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OUTLINE
I 2013 Review: (i) DFO
- Succession / Restructuring
- Application Framework
- P8
- Traceability / Handhelds
- New Dairy Research and
PRESENTATION TO DAIRY FARMERS OF ONTARIO 2014 ANNUAL GENERAL - - PDF document
PRESENTATION TO DAIRY FARMERS OF ONTARIO 2014 ANNUAL GENERAL - - PDF document
PRESENTATION TO DAIRY FARMERS OF ONTARIO 2014 ANNUAL GENERAL MEETING JANUARY 8, 2014 WHEN YOU COME TO THE FORK IN THE ROAD TAKE IT OR THERE ARE NO RIGHTS ONLY PRIVILEGES Peter Gould General Manager Dairy Farmers of Ontario
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INTRODUCTION Despite what may or may not happen, there are only so many things that are within our control. And, for those things, we keep moving forward … we do the very best we can, we strive for excellence. We have things we aspire to do, things we try to achieve. From that perspective, 2013 was a very positive year marked by significant achievements. In hindsight, some could have been done better, a little differently … so we’ll work to get that done in 2014 and I’ll give you some examples, later in the presentation. At the same time, some pretty big clouds rolled in just as fiscal 2013
- ended. I have been saying for over a year that CETA, the Canada-EU
Trade deal was a bell-weather, not the biggest deal from a milk marketing perspective but one that would indicate what lay ahead in the Trans Pacific Partnership, where New Zealand, the US and Australia have their own aspirations for the Canadian dairy market. A bad day in Mississauga or Longueuil or Ottawa can be a good day in Auckland, Washington or Canberra. I’ll be frank, the new TRQ granted to the EU is much larger than I imagined. With that, we may all have to recalibrate
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- ur thinking and again remind ourselves, and take seriously that we
enjoy many privileges … and no rights that I can think of. I. 2013 in Review … DFO (i) Let me start with restructuring and succession. With several retirements of long-service employees, Pat Paines (45 years), Wes Lane (40 years) and Dave Nolan (37 years), Susan Senchyna (30 years, Bill Dimmick (26 years) we went from an organization with seven operating divisions to four, reducing the number of Director positions by three. In addition, there were a number of key departures, in Transportation and Communications; these were all situations where people moved to better opportunities. While it takes a lot
- f work to hire people, it’s also good to know that other companies
/ organizations value individuals who have experience with DFO. At the same time, it gives DFO the opportunity to go out and hire new
- people. It’s also a positive that DFO can attract and hire highly
qualified individuals, Robert Nosek, Transportation Manager, Maria Leal, responsible for FSRs, CQM and farm inspections, Laural Adams, Communications. We’ve also hired five new FSRs … and I have to say I’m impressed with all of them. The organization
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chart(s) is available on the DFO web site. For the first time, in many years, we have a full staff compliment and minimal expectation of turnover for the next several years. Our latest addition is Eric Snow who’ll be working in Transportation, is someone I’ve known and worked with and brings a strong knowledge of the dairy industry. On the succession side, we are striving to develop depth in all key
- positions. In fiscal 2014, we’ll implement a development plan to
ensure there are a number of internal candidates for when the GM position opens up. (ii) At last year’s AGM, we had selected the vendor for a total re-write
- f DFO’s software and were negotiating the contract. That
contract was signed with the project officially beginning on February 1, 2013. The budget was / is $2.5 million dollars with a timeline for completion of 20 to 24 months, e.g. fall of 2014. It would be wrong to say we didn’t know what we were getting
- into. We knew it was going to be an intense and labour intensive
process, involving just about everybody in the organization, some
- bviously more than others. It has been every bit of that and then
- some. I can say without qualification this is the biggest project DFO
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has ever been involved in … it has meant people doing their regular jobs, plus what’s needed for the application framework, countless hours, lots of work on evenings and weekends … but I’ve not heard a word of complaint. If anything, it has strengthened the team
- spirit. The project has not been without hurdles or what I’ll call
mini crises (plural). We’ve worked through them with our partner, Systems Group. In November, we completed what’s called “requirements gathering” … documenting every detail, every calculation, every process to run producer payment, plant billing, transporter payment, raw milk quality, CQM and everything else DFO does. That is the forest, where you can’t always see a way out. Now we are looking ahead to the new program, the optimization, the new software. No less hard work, but one where you can look forward to the results. I will share with you that the Board has made it clear; there can be no slippage on budget. We still expect completion in late fall 2014, well within the expected timeframe. However, if there is a compromise, it will be on time, not money, if needed. (iii) Parallel to DFO’s initiative on the application framework, discussion also began about a year ago with the other nine provinces. Understanding what motivated DFO perhaps other provinces might
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have similar interests / needs. Fast forward to today, we do have something called the P8 IT Group. It does not include Quebec or
