another annoyance to most consumers that were watching the news. When I sat on the Quebec Milk Board, I found out all the complications of getting a price increase in milk that dairy farmers in Canada produce.

Fifty plus years ago, Canada and most of the countries in the world used the free market system of pricing all dairy products. Surplus dairy product not sold to the consumer was either bought and stockpiled for a time of shortage of food. When the surplus got too large, some of it was either given away to people in a have not country or if there was no other solution, it was dumped in the ocean.

One year there was ship loads of eggs, skim milk powder and even butter dumped in the ocean. This prompted the Minister of Agriculture to sit down with the Canadian dairy farmers, egg producers and chicken producers to try to get a solution to the wasteful dumping of food. After several brain storming sessions sitting around the table a basic supply management system was drawn up.

The farmer/producers would become responsible for surplus that now was being dumped at sea, if a cost of production (C.O.P.) was implemented, a quota system designed to restrict production to what the country’s consumer needed and some import restrictions placed on products that were dumped into Canada at a price less than the C.O.P.

This meant that farmers would have to plan ahead to only supply enough milk, eggs and chicken to supply their quota. If the farmer shipped over quota, a much lower world dumping price was all that he got. This over quota price was usually less than it cost to produce the product.

An accurate C.O.P. formula was more difficult to develop. It required a sample of all different sizes of farms from different areas be checked for every cost that the farm had throughout the year. These farms were picked at random and changed from year to year.

If a farm was discovered in this random sample that was found to not be very efficient, it was excluded from the sample farms. All costs were collected (fuel, taxes, repairs, interest paid, feed cost, electricity, labour, seed, fertilizer, trucking of everything, legal, management and even unpaid labour was tracked, plus another page full of expenses that different farms have.

When all these farms C.O.P. was averaged, there were always some farms that had expenses higher than what they received for their production. Therefore through time the least efficient farms will either quit or go bankrupt. This is the guarantee that consumers will only pay what the most efficient farms need to remain farming.

All people are represented (consumer association, retailers, processors, producers, and government) in scrutinizing the C.O.P. each time that either a price increase or decrease is applied. Therefore price increases or decreases come several months after all figures are collected and scrutinized.

The Quebec milk board owns one small milk transport company so that they can compare the costs that other milk transport companies claim with their own milk transport company. Decades ago, the milk board implemented a fuel price clause into the agreement with all milk truck contracts. Whenever the price of fuel increases by more than a cent or two a liter, the amount paid for milk transport is increased accordingly. Many other trucking contracts today do not have that fuel clause and truckers who do not are in serious trouble today when fuel prices jump.

Many politicians and even consumers still believe that the free market is the best way for most efficient pricing. I often wonder how much many items can increase their price without anyone knowing what their C.O.P. actually is. A few items come to mind like the price of gas, fertilizer, even the price of meat in the store compared to what the farmer receives.

Are we always paying what it really costs to get the product to market or are some things priced on what the consumer will pay?

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