August 24th, 2015
How have Canadian dairy products achieved the high reputation they have on a global basis? Answering this question requires another: what does the Canadian Dairy Commission (or CDC) do? Since 1966, the existence of the CDC as a Crown corporation represents an important aspect of dairy processing in Canada conducting a number of important programs and services throughout the country. They operate as a government organization with enough freedom to provide essential support and services to the Canadian dairy sector.
Before 1966, Canada lacked a unified regulatory body for dairy products. This meant that there was no official mechanism for controlling dairy policy and procedures across federal and provincial boundaries. Doing so helps avoid costly errors or surpluses in the supply chain of production.
The CDC is closely aligned with the goals of the industry as a whole, facilitating key roles with organizations such as the Canadian Milk Supply Management Committee, or CMSMC, who represent one of the key policy makers for industrial milk production in Canada.
In essence, the CDC helps provide management strategies that work to the benefit of the overall industry.
Support Prices and Market Sharing Quota
The CDC has played an important role ever since the widespread introduction of supply chain management principles to the dairy sector. They do so by taking charge of two important elements in this relationship: support prices and market sharing quota.
Every year the CDC sets the price of butter and skim milk for the year to come. Support prices represent the amounts of money the CDC buys and sells dairy products such as butter and skim milk powder, in accordance with its various dairy programs.
They determine these values after consulting dairy producers, dairy processors, restaurateurs, and of course the final consumer. A complex interplay of studies, economic indicators, and industry knowledge come together to produce each year’s new amount, which is annually introduced on February 1st.
A wide range of marketing boards and agencies also rely on the CDC’s support prices to dictate values for cheese, ice cream, and yogurt, amongst others. The CDC also sets these prices with a consideration for the global marketplace: 2015’s values are the lowest since 2011, inaccordance with concerns over European Union trade deals. The intention of dropping the support price was to increase demand at both the local and global levels for Canadian products.
Of course, while this year’s low price can mean some serious good news for cheese lovers in Canada, the distribution of benefits are not guaranteed to reach consumers right away, if at all. Food processors might receive these benefits, but they are not necessarily passed along to the average consumer purchasing dairy products.
The market-sharing quota represents the national milk production goal for industrial milk producers in Canada. The CDC stays in close contact with the CMSMC to ensure these values are indicative of the market. If not, they adjust the values after surveying demand so they are more in line with existing demand.
As demand fluctuates throughout the year, the market-sharing quota needs to reflect this reality, so they monitor trends on a monthly basis.
Provincial milk boards draw on the support prices and the market-sharing quota to help set prices from one province to the next.
The various programs endorsed or run by the CDC work to encourage dairy food processors to remain competitive in the industry. They monitor demand for dairy products to help ensure balances between seasonal and domestic demand.
The CDC also raises global awareness for Canadian dairy products, highlighting the superior genes of Canadian cattle along with the high levels of quality control and standards required by dairy farms and dairy processing plants.
There is a firm commitment to quality in the Canadian dairy sector, and the CDC plays a pivotal role in this quality relationship. Asking what the Canadian Dairy Commission does reveals their complex interplay of roles within and outside of the industry, helping create policies, price indexes, and collaboration amongst dairy farmers and processors at the federal and provincial level. A close monitoring of local and global dairy trends helps ensure competitiveness while aiding in the expansion of the industry.