- Newfoundland. The other provinces are actively engaged in a
process that will lead to sharing infrastructure and the development of a common software platform. This is a big undertaking for each of the individual provinces and one that requires a huge coordinating effort to bring everyone together. System Group is the software partner and Reimer and Associates is responsible for coordinating and planning the project. Each province will retain the full integrity of their own data. What we envisage is an environment where a future change in policy requires only one change to the software that can be applied in all provinces, and eventually where policies will converge, where everyone will have secure back-up, where risks are minimized, where costs are shared. The participating provinces all see the benefits of a shared vision and the opportunities that go with it. (iv) Just about a year ago, we signed a contract to buy new handheld computers for all the transporters. They were delivered in April and rolled out to bulk tank milk graders. The roll-out was completed by October. This was a seamless operation. These new
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handhelds are state of the art. They automatically collect way more data than the previous generation of handhelds and transmit data, automatically, in real time, via satellite. Part of the project was the need to replace the old handhelds. The other part is the analytics, the tools DFO will now have to help manage and optimize
- transportation. This is also an example where the technology could
be used in other provinces. Lastly, the new handhelds were integral to a project to improve traceability for dairy products … from the farm to the consumer and vice versa. CDMI, the infant formula company, and Parmalat were co-operators in a simulated product recall. Completing the simulation was one of the criteria needed to get a provincial grant for both CDMI and DFO. The deadline for completion was December 15, 2014. The simulation was successfully completed on December 4, 2015. The simulation was an early harvest of the application framework … in other words, it was run using new software that is part of the overall software solution. I want to thank both CDMI and Parmalat for their co-operation. I also want to thank the province for its generous grant which was certainly helpful and appreciated. Part of the reason that DFO was
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successful in this particular grant application is that the template for traceability developed for this project should be easy to apply to the traceability needs for other commodities. (v) The last Ontario-centric topic I want to discuss is the new University
- f Guelph Dairy Research and Innovation Centre. A lot has
happened in the last year since tenders were issued last winter. The official groundbreaking took place in October and construction is underway. Fundraising has been and will remain a priority for DFO. As you can see from the acknowledgements, many businesses have already made a commitment. We know there are other donations that need final approval and others that have to work their way through the fiscal cycle … meaning they have to be part of next year’s
- budget. As you know, the Province of Ontario has committed $20
million to this project. The intent is to make the University of Guelph a world-class centre for dairy research. This has great value not only to producers but to the industry and its suppliers. Businesses need qualified graduates. The only way to do that is by attracting top researchers and teachers to attract top students.
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That message resonates with businesses ranging from processors to pharmaceuticals to equipment manufacturers and others. We have recently approached Agriculture and Agri-Food Canada to participate in funding this project. Their support would be greatly appreciated by everyone involved. Please do not hesitate to ask for support for this project when you meet with your MP. It’s also important that dairy farms in Ontario and Canada continue to keep pace with dairy farmers in other leading countries. But perhaps Vern Osborne, U of G said it best; at least I heard it from Vern … “all the great innovations in the future will start with the cow.” Vern’s talking about functional foods, neutriceuticals, products for which milk and dairy products are great delivery
- agents. He’s absolutely right … it’s a great message that answers
the question “why should I support a new dairy research facility?” II A LOOK AHEAD (vi) CETA I am not going to talk about the details of the Canada/EU Trade
- Agreement. You are all familiar with those. I want to discuss what
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we’ve learned, whether knowing what we know now can provide any insight as to where we are going. I have been saying for two years that CETA is important, but the big deal from a Canadian dairy perspective is the TPP and that what happens in CETA might be an indication of what’s to come, but hopefully not. CETA has been variously described as a:
- kick in the pants
- a slap in the face
- a wake-up call
- or none of the above, a setback but essentially business as
usual
- for me it’s the wake-up call
Let’s deconstruct:
- on October 18, Prime Minister Harper signed the agreement
- on October 17, the deal was announced in the Throne Speech
- we now know the deal was agreed to in principle in July
- presumably, the fundamentals were in play months before
that
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- information pertaining to the deal was on a need to know
- nly basis. Those individuals were strictly bound by
confidentiality and obviously did a good job.
