June 26, 2011 Mississauga Milk Marketers

Volume 7 | Issue 1

Dairy Farmers of Ontario has brought stability into a regional industry where chaos once ruled. Peter Gould, the organization’s CEO, describ

Dairy Farmers of Ontario (DFO) is the marketing group for Ontario dairy farmers, directed by Ontario farmers.

The Mississauga-headquartered organization is owned, operated and completely financed by nearly 4,200 dairy farm families in the province. It serves the largest sector of Ontario’s agricultural industry, marketing milk on behalf of all dairy farms who send their product to processors.

On first glance, the organization may appear as a co-op. But it’s a little bit more than that, says DFO General Manager and Chief Executive Officer Peter Gould. “We’re a non-profit organization with functions relatively well-defined in terms of marketing milk, including the transportation, distribution to processors and the pricing. When we provide processors with milk, we bill them and pay the money to the milk producers,” he explains. “At the end of the day, we are a buyer and seller of milk, and we carry out the necessary financial transactions.”

What he’s saying is that DFO looks after the best interests of its constituents. It has positioned itself to best respond to the regional vagaries of an ever-changing marketplace, responding to new trade rules and new realities. It has brought stability into a Canadian agricultural industry where instability previously reigned, says Gould. “That means predictability as far as milk production expectations, price expectations and security,” he says.

Bottom line: producers’ milk will get picked up, and these producers will get fair compensation.

Gould describes DFO’s impact. “The organization fosters an environment where farmers can more effectively plan for the future and make the most appropriate investments. Of course, nothing can ever be completely certain, but farmers can make investments with a reasonable sense of security.”

‘60’S FLASHBACK: EMERGING FROM CHAOS

DFO’s beginnings date back to the 1960s. During the first part of the decade, Ontario milk producing organizations operated in a fragmented environment that lacked unity. As a result, marketplace bargaining position proved weak at best. “At the time, dairy farms and processors were involved in what could only be described as unorganized marketing and an inefficient process,” says Gould.

Most milk producers realized inadequate returns related to labor, management and investment. Further, the existing milk marketing system was replete with numerous inequities and inefficiencies. One word best describes the situation: chaos.

The Ontario government felt compelled to step in. “It felt that there had to be a better way to organize the industry, with marketing that would be far less volatile and disruptive for the farming community, processors, and consumers,” comments Gould. “That led to implementation of the ‘Milk Act.’”

In 1963, the government commissioned a study to determine how to best address a situation that industry observers believed would only worsen. This was the “Royal Commission Inquiry into the Milk Industry,” commonly called the Hennessey Commission. In 1965, based upon the commission’s findings, the government introduced the Milk Act, which was passed the same year. A farmer-friendly piece of legislation, the Milk Act established the Milk Commission of Ontario and the Ontario Milk Marketing Board (OMMB), an intermediate body that would buy all of the milk produced on Ontario farms and sell that milk to processors.

The OMMB successfully addressed immediate marketing problems, helping establish a marketing plan empowered to set price and establish quotas, which made buying and selling of raw milk more profitable within the province. Indeed, during its 30-year existence, OMMB addressed marketing problems and strengthened response to a continuously evolving set of domestic and international market changes.

From this evolved the DFO, which was created in August 1995 from the merging of OMMB and the Ontario Cream Producers’ Marketing Board. Subsequently, milk and cream marketing plans were handled by a single organization.

DFO continued the OMMB tradition, and stability now reigns. DFO activities are monitored by the Ontario Farm Products Marketing Commission and are also subject to decisions of the Ontario Farm Products Appeal Tribunal, which hears appeals from parties dissatisfied with decisions. The upshot is that domestic market needs are met.

REVOLUTIONARY MISSION

The DFO perceives its mission as providing leadership and excellence in the production and marketing of milk, and its vision is the operation of a dairy industry that is dynamic and profitable.

To realize this vision, the DFO outlined a set of operating principles, and this document was to the regional dairy industry what Martin Luther’s 95 theses – which the radical theologian nailed upon a church door – were to organized religion: a game changing set of revolutionary proclamations that reformed a previously untenable arrangement.

This is what the DFO outlined: “We are deeply committed to the following operating principles:

• An orderly milk marketing system based on effective border controls, production discipline and the ability to negotiate prices;
• Responsible use of the powers delegated to it under the Milk Act of Ontario, including the authority for farm gate milk pricing;
• The provision of the opportunity for efficient farmers (the majority of which will be family farms) to earn a reasonable return for their labor, management and investment;
• Never losing sight of the reality that we work for dairy farmers, processors are our customers and consumers determine our market;
• Proactively dealing with societal issues such as environment, food safety and animal care;
• The production and marketing of high-quality milk and dairy products;
• A clearly defined process governing policy development and implementation;
• Working co-operatively with other provincial milk marketing organizations to advance the Canadian dairy industry;
• Putting the collective good of the industry ahead of individual needs of producers;
• Fair and equitable application of policies; • Open communication and consultation;
• Efficient, cost-effective marketing and administrative operations;
• Highly motivated, passionate staff possessing a wide range of essential skills.”

It was a bold declaration, at once as positive and provocative as any previous “declarations” composed to upset an existing order.

POLICY MAKING BODY

Today, DFO is a policy making organization. Board Members are elected on a rotating basis (three each year) by their peers (other dairy farmers) for a four-year term. Board members annually elect a chair and two vice-chairs from among their constituents. Board members spend one-third of their working days on DFO-related business. Activities involve monthly board meetings and assuming seats on various internal and industry committees. Internal committees deal with such matters as quota, milk pricing strategy, raw milk quality, research, planning, transportation and Canada’s National Dairy Policy. Board members also participate in many agricultural and dairy industry events. All the while, they maintain close contact with dairy producer committees and producers in their regions.

Sometimes things become a bit more exciting than anyone wants them to be, as Gould well understands. “One of DFO’s purposes is to set policy, and whenever you make policy for a large group of people, you may satisfy the majority but leave some people feeling disadvantaged,” says Gould, who boasts 30 years service and experience with DFO.

DFO, he says, was designed to provide an open process that encourages communication. “We have regular meetings with farmers – both in person and via phone conferences, and even on the Internet – and these serve as forums where people can make comments or express their concerns, as it is with any other business or industry. Also, I always answer my phone, and many producers take advantage of that opportunity.”

ACCESSIBLE AGRICULTURE ACTIVIST

Gould’s accessibility stems from his commitment to his constituents. “Dairy farmers represent one of the hardest working groups in society,” he relates, with both admiration and affection. “They adhere to the Protestant work ethic, and I think it serves the world well to preserve those values.”

But the community is shrinking, he observes, and much to our detriment. “Farmers in general, and dairy farmers in particular, form the bedrock of our societies. We need to support these people if we want to maintain the kind of society that moved us forward in the past.”

Don’t take these words too lightly. Gould has a broad perspective. He was raised on a farm, and during his 30-year career (which commenced after higher education), he has focused on the most critical agricultural issues. And he brings passion to what has become his life’s work.

“I consider it a privilege to work for dairy farmers,” he says.

He’s equally passionate about DFO. “I intend to make sure we keep up with what is most relevant and, at the same time, make sure the organization remains relevant. In one form or another, we’ve been around for 45 years, and relevancy will keep us here for another 45 years, if not longer.”

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