THE CANADIAN DAIRY INDUSTRY

……from the high performance potential of

Canadian dairy genetics

to high quality and innovative consumer

products……

2

Table of Contents

Slide

Canada’s Dairy Industry 4

Canada at a Glance 5

Canadian Dairy Sector 6

Role of Agriculture and Agri-Food Canada 20

Regulatory Framework and Canada’s Dairy Policy 33

At the Farm 46

Farm Management 48

Food Safety 57

Canada’s Dairy Cattle Improvement and Genetic Evaluation 64

Dairy Breeds and Associations 67

Milk Recording 75

Dairy Genetic 82

Canada’s Dairy Processing Sector 98

Top Players of the Canadian Processing Sector 109

Canada’s Dairy Products 121

Fluid Milk, Cream, Yogurt, Butter 122

Consumption of Dairy Products 129

Imports-Exports 136

Organic Milk 140

3

Canada’s

Dairy Industry

Population: 34,108,750

Area (square km): 9,984,670

2nd largest country in the

world

Arable Land: 5%

Canada at a Glance

5

The Canadian

Dairy Sector

Dairy is the third largest sector of the Canadian

agri-food economy, following Grains and Oilseeds

and Red Meats…

7

$8.9 B 20%

$16.4 B 37%

$10.5 B 24%

$5.5 B 12%

$3.0 B 7%

Cattle, Hogs and Sheep

Grains and Oilseeds

Other

Dairy

Poultry and Eggs

Canada’s dairy industry… • 12,965 dairy farms

• 987, 000 cows

• 77 million hectoliters processed

• 455 dairy processing plants

8

British Columbia

529 Farms

50 Plants

Alberta

598 Farms

30 Plants

New Brunswick

234 Farms

10 Plants

Manitoba

356 Farms

14 Plants

Ontario

4,191 Farms

124 Plants

Quebec

6,375 Farms

190 Plants

Newfoundland & Labrador

35 Farms

3 Plants

Prince Edward Island

209 Farms

8 Plants

Nova Scotia

253 Farms

18 Plants

Saskatchewan

190 Farms

2 Plants

Dairy Farm Cash Receipts in 2010 totaled $5.5 billion

Source: Statistics Canada

Value of the Dairy Sector

Manufactured Shipments in 2010 totaled $13.4 billion

9

NL 0.8%

PE 1.3%

NS 2.2%

NB 1.7%

QC 37.2%

ON 32.2%

MB 4.1%

SK 2.8% AB

8.7% BC

8.9%

10 Source: Statistics Canada

The Importance of Dairy Farming in the

Provincial Agri-Food Economy

2009

The typical Canadian dairy farm is specialised, with most of its revenue

coming from milk production and the sale of dairy cattle.

It is a family-owned operation with a herd of about 70 cows.

The impacts of modern research and technology on

Canadian dairy enterprises are clearly obvious.

Today’s dairy farm represents a considerable

capital investment in land, buildings, machinery,

equipment and livestock.

Like other successful business executives, milk producers must be

skilled in budgeting, cash flow analysis and debt management. They

must constantly be aware of costs and events that may affect their

returns.

Canadian Dairy Farms

11

12.9% 81.5% 5.6%

12 Source: Canadian Dairy Commission

Dairy Farms by Province 2010

13 Source: Canadian Dairy Commission and Statistics Canada

Number of Dairy Farms and Cattle from 1992 to January 1, 2011

Source: Statistics Canada and Canadian Dairy Commission

Number of Farms - Average Production per Farm

14

Source: Statistics Canada - 1996 Census of Agriculture

Average Number of Dairy Cattle per km2 of farmland

15

16

Volume of Milk Sold in Canada

The average farm owner is in their mid-forties and have built up

considerable equity in their operation.

Farm Operators and Labour Force

Source: Statistics Canada 17

1983 2008 % Change

NUMBER OF FARMS 49,936 12,965 - 74%

NUMBER OF MILK COWS 1,736 987 - 43%

(thousand heads)

COWS PER FARM 35 72 + 106%

VOLUME OF MILK PRODUCED 72.3 77 + 7%

(million hectolitres)

VOLUME OF MILK PER FARM 1,449 5, 807 + 301% (hectolitres)

Source: Statistics Canada and Canadian Dairy Commission

Trends on the Farm

18

In 2010

Source: Statistics Canada

Dairy Farms 12,965

Herds on Milk Recording 9,721

Dairy Cows 987,000

Cows on Milk Recording 702,764

Dairy Heifers 450,700

New Animal Registrations 292,724

Average Milk Production 9,768 kg

Average Fat Production 367 kg

Average Protein Production 311 kg

Processing Plants 455

19

20

Sector that

Contributes

to Society’s

Priorities

Sector

Proactive in

Managing

Risks

Competitive and

Innovative Sector

OUR VISION:

A profitable, innovative, competitive, market-oriented

agriculture, agri-food and agri-based products

industry.

Based on three

policy outcomes:

21

• Business Risk Management

• Food Safety

• Science

• Environment

• Business Development

• Markets & Trade

22

Key elements of the policy framework

Business Risk Management (BRM)

Protecting our Farmers

AgriInvest: – Savings account for producers – Provides coverage for small income declines – Allows investments that help mitigate risks or improve

market income AgriStability: – Provides support to producers for larger income losses – Covers declines of more than 15% in a producer’s

average income AgriRecovery: – To respond rapidly when disasters strike, filling gaps not

covered by existing programs AgriInsurance: – Provides insurance coverage against production losses

for specific perils (weather, pests, disease).

