Dairy organizations partner to manage risk

Pierre Lampron, president of Valacta and Dairy Farmers of Canada. (John Greig photo)

A partnership among Canadian dairy service provider organizations should help position Canadian producers to take advantage of rapidly changing technology and make the sector more efficient, the groups say.

Why does it matter? The number of Canadian dairy farmers continues to drop and the need for more efficient services is growing as the price of milk declines. Technology is also challenging historical business models in dairy services, but also providing new opportunities.

The three partners include CanWest DHI; Valacta, its dairy herd management services counterpart in Quebec and the Maritimes; and the Canadian Dairy Network (CDN), which provides genetic evaluation for Canadian dairy cattle. Together they employ 500 people across the country.

CanWest DHI delegates will meet Jan. 20 in Alliston, Ont. to approve bylaw changes needed to create the new partnership.

At CanWest DHI’s final annual meeting recently in Toronto representatives of all three farmer-run organizations talked about the benefits of the partnership.

There’s little but semantics in calling the coming together of the organizations as a partnership instead of a merger, but each organization continues to have external funding from government and legacy funds that requires that each of them to continue to have their own organizations exist. But there will be one board of directors, name and staff for the new organization.

Ontario dairy farmer Harold Kress, a CanWest DHI board member, outlined the details of the deal at the meeting.

Several pressures led to the creation of the new partnership, he said, including:

  • Consolidation in the industry, including fewer and larger dairy farms.
  • The next generation on the farm is reconsidering traditional services. Technology allows for the collecting of copious data on the farm that used to be collected by herd management services organizations, like Valacta and CanWest DHI. However, those organizations have expanded into other services for farmers.
  • Genetic evaluation is coming from artificial insemination and other companies due to the increased availability of genomic testing.
  • Industry organizations are supported by fewer farms. “For every partnership involved in the dairy industry, the funds come out of the bulk tank.”

Kress and other speakers said there are numerous benefits to the partnership, including:

  • Risk management
  • Product and service innovation through the sharing of data and expertise. Neil Petreny, general manager of CanWest DHI, pointed to artificial intelligence and machine learning, sensor technology and growing international partnerships as areas where the organization could grow in the future.
  • The Valacta Centre of Expertise, set up to research and deliver productivity and profitability information for farmers, in a partnership of Valacta, the Quebec government and McGill University, which will be made into a national centre
  • Operational efficiency
  • Talent attraction

The organization will have nine directors, two from Ontario, one from Western Canada, three from Quebec, one from Semex, one from Holstein Canada and one from Dairy Farmers of Canada. All of those board members have to be farmers, although two external directors can be added who are non-farmers.

The partnership will actually be among four entities, as within CanWest DHI still exists the separate Ontario and western DHI organizations, Valacta and CDN.

The organizations already work together. For example, CanWest DHI and Valacta have shared software for almost 20 years.

“It’s a pleasure to be part of a group of people with a tremendous clear vision of where we need to go,” says Norm MacNaughton, president of CDN.

Valacta president and Quebec dairy farmer Pierre Lampron, who is also the president of Dairy Farmers of Canada, said he kept his job as the president of Valacta to see the partnership through.

“I’ve been very enthusiastic about the partnership developing over last year.”

The partnership is expected to be in operation in October.

— John Greig is a field editor for Glacier FarmMedia based at Ailsa Craig, Ont. Follow him at @jgreig on Twitter.

Neil Petreny
CNS Canada -- Canada Western Red Spring (CWRS) wheat cash bids across Western Canada were steady to slightly lower during the week ended Friday, while Canada Prairie Spring Red (CPSR) bids were mixed. Average CWRS wheat prices were steady to C$3 per tonne lower across the three Prairie provinces, according to price quotes from a cross-section of delivery points across Western Canada. Bids ranged from about C$212 per tonne in north-central Saskatchewan, to as high as $225 per tonne in southern Alberta. Quoted basis levels varied from location to location, but generally improved by about $2, to average about $31 above the futures when using the grain company methodology of quoting the basis as the difference between U.S. dollar-denominated futures and Canadian dollar cash bids. When accounting for the currency exchange rates by adjusting the Canadian prices to U.S. dollars, CWRS bids ranged from US$161 to $171 per tonne. That would put the currency-adjusted basis levels at about US$17-$27 below the futures. Looking at it the other way around, if the Minneapolis futures are converted to Canadian dollars, CWRS basis levels across Western Canada range from C$22 to $35 below the futures. Average CPSR bids were narrowly mixed, with prices anywhere from C$3 per tonne lower to $4 per tonne higher. CPSR prices came in at about C$174 per tonne in Manitoba, $184 per tonne in Saskatchewan, and $193-$196 per tonne in Alberta. Soft white spring (CWSWS) wheat prices were unchanged, ranging from C$200 to $202 per tonne in Alberta. Winter (CWRW) wheat prices were mixed. Prices ranged from about C$179 to $186 per tonne, with the best levels in southern Saskatchewan and Manitoba. Durum (CWAD) prices were down by C$15 per tonne. Bids in southern Saskatchewan, where the bulk of the crop is grown, came in at $318 per tonne. The December spring wheat contract in Minneapolis, off of which most CWRS contracts in Canada are based, was quoted at US$5.18 per bushel on Friday, down 15.75 cents from the week prior. Kansas City hard red winter wheat futures, which are now traded in Chicago, are more closely linked to CPRS in Canada. The December K.C. wheat contract was quoted Friday at US$4.9275 per bushel, down 17.5 cents from last week. The December Chicago Board of Trade soft wheat contract settled at US$5.04 on Friday, 6.75 cents weaker compared to the week prior. The Canadian dollar closed at US75.94 cents on Friday, which was up by about a third of a cent relative to its U.S. counterpart compared to the previous week. -- Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Table: The weekly snapshot of average published prices, as of Aug. 24, 2015. Futures prices (US$ per tonne) vary slightly due to changes while data is collected. Cash bids (C$ per tonne) have currency conversion included in the basis. Source: AGCanada.com. CWRS Future Basis Net Manitoba 187.96 32.91 220.87 Sask North Central 189.55 22.63 212.18 Sask South 188.86 26.16 215.02 Alberta South 185.89 39.86 225.75 Alberta Central 189.26 32.41 221.67 Peace 187.63 31.71 219.35 CPSR Future Basis Net Manitoba 178.57 -3.96 174.61 Sask North Central 179.36 5.15 184.51 Sask South 179.12 4.44 183.57 Alberta South 175.45 21.05 196.50 Alberta Central 179.37 14.54 193.90 Peace 176.92 15.96 192.88 CWSWS Future Basis Net Alberta South 183.99 17.24 201.23 Alberta Central 186.20 15.76 201.96 Peace 183.99 16.17 200.16 CWRW Future.   . Basis.  . Net Manitoba 178.53 4.45 182.98 Sask North Central 180.48 -0.54 179.95 Sask South 181.73 4.58 186.31 Alberta South 176.25 3.24 179.49 Alberta Central 179.37 -0.52 178.85 Peace 176.92 4.30 181.22 CWAD     Net Sask North Central.   . 315.02 Sask South 318.15 Alberta South 319.41 Alberta Central 336.38

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