1. Collective marketing and supply management 1

2. PORTRAIT OF PRODUCTION 2 2008CanadaQuebec Dairy farms13,6006,600 Production (litres)7.6 billion2.8 billion Average herd67 cows55 cows Production per farm (litres)550,000 Total farm receipts4.961.98 (billions of $)

3. THE MARKETS Québec produces 38% of Canada’s milk Milk use: 23% (fluid milk and cream) 7% (yoghurt) 48% (cheese) 22% (butter, powder, evaporated milk and secondary processing) 3

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5. Market forces unfavourable to producers 5 6,600 dairy farms in Québec - 3 processors buy 82% of the milk 13,600 dairy farms in Canada - 3 processors buy 70% of the milk Situation is similar elsewhere in the world

6. Farm prices unstable, retail prices rising 6

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8. Supply management and collective marketing: Two tools for obtaining a farm gate price:  that covers production costs  that is fair and the same for all  that is stable and predictable

9. Supply management Since 1971, a federal-provincial agreement has allowed the adjusting of supply to demand GOVERNMENTS Limit imports Set a milk price based on production costs PRODUCERS Plan production to satisfy market needs Dispose of surpluses at their own expense 9

10. Simplified supply management diagram DEMAND IMPORTS less TOTAL QUANTITY TO PRODUCE Province XProvince ZProvince Y Farmers -------------------------Individual quota ----------------------

11. Who makes the decisions ? The Canadian Milk Supply Management Committee (CMSMC) chaired by the Canadian Dairy Commission (CDL): Joint decisions by the representatives of producers and governments Processors are consulted. Consumers are observers.

12. Milk price for producers Determined based on the production costs of a sample of dairy farms Allows the 50% more efficient to cover all of their costs Enables producers to live off the market, without subsidies 12

13. Since 1956, the Farm Products Marking Act has allowed the adoption of joint plans The joint plan is a collective tool that enables some 7,000 farms that are independent producers to unite as a single company to market their milk Managed democratically by producers within the FPLQ

14. Marketing Agreements (MA) Terms negotiated between: Agropur (coops) FPLQ Québec Dairy Council (private companies) A single sales agent negotiates: plant supply, milk quality, milk classes and prices, payment terms 14

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16. 16 Comparative performance Trend in consumer prices of dairy products per country, in national currencies, from 1981 to 2006 (1981 = index 100)

17. 17 Comparative performance

18. Price stability

19. Supply management: A solution or a problem? Impact of the global food crisis on consumers Subject to supply managemen t * Note: For Europe and France, the index also includes eggs.

20. 20 More stable production and retail prices

21. Supply management and joint marketing Benefit … PRODUCERS A single point of contact responsible for negotiating Equity in purchasing terms Stable and predictable prices Guaranteed supply of quality milk Milk for developing new niches

22. Supply management and collective marketing Benefit… GOVERNMENTS No subsidies to pay out for income support A healthy farming sector which contributes to the economy A sustainable agriculture model on a human scale

23. Supply management and collective marketing Benefit … CITIZENS A stable supply of diversified, high quality and reasonably priced dairy products Stable, paying jobs A model of modern, human-scale agriculture, respectful of the environment

24. A legitimate and sustainable policy … requires an appropriate legislative framework. … the producers must be disciplined. Logical response to free trade and market concentration … Efficient way to ensure a fair price for producers … BUTBUT

25. Refocusing the debate Restoring the real context Less than 10% of total food is traded on world markets. 6.5% of total milk production is in world trade

26. Refocus the debate The objective is not to diminish the size of trade But to make sure that trade rules allow fair treatment of what is traded And to make sure that policies leave sufficient margin to countries for them to be able to exercise their food sovereignty e.g., the right of countries to adopt farm policies based on their own particular realities

27. Thank you