase in milk/cow! So, to make 1,000 kg of milk it now takes 5 X fewer cows, 4 X less feed, 10 X less land and 3 X less water! Same story at the other end of the cow: 4 X less manure, and the total carbon footprint to make 1,000 kg of milk is 3 X lower than it was 70 years ago! That sounds sustainable to me….

Even though the beef, pork and poultry industries have also seen similar improvements, consumers are of the belief that if something makes food “cheaper” it must be bad for the environment. Go to any grocery store today and you are bombarded with messaging that, if you are prepared to pay extra, you can make the environmentally responsible choice to buy organic, natural, hormone free… The list goes on and on. Most people believe that if something is “conventional” or “cheap” it must be at the expense of the environment, the animal or the quality of the food. Ironically, science shows that the environmental impact of food production is lowest when we use every modern technology available. This would be less significant if these technologies were used at the expense of animal welfare of food safety, but we know that both quality of life of farm animals and the safety of our food system have never been better!

The argument that local food is better for the environment seems reasonable and, in general, I am in favour of buying in my community. The reality is that, at least for meat products, only 5-10% of the carbon footprint is tied to transport. That means that a switch from “conventional” to “niche market” local food would have to be produced with no less than a 10% drop in efficiency to be carbon neutral. To be clear- I AM NOT SAYING DON’T BUY LOCAL. Just be careful to not be sold on the premise that, because it was grown in an “urban garden” in your neighborhood, that it is the environmentally responsible choice.

The challenge for the conventional livestock industry has shifted from supplying the needs of the growing global population to convincing consumers that we are good for the environment. Science shows that improved productivity reduces the carbon footprint per unit of food, yet we need to find ways to convince consumers, retailers, and the mainstream media. Attacking mainstream producers (feedlot beef or conventionally housed layers) in favor of niche markets furthers the idea that conventional production and mass food production are undesirable. In parts of the world where food is readily available, consumers have the luxury of making choices according to production system, but many parts of the world simply need nutritious food. It’s my hope that better consumer education demonstrating the continuing food crisis will shift consumers to make more science based food choices in the future.

Why People Take Farmers For Granted

The post-election backlash of liberal protesters against American farmers has been both vocal and outrageous. How has the urban population in America and Canada come to take farmers and their food supply so much for granted? In general we’ve become a society of disconnected people. We deal with each other indirectly and nowhere is this more obvious than in food and farming. Most consumers have no idea where their food actually comes from. They might know that farmers grow crops and livestock, and that someone packages these crops and delivers food to grocery stores and restaurants, but they have little sense of the hard work and complexity of the process.

Farming, in the minds of many, conjures up images from the past of a hard working family living in rural isolation and trying to coax a living from the land. To others, farming is just like any other manufacturing process that turns raw materials into finished products. But, there is no sense of connectedness between the people who shop in grocery stores or order off of restaurant menus and the farmers who till the soil to grow their food.

Until fairly recently, nearly everyone farmed, had farmed, knew a farmer, or at least knew someone who had farmed for a living, but this is no longer the case. People no longer understand how life in general, is connected to the soil and life on the land. They are concerned that farmers are destroying the natural productivity of the soil and destroying the environment and yet their main demand is cheap, abundant food in the grocery store.

Years ago, when we were a farm based society, people either grew their own food or bought it directly from someone who had grown it. The relationship between consumer and producer was personal – face to face. As the economy became more specialized, merchants such as butchers and bakers bought from producers and sold to customers, and the farmer/consumer connections became one-step removed. Then came grocery store owners, who bought from the butchers and bakers and consumers were at least two-steps removed from the farm.  The principles of industrialization are specialization, standardization, and centralization of decision making. Regardless whether the result is assembly line production of cars or a large scale, modern farm, the principles are the same.  As we have become specialized in our work, we have come to rely on the impersonal market place to get our commodities to consumers.

As people left rural areas for the cities, consumers became separated by distance and added functions such as transportation, further processing, storage, and packaging magnified the degrees of separation. Producers became increasingly reliant upon impersonal marketing systems. We began to rely on laws to facilitate buying and selling, on grades and standards to define quality, on health requirements to ensure safety, etc. –  all vitally important, but counter to personal connections.

Today, models of working farms are more like tourist attractions, but tourist attractions don’t reconnect consumers with farming any more than zoos connect people with the jungle. We need to find a way to recreate those personal connections between farmers and consumers, daunting as that task sounds. How do the 2% of people who grow the food compete for the attention of the other 98% who are our customers? This is one more eye opening example of why we need to keep telling our stories and reaching out to consumers regardless of whether they appreciate us or not.