23

Positioning industry to meet market demands

Governments and industry continue to work together in:

• Protecting human health by reducing exposure to food-borne hazards

• Improve practices to reduce food safety risks and plant / animal health risks

• Increasing industry’s ability to meet market requirements

• Provide the infrastructure to continue developing a National Agriculture and Food Traceability System

• Providing greater value-added opportunities

• Increasing consumer confidence

24

Food Safety

Innovation and Growth

Governments and industry continue to work together in: Developing Strategic Focus and Encouraging Collaborative Action

• Building expertise in systematic strategic foresight • Engaging sector, academic and government decision-makers collaboratively • Determining the core capabilities needed to support industry innovation and

competitiveness

Accelerating the Flow of Science and Technology along the Innovation Continuum

• Encouraging producer/processor organizations to establish Science Clusters

Enhancing Commercialization and On-Farm Innovation • Improving access to commercialization services • Promoting agri-based innovation investment opportunities • Supporting the innovation capacity of farmers

25

Science

Implementing beneficial environmental practices

Governments and industry continue to work together to develop an economically and environmentally sustainable sector that:

• Responds to and anticipates the demands of society and the marketplace

• Is making efficient use of available natural resources

• Is able to adapt to changing environmental conditions

26

Environment

Opening up new markets

Governments and industry continue to work together to maintain and expand market access and enhance competitiveness in Canada and internationally by: • Better planning

• Market diversification

Programs delivered by provinces, allowing each region to

determine local needs.

27

Markets and Trade

Business Development

Market and Industry Services

Branch

Farm Financial Programs Branch

Strategic Policy Branch

Research Branch

Human Resources Branch

Agriculture and Agri-Food Canada뭩 role

28

A Competitive and Innovative Sector is central to achieving long-term profitability

Capacity to Innovate

Support for commercialization and innovation

A bioeconomy strategy

Science clusters to deal with priority areas

Regulatory performance

Improving approval process for veterinary drugs, novel foods and food additives

Science and other support to help industry generate approval for health

claims and new minor use pesticide products

Industry success in global and domestic markets

Support for industry-led marketing strategies

Canada branding strategy

Market intelligence and services for exporters

Maintaining and improving market access

Capacity to adapt and succeed

Helping entrepreneurs evaluate their performance and plan the future of their businesses

29

Contributing to Society’s Priorities will be done in a way that minimizes costs and maximizes opportunity

Food Safety

Support for and recognition of food safety systems

Facilitation of producer adoption of systems where the market demands

Environmental performance with focus on priority areas

Research into agricultural practices that improve environmental performance

Support for adopting management practices that create benefits or reduce risk in priority areas

Dissemination of knowledge and information on environmentally sound practices

Measurement of sector’s environmental performance

30

Proactively Managing Risks means taking steps to both prevent and prepare for problems

Preventing and preparing for risks

Animal and plant biosecurity strategy

Implementing biosecurity and traeceability systems

Improved BRM program suite

AgriStability

AgriInvest

AgriRecovery

AgriInsurance

31

AAFC Workforce Distribution by Branch

2010

Branch Total Population

Research 2,147 33.7%

Farm Financial Programs 841 13.3%

Agri-Environment Services 669 10.6%

Market and Industry Services 426 6.8%

Strategic Policy 249 3.9%

Corporate Management Branch 807 12.8%

Information Systems 511 8.1%

Human Resources 326 5.2%

Communications and Consultations 141 2.2%

Rural and Cooperative Secretariats 100 1.6%

Deputy Minister’s Office 58 0.9%

Audit and Evaluation 31 0.5%

AAFC Total 6,306 100.0%

32 http://directinfo.agr.gc.ca

Regulatory

Framework and Canada’s

Dairy Policy

The goal of supply management is the production of

sufficient milk and cream to meet the domestic

demand for dairy products as well as certain planned

exports. The National Milk Marketing Plan is a

federal-provincial agreement that governs the supply

management system for dairy in Canada.

Supply Management

34

Target price

for industrial milk

based on costs of production

3 Pillars

Control of dairy

product imports

Managing Supply

through national

market quota

Supply Management for Dairy

35

• Support prices are announced in December by the CDC effective February 1st

• The price for fluid milk is set by provinces

36

Pillar 1: Controlled Prices

• Industrial milk prices are determined by provinces based on CDC support prices

• Support prices are the prices at which the CDC buys and sells butter and skim milk powder under its various programs

37

Pillar 1: Controlled Prices

Class $/kg

butterfat

$/kg

protein

$/kg

other solids

1(a) Fluid milk 6.94 5.59 5.59

3(b) Cheddar 7.01 11.58 0.76

4(a) Butter 6.98 4.62 4.69

38

Example of Class Pricing

• Most dairy products are protected by tariff rate quota (TRQ)

• Over-quota tariffs range from 200 - 300%.

39

Pillar 2: Controlled Imports

Canadian TRQs

40

There are 15 other dairy products on

the Import Control List with a

TRQ of 0 (subject to a high tariff)

• Skim Milk Powder

• Whole Milk Powder

• Buttermilk

• Dairy Spreads

• Ice Cream and Ice Milk Mixes

• Other Food Preparations

• Milk, Butter and Cream Substitutes

• Milk Beverages

• Complete Animal Feed and Supplements

PRODUCTS METRIC

TONS

Milk 64,500

Cream 394

Concentrated and Condensed Milk 12

Yogurt 332

Buttermilk Powder 908

Dry Whey 3,198

Natural Milk Constituents (MPC) 4,345

Milk Protein Substances (MPS) 10,000

Butter and Fats and Oils derived from

Milk 3,274

Cheese 20,412

Ice Cream and Edible Ice 484

Margarine and Butter Substitutes 7,558

Other Food Preparations 70

Last Updated: August 2011

Product TRQ (tonnes) Over-quota Tariff (%)

Skim milk powder 0 201.5

Butter 3,274 298.5

Cheese 20,412 245.5

Ice cream 484 277

41

Examples of TRQ and over-quota tariffs

Last Updated: August 2009

• Fluid milk quota is established by provincial marketing boards

• Industrial milk quota is established nationally by the CMSMC and is called Market Sharing Quota (MSQ)

• Quota is calculated in kg of butterfat

42

Pillar 3: Controlled Production

42

• Provincial milk marketing boards allocate production quota to their respective dairy farmers

• This quota combines both fluid milk quota and industrial milk quota.

