“Industry Overview”

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Dairy Farmers of Ontario Update

DAIRY INDUSTRY OVERVIEW

1. Production & Pricing

2. Growth Targets

3. Promotion Accountability

4. proAction

5. New Dairy Barn

6. Trade

7. Ingredients Strategy

8. 50th Anniversary2

Production

• As of October 2014, there were 3,896 licensed dairy farms which equates to about 9,600 dairy farm families in Ontario.

• The New Entrant Quota Assistance Program had 26 applicants and 10 new entrants acquired quota on the quota exchange.

• Total milk production was 2.538 billion litres with a total revenue of $2,072,844,872.

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Milk Pricing

• Industrial milk prices announced increased by .9% was effective February 1, 2014.

• A class 1 price increase was implemented across the P5 on February 1, 2014 as a result of the national fluid milk price formula by 1.347%.

• Average within-quota price paid to Ontario producers for Ontario average composition of $82.08/hl for the fiscal year.

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Milk Supplies & Quota Utilization:

• For the period ending October 31, 2014, the P5 filled 99.8 per cent of the issued quota for expected market requirements.

• The pool provincial cumulative difference, or the provincial credit position, was -0.76 per cent at the end of October 2014.

• Producer quotas were increased by 1.5 per cent, effective April 1, 2014, and, by an additional 3.0 per cent, effective December 1, 2014

• CDC butter stocks were 4,452 tonnes and processor butter stocks were 8,470 tonnes. These levels were lower than the

normal

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1. Growth Targets• Strategic Plan of 2% per year• We have had 4.5% this year

• question is “How do you grow markets?”

• promotion is an argument

• putting milk in the system is required- lead the market or it meets it (without milk processors do not grow)

• changing consumer attitudes … “Grain Brain”, “Wheat Belly”“Good Food, Bad Food” → The Swedish Food Pyramid

• sell products with BF … high BF is even better

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2. Promotion

• DFO essentially flows through ~$38.0 million annually to DFC• DFO Board has heard producers say “DFO has to be accountable to

them”• DFO Board has decided to “enter into a contract with DFC” to frame

accountability• question about generic advertising• question about how to make the 100% Canadian logo more effective• DFO supports supply chain partnerships, leveraging producer dollars

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3. proAction• relatively good buy-in among the provinces• principles of “implement at the same time, in the same way” Integration

is key• animal welfare … too big an issue to follow proAction Timelines

→ DFO/Ontario wants to be a leader

→ OMAFRA/CFIA should use tools that are available

→ DFO Board/Staff strongly support a “more aggressive” approach to enforcement and education

• auction barns are concerning and dairy must lead

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5. New Dairy Research and Innovation Centre• construction is well underway → building complete by Spring + three to four

months to install equipment

• budget $25 million = ARIO @ $20 million + DFO @ $5 million

• realistic potential for final cost to come in under budget

• Still funds to come in and need more

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6. Trade File

i. CETA• dotting ‘i’ and crossing ‘t’ took from Oct ‘13 to Oct ’14 - legal scrub

three months + translation (27 languages) six to nine months + national legislation 12 months = minimum 21 months → implementation January 1, 2017

• fully implemented by December 31, 2021• TRQ administration remains issue → some TRQ will be held/

allocated to non-TRQ holders• producer compensation will be determined at the end of

implementation• quite possible ‘a transition fund’ will be established for processors

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6. Trade File (cont’d…)

ii. TPP

• remains a wild card

• US is a reliable ally which will help save Canada

• if it comes down to the wire, like CETA, there will be a deal

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7. Ingredients Strategy

• upcharge and competitive pricing for skim solids

• awaiting processor response

• could be more broadly based

• How and who will negotiate?

• how patient will the government be?

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8. 50th Anniversary

• New flag. New Logo. Reason to Celebrate!

• Kick-off at the Royal Agricultural Winter Fair → launch 2015 Calendar

• November MP +

• AGM

• Summer Open Houses

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