ArticleVolume Number May 24, 2019
René Royagr.

The signals have changed, let's adjust production before it's too late

Les signaux ont changé, ajustons la production avant qu’il ne soit trop tard

Production dynamics have changed since the beginning of the winter. Butterfat deliveries now exceed the provincial quota, resulting in a 1.3% decrease in the cumulative difference from December 2018 to April 2019.  At the individual level, this translates into an average cumulative use of the tolerance from -14.5 days in August 2018 to -7.0 days at the end of April 2019.

Non-carryover and over-quota production

Other signals also confirm the trend. The following graph illustrates the evolution of the tolerance overruns (-30 days, + 10 days) by Quebec dairy producers.

Evolution of tolerance overruns since August 2018

In August, 26% of producers lost the equivalent of 394,000 kg of butterfat production capacity in non-carryover, while only 3% of producers were over-quota for the equivalent of 14,800 kg of butterfat. The situation has greatly improved for the non-carryover since February, with only 12% of producers in this sector, with the equivalent of 158,000 kg.  However, there is a deterioration on the over-quota side, with 12% of producers since February for the equivalent of 63,500 kg of butterfat.

Rising quota demand and falling supply

The next graph is the consequence of what I have just mentioned: a sharp increase in the purchase demand for the quota and a decrease in the volumes offered for sale.

Evolution of quota supply and demand at the SCVQ

After remaining very steady at around 10,000 kg during summer and fall, demand has jumped since December to 18,000 kg.  During the same period, the sellers liquidated their surplus at the beginning of the summer and returned to the pre-2015 supply volume.  We are therefore in a well-known situation: about 5% of the requested volume has been met since December (see graph).

Percentage of requested quantities filled

The importance of planning the quota now

Why am I talking to you about this today?  Because the milk production of a herd is like a large haul of silage pulled by a tractor: it takes time to accelerate, but you need to be thinking ahead when you want to stop. It is therefore necessary to start planning immediately and follow up regularly (every 2 months), even for those with negative tolerances, to avoid accidents. Valacta's dairy production advisors have the expertise and tools necessary to carry out milk production planning and quota monitoring.

One last anecdote to conclude... I have a producer friend who could have sold forages at a high price this year, but instead chose to keep it to feed cows whose milk was delivered over quota and which cost nearly $4.50/hl in transportation and marketing....