43

Pillar 3: Controlled Production

• Fluid milk – provincial responsibility

– Class 1 (milk and cream) on demand

– Perishable (shorter shelf life)

– Local markets

• Industrial milk – federal responsibility

– Classes 2, 3, and 4 (yogurt, ice cream cheese butter and milk powders)

– Less perishable

44

Types of Milk

Class Products

1(a) Milk and milk beverages, partly skimmed or skimmed, whether or not treated for lactose intolerance, whether flavoured or not, with or without vitamins or minerals

added, for retail and food service (eggnog, cordials, cultured milk, concentrated milk to be reconstituted as fluid milk)

1 (b) All types of cream with a butterfat content not less than 5 % for retail food service

1(b)ii Fresh cream with a butterfat content of 32 % and higher used to make fresh baked goods which are not eligible for a Class 5 permit. Any utilization of this class

would require a Class 1(b)ii permit.

1(c) New 1(a) and 1(b) fluid products for retail and food service as approved by the provincial authorities during an introductory period.

1(d) 1(a) and 1(b) fluid products marketed outside the ten signatory provinces but within Canadian boundaries (e.g. Yukon, NWT, Nunavut and cruise ships).

2 All types of ice cream, ice cream mix, yogurt, kefir, whether frozen or not, all types of sour cream, all types of milk shake mixes, other frozen dairy products and the

following products: fudge, puddings, meal replacements, soup mixes, infant formula, caffeinate and Indian sweets

3(a) All cheeses other than those identified in class 3(b), all types of cheese curds other than stirred

3(b) All types of cheddar cheese, stirred curd, cream cheese, creamy cheese bases (cheese mixes), cheddar and cheddar-type cheeses sold fresh (see definition)

4(a) All types of butter and butteroil, all types of powder, concentrated milk as an ingredient in the food industry, all other products not elsewhere stated

4(a)1

Milk components for the manufacture of rennet casein (dry or curd, Milk Protein Concentrate (dry or liquid) or Skim Milk (dry or liquid) to be used in the

manufacture of non-standardized final products in the processed cheese category or in weight-muscle gain formulations, meal replacement products, medical and

sports recovery drinks and infant food formulations destined for retail sale

4(b) Concentrated milk for retail sale whether sweetened or not

4(c) New industrial products as approved by provincial authorities for an introductory period.

4(d) Inventories and losses

4(m) Milk components for marginal markets as established from time to time by the CMSMC

5(a) Cheese used as ingredients for further processing for the domestic and export markets.

5(b) All other dairy products used as ingredients for further processing for the domestic and export markets

5(c) Dairy products used as ingredients for the confectionery sector destined for domestic and export markets

5(d) Planned exports and other exports approved by the CMSMC, the total of which shall not exceed Canada’s WTO commitments

45

Milk Classes in Canada

46

At the Farm

At the

Farm

46

47

Dairy Farmers of Canada (DFC) is the national organization

representing all dairy farmers in Canada.

It is a federation of provincial milk marketing boards, dairy producers'

associations, co-operatives and a national dairy breed organization.

The main objective of Dairy Farmers of Canada is to promote the

interests of the country's milk producers by coordinating the actions

of dairy producer organizations on all issues of national scope, and

collaborating with the relevant agencies in the elaboration of national

policies affecting the Canadian dairy industry.

The association is also responsible for generic promotion of dairy

products

47

Farm Management

48

Milk producers constantly strive to improve their efficiency in order to

maintain the viability of their enterprise.

It is critical to develop expertise in a number of areas which have an

impact on the performance of their operation, including:

1. planning production goals;

Farm Management

49

2. effective cropping, in light of climatic and soil conditions;

3. making optimum use of available feeds and striking a balance in herd

nutrition;

Farm Management continued

50

4. monitoring herd improvements and developing cows through breed

selection; and

5. making good, sound, management decisions based on available data for

production performance, genetic evaluation, reproduction, nutrition, health,

disease, standard operating practices, financial position, etc.

Farm Management continued

51

• Animal health and nutrition are the most important components in

farm management.

• The specific feeding program on the farm affects the quality and

production level of the milk.

• Through research on animal nutrition,

dairy farmers have greater control

over the quality of the milk

than ever before.

Animal Nutrition

52

The typical dairy cow will produce over 30 litres of milk from two daily

milkings. How they are able to produce that much milk begins with what

they eat.

A cow's daily diet consists of:

4.5 kilograms of hay

9.0 kilograms of haylage

9.0 kilograms of corn silage

10 kilograms of dairy ration

57 grams of minerals and salt

80 to 160 litres of water

Animal Nutrition continued

53

Research has shown that in an outdoor pasture, healthy cows spend

around 15 hours each day lying down

The same cows,

when confined to a barn

spend only 8 to 10 hours a day

in a prone position

Based on behavioural studies,

this graph shows

the ideal day for a cow

Cow Comfort

54

With proper cow comfort,

these numbers can be achieved

in a barn environment

Cow Comfort continued

55

The Canadian dairy sector has access to an impressive group of

research facilities (government, universities, private sector) that work

to maintain and improve the long-term competitiveness of the sector

through the development and transfer of innovative technologies.