- during DFO’s lobbying activities in August and September,
MPs delivered the message that supply management would not be traded away in the CETA. Everyone stayed precisely on message
- while we don’t like the writing of columnists like Andrew
Coyne, Jeffrey Simpson, Barrie McKenna and John Ibbotson and others, the question is, do they in any way foretell what might be in store? If they do, we should be paying attention to what they are writing now. (vii) Modernizing Supply Management This is where I think it’s appropriate to talk about the title of this presentation “Rights vs. Privileges”. I spoke about that two years
- ago. Some people picked up on it, not many and arguably not
- enough. The notion is central to the sustainability and viability of
- rderly marketing in Canada. From my perspective, and I’d
welcome a challenge, we have no rights, only privileges, period. When you think your privileges are rights or otherwise abuse privileges, there will be a reckoning. As the stewards of orderly
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marketing, we have an obligation, no a duty, to ensure that government(s) both provincial and federal remain on-side, remain supportive, that we not only do the right thing but are seen to be doing the right thing. If our ambitions and endeavours are too producer-centric, then someone, government will act as a moderating influence … and no one should be too surprised. We have now seen what they are capable of doing. The term ‘modernizing supply management’ is not mine … it’s used by the federal government, both elected MPs and bureaucrats. They don’t define it, they just use it. So I don’t know what they mean but if I took off my ‘producer’ hat and put myself in their shoes, I can imagine some of the things they might include. We know that government, federal and provincial want jobs, growth and economic activity … and they don’t want supply management to be an impediment. So what are the areas where government would like to see change or progress?
- the structural surplus will be about 80,000 tonnes on a skim
milk power basis or the equivalent of 800 million litres of milk … at the same time, imports of MPIs have grown steadily for years … that combination has put significant pressure on
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industrial milk pricing. We’ve known about this issue for over ten years. There have been efforts over the last four or five years to address this problem but not have borne fruit … there is no ingredient strategy or other equivalent solution … the need and ability to get protein out of animal feed and into the domestic food market
- as previously noted, P5 Allocation, which contains many
compromises already, still has not been implemented.
- milk pricing should be based on fair returns to efficient
producers … that’s how it’s described in the legislation. Obviously, it’s open to interpretation but there appears to be a gap between governments’ and producer perspectives.
- The industry’s inability to reach a satisfactory conclusion on
an innovation program. Nothing happens by chance, there are no coincidences. So while we are grateful for the new DIP Program, we have to ask ourselves how it looks to the outside world
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- while there has been much more and, arguably, good
discussion on effective decision-making at the national level, it remains a serious issue for the industry to address. Which brings us to Yogi Berra’s fork in the road. He said “when you get there, take it.” I don’t think the choices have ever been as focused or clear. One direction is to think CETA is one-off, we’ll manage it, business as usual. The other direction is to sit down with governments, have a real conversation and find out what modernizing supply management means. Choosing which fork to take is without a doubt the big challenge for 2014. The only question is whether or not it’s too late. (viii) Trans Pacific Partnership (TPP) I can’t say we don’t know anything about the TPP, it’s described as a 21st century trade agreement … we know that it aspires to the complete elimination of all tariffs … we know that was the ante, the cost of entry for Canada … we know that a dark day in Mississauga, Longueuil and Ottawa was a cause for celebration in Canberra, Auckland and Washington … and we now know that we had no insight, no knowledge of what was really being negotiated, what was on the table in CETA until after the fact, after the deal was
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- done. We know that the TPP negotiations are far more secretive
than were the CETA negotiations. We know that New Zealand, Australia and the US have serious aspirations for access to the Canadian dairy market, and not just for cheese! We know that Canada has been able to defend supply management in 11 previous trade negotiations, just not the most recent one … even though the government would argue the three pillars are still intact. We know that a number of TPP countries have sensitive products, notably Japan but also Mexico and the US. Other countries have non-agriculture issues / sensitivities like state-owned trading enterprises. Perhaps Japan will be a significant ally. The US says if they don’t reform agriculture, just kick them out. Perhaps the US will be our biggest ally. They have never previously ceded ground on rice, sugar, cotton, dairy or other key agriculture
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- commodities. We’ll see if the TPP is any different. I’d be surprised.
Like the CETA deal, we’ll likely find out what has been negotiated
- nce an agreement has been reached.
In the meantime, the rhetoric, sticking to the speaking points about supporting supply management and the three pillars will continue. In December, following the TPP negotiating session in Singapore, they announced that “no agreement had been reached, but they agreed on all the landing zones.” That sounds like they may not have reached an agreement … but it also could be interpreted as though they had. They had landing zones for everything except
- agriculture. That sounds like there may be some difficult sticking
points … but then again, maybe not. A TPP agreement may not be that far away. When it gets announced is another matter. Conclusion The two points I want to emphasize are (i) the need to take a step back and remind ourselves that the Canadian milk marketing system is based
- n a series of privileges, not rights … that we exist solely at the pleasure
- f provincial governments and the federal government, that it is a
national system, not a regional or provincial system … that we should review our strategies in light of that and re-calibrate if needed; and (ii)
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we are at the fork in the road, we need to have that conversation with governments about what modernizing supply management means and make sure we take the right fork in the road. I also want to take this opportunity to thank the many companies who support DFO’s AGM through their generous sponsorships. I want to recognize and thank the companies and organizations who have stepped forward to make important and generous contributions to the new dairy research and innovation centre and look forward to
- ther industry partners doing so (Salon A).