This week, a former milk producer called me, asking me to explain the baby formula shortage in North America when Canada gave the Chinese millions of dollars to build a new milk processing plant near the St. Laurence Seaway to produce baby formula for export to China? Well, here goes.
Even the best designed and built wall has . . .
holes in it somewhere. Any farm that had or has a grainery or other small form of grain storage knows that mice and rats are culprits that can be very hard to eliminate. Originally, all graineries and grain elevators were constructed of wood. Rats had no trouble eating through the wooden walls. That’s why most farms kept a healthy herd of cats. The western grain growing provinces were dotted with wooden graineries and elevators before steel and huge cement structures replaced them.
During the late 1940s, Alberta declared war on rats and by 1959 with the use of traps, shotguns, poison, shovels and baseball bats Alberta was the only province in Canada that was declared rat free. It is still illegal to keep even a pet rat in Alberta and there is a very heavy fine for bringing one in.
One of my grandfather’s dairy farming friends from Ontario also had an excellently built hen house that became overrun with rats. The rats even ate holes through the cement foundation to get into the hen house. When it got where the rats were eating more hen feed than the hens, the distressed farmer declared war on the rats. He sold all his hens and kept filling the hen feeders with a mixture of hen feed and rat poison. For a week after that, he would scoop up a manure spreader load of dead rats each day. The rat poison company wanted to come and take pictures to document how well the rat poison worked, but the farm owner refused.
There are other walls used by most countries called tariff barrier walls. If there is a world-wide surplus of a product, then a country will put a tariff on imports of that product which the country already has a surplus of. It could be anything from skim-milk powder to car parts. When milk is processed into butter, the remaining left over is skim milk which is usually dried and sold as SMP or skim milk powder. SMP is the lowest priced milk ingredient of all. Some SMP is used in bread manufacturing, some is used to make chocolates, some is sold as protein supplement and some used in milk replacer for feeding calves. Every milk producing country has a surplus of SMP.
Canada is a cold country and uses millions of tons of salt each winter to help keep our roads ice free and safe to drive on. There is no import tariff on salt. During 1960s, one of the European countries also had a surplus of SMP and since there was no import duty on salt, they found a hole in Canada’s tariff wall that allowed them to mix salt and SMP 51-49 per cent to supply Canada’s largest milk replacer company with SMP even though we had a tariff wall and a surplus of SMP.
When the salt-SMP mix arrived at the milk replacer plant, they just screened out the salt and sold it for road salt, leaving the SMP to make into milk replacer. They got away with this for years until one load they received had finer salt particles than usual and the next batch of milk replacer caused diarrhea in the calves that received that milk replacer. After that company had recalled tons of milk replacer and paid some farmers for calves that had died from drinking that milk replacer they decided to use Canadian SMP instead of the slightly cheaper imported SMP.
A few decades ago when a new start-up air plane manufacturing company received an enormous incentive to build in Quebec, the Quebec farmers calculated that if the incentive had
been given to the farmers instead, it would have been more than one million dollars per farmer. We always wonder why would the government give such high incentives? If you calculate the increase in income taxes paid by the skilled workers employed in that new plant, within a few years it would amount to more money than the inventive grant. When COVID-19 grounded most planes and that company had many plane orders cancelled it may have impacted the government’s financial calculations as well as the plane manufacturers profit projections.
Probably the largest hole in the wall that hit North America this century was the tunnels dug under the US-Mexico wall by the Mexican drug lords which allowed billions of dollars worth of illegal drugs to enter the US.
The most recent success story in a use for a practically useless milk by-product was the project of Vodcow, a small start-up distillery in Almonte, Ont. They take a milk b-product that used to be stored in manure lagoons until spread on farmer’s fields and distilled it in a small distillery into a very drinkable vodka.(Yes, I’ve tried it.)
What about that Kingston, Ont. milk plant that Canada invested in that is controlled by Chinese investors? Ever since the melamine (a form of nitrogen fertilizer that they added to the milk to increase protein because nitrogen is 280 per cent protein) milk scandal in China in 2008, that affected more than a quarter of a million Chinese children and resulted in two individuals being condemned to death for their part in the contamination, Chinese mothers have not trusted baby formula made in China. Canadian milk is the most trusted in China.
Both the Canadian Government and the Canadian dairy farmers have been seriously looking for a market for a lower class milk since Trump decided that Canada unfairly created “class 7” milk to keep the US from dumping their SMP into Canada as dia-filtered milk.
Both the US and Canada were a possible destination for the Chinese invested baby-formula plant. Several locations in Canada close to the St. Laurence Seaway were looked at. Canada offered cow milk at a “class 7” price since the USA wanted it taken out of the US-Canada trade agreement.
The recent closure and recall of US made baby formula because of contamination has proven that a plant in Canada was the correct choice. It also gave the Canadian dairy farmer a market for “class 7” milk. Because the plant also uses goat milk in the manufacture of their formula, it is a new market for goat milk. Half a century ago, a local goat farmer supplied fresh goat milk daily to our local hospital for newborns.
Yes, our Canadian Government gave a cash incentive to get the baby-formula plant built in Canada but it was only a fraction of the cost of the plant. Like other new manufacturing facilities the income taxes paid by the plant workers will soon pay back more money than the incentive grant was. 85 per cent of the plant production is supposed to be exported to China. As of now, formula is being exported to China but since Canadian quality control is higher than China, it requires no product is sold in Canada yet.
Watch for the little blue cow or the Dairy Farmers of Canada sticker.”