The Dairy and Swine Research and Development Centre in

Lennoxville, Quebec, is the national research centre on dairy

production. The multi disciplinary research team explores how dairy

cows transform feedstuffs into milk, in order to optimize feed utilization

and control milk composition while providing the animal with a healthy

and stress-free environment.

Research

56

Food Safety

NLID is National Livestock Identification for Dairy. Dairy producers

across Canada are participating in an identification for health initiative to

ensure consumer confidence in our meat and milk industries and

continued global market access.

• Each animal’s unique national identification

number can be read three ways—RFID

(Radio Frequency ID), bar code, and visual.

• Animals require tags to move off farm.

• All national tags are to be ID captured and

reported at time of export or slaughter.

• The CFIA deploys full enforcement of

mandatory tagging regulations - warnings,

censure, and monetary penalties.

58

59

Dairy Farmers of Canada’s

“Canadian Quality Milk”

- Quality Assurance

- Best Management Practices

- Critical Control Points

- Standard Operating Procedures

- Corrective Actions

Staff Training Animal Health and Biosecurity

Hazards Index Dairy Facilities and Manure Management

Water and Feed Medicines, Treatments and Residue Prevention

Milking Management Beef Produced from Dairy Farms

On-Farm Food Safety

60

• Every two days, for most producers, an insulated tank truck will arrive

at the farm. The truck will arrive at approximately the same time for

each pickup, with milk collection times generally being between 8 a.m.

and 5 p.m.

• The truck driver takes the milk to a processing plant.

• Bulk tanks and tank trucks

are regularly inspected.

Transporting Milk

from the Farm

61

At the farm, certified bulk tank

graders check the milk for

temperature, odour, appearance and

flavour before it goes into the tank

truck. A sample of the milk is

collected and sent to a laboratory for

raw milk testing.

Each tanker driver must take a

course on milk grading and hold a

bulk tank milk graders' certificate

Transporting Milk

from the Farm

62

• At the plant, milk is graded by a licensed raw milk and cream grader

• At all stages, the quality and temperature

of the milk are rigidly controlled

• All dairy plants are licensed and

must conform to strict standards of sanitation

• The milk is received at less than 4°C and goes into insulated holding

tanks, where it stays for a few hours until the tank is filled

Transporting Milk

from the Farm

63

Canada’s Dairy Cattle

Improvement

and

Genetic Evaluation

65

65

Canada’s Data Exchange System

Young sire,

daughter

classifications

Classifications &

genetic indexes

Classifications & genetic evaluations

Genetic mating

services &

young sire

incentives

Classifications &

genetic indexes

Genetic

indexes

Reports, pedigrees,

genetic evaluations

etc.

Individual cow

classifications

Genetic

Evaluations

Classifications

& pedigree

Bull proofs &

top cow Indexes

Canadian Dairy Producers Culling, Mating, Genetic Selection, Improvement, Marketing, Herd Management

Artificial

Insemination

Milk

Recording

Canadian Dairy Network (CDN)

and

Data Exchange System (DES)

Breed

Associations

66

Dairy Breeds

and

Associations

68

Holstein

93 % of national herd.

9,970 kg milk,

3.8 % fat, 3.2 % protein

Jersey

3 % of national herd.

6,559 kg milk,

4.9 % fat, 3.8 % protein

Ayrshire

3 % of national herd.

7,663 kg milk,

4.0 % fat, 3.3 % protein

Brown Swiss

8,340 kg milk,

4.1 % fat, 3.5 % protein

Guernsey

6,891 kg milk,

4.5 % fat, 3.4 % protein

Milking Shorthorn

6,827 kg milk,

3.7 % fat, 3.3 % protein

Canadienne

5,791 kg milk,

4.4 % fat, 3.6 % protein

Dairy Breeds

Source: Canadian Dairy Information Centre, August 2011

69

Breed associations are corporate entities which have been established,

with respect to distinct breeds. They have sole authority under the federal

Animal Pedigree Act:

to manage a public registry for the breed,

to issue registration certificates,

to establish breed standards and rules of eligibility for registration,

to define what is a purebred.

Breed associations provide services such as:

registration

classification

pedigrees

Dairy Breed Associations

69

Registration

Dairy Breed

Associations

70

71

Classification (for Holstein; emphasis varies for each breed)

Dairy Breed Associations

71

Feet & Legs

25%Rump

10%

Mammary

System

40%

Dairy

Strength

25%

Classification (for Holstein; emphasis varies for each breed)

Dairy Breed Associations

72

Pedigrees

Dairy Breed

Associations

73

74

Individual

Animal Enquiries

Dairy Breed

Associations

74

Milk Recording

75

“ … testing of individual purebred

dairy cows for full milking periods

for the purpose of securing for dairy

farmers reliable information as to

where sires from high producing

ancestry may be secured ”.

The Canadian Record of Performance (R.O.P.) program was

established in 1905 with the objective of:

Milk Recording

76

77

Under the auspices of Canadian DHI, CanWest DHI and Valacta work

collaboratively to deliver one national dairy herd improvement program.

Canadian DHI

77

Canadian DHI

78

in 2010

294 464 cows

4 657 herds

(Average herd size 63.2 cows)

408 300 cows

5 064 herds

(Average herd size 80.6 cows)

M

a

n

a

g

e

m

e

n

t

P

u

b

l

i

s

h

a

b

l

e

Source: Canadian DHI

Enrollment on Milk

Recording Programs

79

70% 73%

Source: Statistics Canada & Canadian DHI

72% 71% 73%

Percentage of Cows

on Milk Recording

71%

80

Somatic Cell Count (SCC) Individual cows are analysed for SCC levels. The report also lists the individual cow linear score and summarizes results

on a herd trend basis. For an additional fee, members may have a copy of this report sent directly to their herd

veterinarian.

