from the editor’s desk: january/February 2005
Drew McCarthyFeatures Business and Operations Finance
They Ran and Hid
They Ran and Hid
The Canadian Dairy Commission (CDC) offices were closed on the afternoon of Friday, Dec 10, 2004. Phone calls were not returned. They ran and hid.
For weeks the CDC had refused to explain to anyone how it would arrive at a new price that would include a BSE compensation amount for dairy farmers. Their announcement of an 11.7 per cent dairy price increase on Dec. 10 was likewise delivered without an explanation.
In a Dec. 10 press release the Canadian Dairy Commission said that it had “seriously considered dairy producers’ needs and recognized the extraordinary circumstances in their announcement.” The commission went on to say that the “adjustment to the farm price of milk will help relieve the financial pressure on dairy farms across the country.”
Problem is, it’s not clear whether the CDC even has a mandate to address BSE compensation. But why be concerned with jurisdictional niceties; just blow through it and let the chips fall where they may. Just what do they think they’re doing? And why aren’t they accountable to anyone?
Jacques Laforge, president of Dairy Farmers of Canada said that dairy farmers “have dealt with increasing costs and the loss of farm income from BSE for more than 18 months now. Under similar conditions other businesses would have already increased prices to cover their lost income.”
Spoken like a person who’s never even been in real business – unless you call operating as a member of a monopolistic cartel being in business. Sure ain’t the pizza industry!
When faced with sharp increases, such as the one just administered by the dairy commission, pizza operators must look for creative ways to cut operating costs and increase sales volume. They must sometimes unfortunately look at cutting staff. The idea of simply increasing prices to cover their lost income to a pizza operator is like a trip to NeverNeverLand.
The unfortunate aspect of all of this is that the use of dairy in the foodservice industry will decline.
Last year’s spike in milk prices south of the border has pointed to a drop in U.S. sales. Dairy market analyst Jerry Dyer wrote in U.S.-based Dairy Foods magazine in November that foodservice operators began blending cheeses to cut costs. Those who were already blending, says Dyer, started to look for alternative fats and proteins. He concluded that, “users of blends are probably lost customers forever.”
The same will be true here in Canada. Of the 14 foodservice representatives that presented briefs to the Canadian Dairy Commission this year, every one of them pointed out that the increase would force them to reduce the amount of dairy they use in their businesses.
That’s bad news. It’s bad for foodservice; it’s bad for manufacturers; it’s bad for farmers; and it’s bad for Canadian society. Sadly, for all of us, the Canadian Dairy Commission has forced us into a lose-lose situation.
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