Milk Urea Nitrogen (MUN) MUN analysis involves measuring urea levels in milk which is a useful tool for managing and optimizing a feeding program.

It is another piece of the feed management puzzle.

Electronic Registration Application (ERA) Your DHI Field Staff can now register your calves-cows with Holstein Canada electronically on test day. If you already

provide your breeding information to DHI, your DHI Field Staff will only need the name of the calf, the EZE-IR-NLID tag

number and the management number of the calf to complete the registration.

Forage and Soil Analysis (Ontario Only) Forage and soil analysis can be arranged via the established DHI courier network with Agri-Food Labs in Guelph.

Johne's & Leukosis Testing

Return Over Feed (ROF) ROF (Return Over Feed Costs) is a program that provides an economic benchmark to measure the effect of changes in

herd performance.

Other services provided

by Milk Recording agencies

81

Canada is recognized worldwide for the excellence of its type

classification program as well as the accuracy and stability of the

resulting genetic evaluations. The Canadian “Balanced Breeding”

philosophy is a breeding goal that combines high production with

desirable conformation contributing to increased longevity.

The national breeding goal is to select for high levels of production,

especially protein yield, as well as improved conformation which is

required to sustain high production for as many lactations as

possible. Canadian producers have been quite successful with this

objective as witnessed by the significant rate of genetic progress

realized during recent years for both Protein and Conformation.

Genetic Evaluation

83

Genetic Indexes

84

Genetic Indexes

85

Bull Proof Sheets

86

Distribution of Canadian Registered Holsteins born in 2002

Canadian

Sires 87%

Source: Canadian Dairy Network

Artificial Insemination

87

Number of Annual Registrations

of Dairy Cattle from AI Sires

Source: Individual Canadian Dairy Breed Associations

Artificial Insemination

88

Number of Annual Registrations of

Dairy Cattle from Embryo Transfer

Source: Individual Canadian Dairy Breed Associations

Embryo Transfer

89

Canadian Milk

Production Trends (1990-91 to 2009-10)

90

Source: Canadian Dairy Commission and Statistics Canada

Herd Milk Production Trends (1991-92 to 2009-10)

91

Source: Canadian DHI

9,768 kg /cow

Average Production of all Breeds From 1960 to 2010

(publishable records)

92

Source: Statistics Canada

Exports of Dairy

Genetic Material

93

Source: Statistics Canada

Exports of Dairy

Genetic Material

Trade Partners 2002 2003 2004 2005 2006 2007 2008 2009 2010

$Can millions

Africa and Middle East 1.59 2.54 2.62 3.11 3.09 5.71 5.48 4.52 9.30

Asia-Pacific 13.24 8.65 7.83 10.43 9.91 15.05 12.03 12.90 14.42

Central and South America 1.46 2.55 2.88 3.42 4.58 5.04 10.62 7.26 10.30

European Union (27) 12.52 19.10 18.40 18.62 23.15 25.25 26.13 22.88 27.17

North America 138.45 55.27 12.74 27.50 32.25 41.49 82.37 32.13 35.62

Other European Countries 1.17 1.26 1.49 3.07 5.05 10.09 41.17 19.98 4.10

Total 168.42 89.37 45.96 66.15 78.04 102.62 177.81 99.67 100.91

94

The Canadian Embryo Transfer Association (CETA) was incorporated in 1984

with the purpose of uniting those organizations and individuals, primarily

veterinarians, engaged in the embryo transfer industry in Canada.

CETA operates under standards of performance and conduct as set out by the

CETA Board of Directors and membership at large in order to protect the users of

the embryo transfer (ET) industry to the extent as technically and ethically

possible.

The Association works in close liaison with the Canadian Food Inspection

Agency, breed associations, provincial veterinary licensing bodies and provincial

governments in carrying out the regulations and requirements pertaining to

embryo transfer established by those bodies from time to time.

Industry Associations

95

The Canadian Livestock Genetics Association’s (CLGA) is made up of

companies, corporations, co-operatives, partnerships and individuals involved in

both the domestic and international production and trade of livestock genetics, in

all forms.

Established in 1999, CLGA is a nationwide, not-for-profit trade association

representing the market access and animal health interests of those involved in

the sale, service and promotion of livestock genetics both domestically and

internationally.

Industry Associations

96

Canada’s

Dairy Processing

Sector

The Dairy Processors Association of Canada (DPAC) is Canada’s

national industry association representing the public policy and

regulatory interests of the Canadian dairy processing industry.

The main objective of DPAC is to represent the interests of the dairy

processing sector to the Government of Canada, Dairy Farmers of

Canada, Canadian Dairy Commission and federal or provincial

government agencies and to work with other dairy and food associations

on regulatory, legislative and policy issues relevant to the industry.

98

Source: Canadian Food and Inspection Agency (CFIA), Provincial Governments, by AAFC-AID, Dairy Section

Dairy Processing Facilities - 2009

99

BC (50)

Fed.: 32

Prov.: 18

AB (30)

Fed.: 24

Prov.: 6

NB (10)

Fed.: 6

Prov.: 4

MB (14)

Fed.: 13

Prov.: 1

ON (124)

Fed.: 92

Prov.: 32

QC (190)

Fed.: 86

Prov.: 104

NL(3)

Fed.: 2

Prov.: 1

PE (8)

Fed.: 6

Prov.: 2

NS (24)

Fed.: 11

Prov.: 13

SK (2)

Fed.: 2

Federal: 274

Provincial: 181

Total: 455

100 100

Dairy Processing

Facilities Trend 2001-2010

101

Source: Statistics Canada, Table 031-0002 (After 2005 – Series is terminated)

Dairy Processing

Facilities Capital Investments 1984 - 2005

102

Fluid Milk: milk that is directly consumed – e.g. homogenized milk, partly skimmed milk, low fat milk, etc.

Industrial Milk and Cream: used to produce other dairy products, typically with longer shelf lives

– e.g. butter, yogurt, cheese, ice cream, etc.

Sources: Milk Marketing Boards, Canadian Dairy Commission

Types of Processed Milk

103

104

* 12,965 farms delivered 77 million hl of milk to 455 plants

* 39% was fluid milk and 61% was industrial milk

(e.g. cheese, butter, powder, ice cream)

* Three companies process about 80% of Canadian milk

* Ontario and Quebec -- 75% of industry output

* Quebec - largest specialty cheese producer

Dairy Processing Sector - 2010

104

• Statistics Canada reports:

– Over 23,000 people employed in dairy processing industry

– Approximately 78% are employed in Ontario and Quebec

Employment 2010

105

Sources: Statistics Canada Table 281-0024

Employment 2010 Dairy Processing Industry

106

Source: Statistics Canada, Table 281-0023

Employment 2010

107

Top Players of the

Canadian Dairy

Processing Sector

108

Company Total Revenue ($000)

Saputo Inc. (2010)

Canada and Other (Excluding U.S.) $3,745,930*

Agropur (2010) $3,350,000**

Parmalat Canada (2010) $2,196,900

Nestle Canada (2010) $1,850,000

Kraft Canada (2009) $1,100,000*

Danone Canada (2010) $530,000

Gay Lea Foods (2010) $422,000

Scotsburn Coop Services (2008) $252,837

Farmers' Coop Dairy Limited (2008) $186,860

Sources: Company Financial Statements, Canadian Food Industry Guide, Food in Canada (100 Canadian Food and Beverage Processors)

* Revenue includes dairy sales only.

** Agropur – 25% of which came from outside Canada. 109

Sources: Company Research, Milk Marketing Boards, Canadian Dairy Commission, Estimates

Key Players - Companies

Sources: Company Research, Statistics Canada - Table 281-0024, Estimates

Key Players - Employed

111

• Canadian Multinational

• Operates total of 46 plants – 45 in Dairy Products Sector

• 26 dairy plants in Canada

• 15 (US), 2 (Argentina), 1 (Germany), 1 (United Kingdom)

• 9,800 employees – 4,945 dairy employees in Canada

• Products – Cheese, Fluid milk and cream, Butter, Yogurt, Milk powders

112

• Canada’s largest dairy cooperative with 3,533 members

• Operates total of 27 plants • 19 plants in Canada

• 6 plants in United States

• 2 plants in Argentina

• 5,225 employees

• Products • Cheese, Fluid milk and cream, Butter, Yogurt, Milk powders

Agropur Cooperative

113

• Subsidiary of Parmalat Finanzaria SpA

• 18 processing facilities in Canada

• 2,900 employees

• Products

– Cheese, Fluid milk and cream, Butter, Yogurt

Parmalat Canada Ltd.

114

• Dairy Cooperative owned by over 1,147 farmers

• 4 processing facilities in Ontario

• 290 employees

• Products in market – Butter, Cottage cheese, Sour cream, Specialized creams, Whipped Cream

Gay Lea Foods Cooperative

115

Fluid Milk Market Share (2008)

Source: Euromonitor: Packaged Food in Canada, January 2009, based on 2008 figures (% of retail value)

116

Cheese Market Share (2008)

Source: Euromonitor: Packaged Food in Canada, October 2009, based on 2008 figures (% of retail value)

117

Ice Cream Market Share (2008)

Source: Euromonitor: Packaged Food in Canada, October 2009, based on 2008 figures (% of retail value)

118

Yogurt Market Share (2008)

Source: Euromonitor: Packaged Food in Canada, October 2009, based on 2008 figures (% of retail value)

119

Canada’s Dairy

Products

120

Fluid Milk,

Cream,

Yogurt and Butter

121

Source: Statistics Canada

Fluid Milk Sales

in Canada (1997-2009)

122

Source: Statistics Canada

Cream Sales

in Canada (1997 to 2009)

123

Source: Statistics Canada

Yogurt Production

in Canada (1997-2009)

124

• Production of Yogourt in Canada has risen 50% from 2001 to 2007.

• Yogourt is currently experiencing growth attributable to its image as a healthy product.

• Though growth of small containers and individual portions of yogourt have weakened, growth of large containers (650ml and 750ml) remained constant, and growth of packages of yogourt containers has risen.

• These statistics indicate that consumers have begun perceiving yogourt as a regular dietary food rather than as an occasional snack. Packages of multiple containers of yogourt sells better than larger containers due to its variety and portability.

• The popularity of yogourt overall is attributable to a larger variety of yogourt products and rising concerns among consumers for their health.

Production of Yogourt

125

Butter Production

in Canada (1997-2009)

Source: Statistics Canada

126

Source: Statistics Canada

Ice Cream &

Frozen Yogurt Production

in Canada (1997 to 2009)

127

Consumption of

Dairy Products in

Canada

Per Capita Consumption

of Milk in Canada (1996 to 2009)

129

Per Capita Consumption

of Cream in Canada (1996 to 2009)

130

Per Capita Consumption

of Butter in Canada (1996 to 2009)

131

Per Capita Consumption

of Yogurt in Canada (1996 to 2009)

132

Per Capita Consumption

of Ice Cream in Canada (1996 to 2009)

133

Per Capita Consumption

Of Cheese in Canada (1996 to 2009)

134

Imports - Exports

Dairy Product Imports in 2009

totaled $573 million

136

Dairy Product Exports in 2009

totaled $ 230 million

137

Source: Statistics Canada

Canadian Dairy

Trade Balance (1998-2009)

138

-144 -105

-172

-233

-317 -354

-258

-337

-423

-343

52

134

-500

-300

-100

100

300

500

700

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Mil

lio

ns $

-500

-300

-100

100

300

500

700

Millio

ns $

Imports Exports Trade Balance

Organic Milk

in Canada

Organic Farms

in Canada by Product 2007

Source: Canadian Organic Growers, Certified Organic Production in Canada 2007

140

Organic Dairy Farms &

Milk Production Dairy Years 2000/2001 to 2008/2009

Source: Dairy Farmers of Ontario, BC Milk Marketing Board, Alberta Milk, MB Milk Marketing Board,

the Fédération des producteurs de lait du Québec

141

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Hl

0

50

100

150

200

250

Pro

du

cers

Milk Production Producers

Region

Hectolitres % of Total Milk

Production Producers

Quebec 308,540 0.98% 101

Ontario 243,415 0.99% 75

British Columbia 159,057 2.40% 15

Manitoba 12,062 0.37% 4

Alberta 10,928 0.16% 3

Canada 734,002 0.97% 198

Source: British Colombia Milk Marketing Board, Dairy Farmers of Ontario,

Fédération des producteurs de lait du Québec, Alberta Milk, MB Milk Marketing Board

Organic Milk Production

and Number of Producers

by Province Dairy Year 2008/2009

142

• Production of certified organic milk is concentrated in Ontario, Quebec,

British Columbia, Alberta, and Manitoba.

• However, the majority of production is in Ontario and Quebec.

• In the Prairies, Alberta has 3 organic producers who process on farm.

• Organic milk production in Manitoba

started in 2007/2008 and currently has

4 producers.

Where is Organic Dairy

Produced in Canada?

143

• The new Canadian Organic Regulation came into effect on June 30, 2009.

• Products represented as organic for interprovincial and international trade, or bearing the new Canada Organic logo, must be certified to the Canadian Organic Standards by a CFIA-accredited certification body.

• The regulations can be found at the CFIA’s website at : http://inspection.gc.ca/english/fssa/orgbio/orgbioe.shtml

Source: The Canadian Food Inspection Agency (CFIA), Organic Products

http:--www.inspection.gc.ca-english-fssa-orgbio-otfgtspbe.shtml

Canada’s New

Organic Standards

144

Source: The Canadian General Standards Board - Organic Production Systems General Principles

and Management Standards - CAN-CGSB-32.310-2006

Transition to Organic

“When an entire dairy herd is being converted to organic production,

the operator shall:

i. in the first nine months of the transition year, provide a

minimum of 80% feed, calculated by dry matter, that is either

organic or raised from land included in the organic system

plan and that is managed in accordance with organic crop

requirements;

ii. in the final three months of the transition year, provide only

organic feed conforming to this standard.”

…key elements of the

standards as they relate to dairy

145

Origin of Livestock

• “Animals used for milk production shall have been under continuous

organic management, in accordance with this standard, for at least one

year before the milk can be sold, labelled or represented as organic.”

Harmony Organic Dairy farm

in Southern Ontario.

Transportation

• “To avoid possible commingling of organic and non-organic products at

any time during transportation, organic products shall be physically

segregated or protected to prevent substitution of the content.”

Source: The Canadian General Standards Board,

Organic Production Systems General Principles and Management - Standards, CAN-CGSB-32.310-2006

Standards

146

Source: The Canadian General Standards Board,

Organic Production Systems General Principles and Management - Standards, CAN-CGSB-32.310-2006

Livestock Health Care

• Certified organic feed is required.

• “Milk from sick animals or those undergoing treatment with restricted

substances cannot be sold as organic or fed to organic livestock.”

• “As a last resort, antibiotic treatment of dairy animals is permitted in

emergencies under the following conditions… Such treatment shall result in a

milk withdrawal time of at least 30 days or two times the specific medication’s

withdrawal period, whichever is longer.”

• “Dairy animals shall undergo only two treatments (of combined parasiticides

and antibiotics) per year. Dairy animals that require more than two treatments

shall undergo a 12-month transition period.”

• Dairy animals with chronic conditions requiring repeated use of this practice

shall be removed from the herd.”

Standards

147

(1) For the period of 52 weeks ending August 5, 2006 – AC Nielsen MarketTrack estimates, National Grocery Banners.

Sources: AC Nielsen Canada, Review of Certified Organic Grocery Food at Retail in Canada,

November 2006; and Organic Meadow Co-operative Inc.

Emergency Pest or Disease Treatment

• “When a prohibited substance is applied on an establishment because of a

federal or provincial emergency program for the treatment of pests and

diseases and when the establishment otherwise meets the requirements of

this standard, the organic status shall not be affected provided the operator

complies with the following:

Any livestock treated or any products derived from such treated livestock, shall

not be sold, labelled or represented as organically produced with the exception

of milk or milk products produced more than 12 months after the last date that

the dairy animal was treated with a prohibited substance.”

For a copy of the complete organic standard and permitted substance list please visit:

http:--www.pwgsc.gc.ca-cgsb-on_the_net-organic-index-e.html or call the Canadian General

Standards Board at: 1-800-665-2472

Standards

148

• Organic milk producers in Quebec, Ontario, Manitoba, and

B.C. are paid the price of milk established by the provincial

marketing boards, plus a premium to cover additional

production costs associated with operating an organic farm.

Sources: Fédération des producteurs de lait du Québec,

Dairy Farmers of Ontario, British Columbia Milk Marketing Board

Price Premiums

149

Quebec

i. as of February 1, 2009, the premium paid by processors was

$25.00/hl for raw milk used in fluid milk and cream,

yogurt and ice cream; and $16.00/hl for cheese, butter, milk

powders;

ii. when total production reaches 22 million litres per year, an

additional $0.75/hl will be paid to producers;

iii. a second premium of $1.00/hl will be added if production reaches

24 million litres per year;

iv. transportation costs are paid by the producer or processor.

Source: Fédération des producteurs du Québec.

Price Premiums

150

Ontario i. the base premium in 2005-2006 was between $13.96 and $14.60 (21% to 22%

of the gross milk revenues) and calculated on the total volume shipped times the within quota milk price per farm;

ii. transportation costs are not included and these are the responsibility of the

producer or processor.

British Columbia i. a premium of 30 cents per litre ($30/hl) is paid;

ii. any supplementary transportation costs are paid by the producer or processor (varies from contract to contract).

Manitoba i. a premium of $18/hl is paid for fluid milk

Sources: Dairy Farmers of Ontario, British Columbia Milk Marketing Board

Price Premiums

151

Source: Organic Meadow Co-operative Inc.

• Quebec has • 3 fluid milk plants,

• 5 cheese makers,

• 1 ice cream plant,

• 3 yogurt plants,

• 2 butter plants

• Ontario has • 3 fluid milk plants,

• 1 cheese maker,

• 1 ice cream plant,

• 1 yogurt plant,

• 2 butter plants

Organic Dairy Processing

• British Columbia has • 2 full-line plants (conventional

and organic) which can

process an array of products,

• 1 yogurt maker,

• 1 on-farm cheese maker

• Manitoba has • 1 fluid milk plant

152

Province # of Producers # Processors &

Handlers

British Columbia 444 178

Alberta 259 70

Saskatchewan 1,039 102

Manitoba 186 60

Ontario 680 257

Quebec 935 501

New Brunswick 52 14

Prince Edward Island 51 5

Nova Scotia 61 15

Newfoundland 2 ..

Yukon 4 1

Total 3,713 1,203

Source: Canadian Organic Growers, Certified Organic Production in Canada 2008

Certified Organic Products

Processors, Handlers in Canada in 2008

153

Source: Organic Packaged Food – Canada, Euromonitor International May 2010

• Total organic sales in Canada are estimated at $2 billion a

year, with an average annual growth rate of 20% for the past

few years.

• Approximately C$607 million of this is estimated to be sales through grocery

supermarkets/hypermarkets.

• Organic dairy products sales reached C$376.5 million in 2009, up 5% from

2008. Sales of organic dairy products are expected to reach C$436 million

by

2014.

• Organic milk had a retail value growth of 6% during 2009, with sales

reaching more than C$118 million while organic yogurt had a retail value

growth of 13%, with sales reaching C$57 million.

Organic Sales in Canada

154

Avalon Dairy Ltd. – oldest continuously operating dairy in British Columbia

and the first processor of organic milk in B.C.

• Organic products include butter, yogurt, sour cream cheddar and

mozzarella cheese, ice cream, milk, chocolate milk and cream.

Harmony Organic – based in Ontario, fluid products are available in

returnable glass bottles, recyclable containers or four litre bags.

• Organic products include a full-line of fluid milk, 10% cream and 35%

whipping cream.

La Fromagerie L’Ancêtre – located in Quebec since 1992 and specializes

in organic raw milk cheddar at various stages of maturity.

• Organic products include cheese and butter.

Some Key Players in

Organic Dairy at Retail

155

Liberté Natural Foods Inc. – located in Quebec since 1928

• Organic products include milk, yogurt, cheese, sour cream and Kefir.

Organic Meadow – selling certified organic milk to Ontario customers since

1995.

• Organic products include milk, lactose-free milk, chocolate milk, tetra-

pak chocolate and strawberry milks, half and half cream, whipping

cream, yogurt, ice cream, cheese, sour cream, cream cheese, cottage

cheese and butter.

Some Key Players in

Organic Dairy at Retail (continued)

156

Source: AC Nielsen Canada Review of certified Organic Foods at Retail in Canada, November 2006

and Organic Packaged Food – Canada, Euromonitor International May 2010

• AC Nielsen estimates the combined value of certified organic food

sales for domestic home consumption at C$1.1 - $1.3 billion.

• Approximately C$607 million of this is estimated to be sales through

grocery supermarkets/hypermarkets.

• Organic food is more popular in B.C.

than in other provinces.

• B.C. accounts for 13% of Canada’s

population, but 26% of all certified

organic food sales in Canada takes

places there.

Organic Retail Sales

in Canada

157

Based on 2,676 items at grocery = 100%

Source: AC Nielsen Canada, Review of Certified Organic Grocery Food at Retail in Canada, November 2006

Availability of Organics

at Retail

158

• An estimated 11% or C$45.3 million of the value of sales through

grocery supermarkets is organic dairy products.

• Canadian consumers pay a premium at retail of between 50% and

100% over the price of conventional dairy products.

(1) For the period of 52 weeks ending August 5, 2006 – AC Nielsen MarketTrack estimates, National Grocery Banners.

Sources: AC Nielsen Canada, Review of Certified Organic Grocery Food at Retail in Canada,

November 2006; and Organic Meadow Co-operative Inc.

Organic Dairy at Retail

in Canada

159

Examples of Organic Dairy Available

in Canada

British Columbia

Ontario

Ontario

LIBERTY

Quebec

Organic

Kefir

160

Examples of Organic Cheeses Available

in Canada

British Columbia Quebec

Quebec 161

According to Organic Meadow, consumers of organic milk include:

• 20% core organic consumers

• 20% recent immigrants (often lactose intolerant)

• 60% mixed consumers • Affluent

• Mothers

• Urban and suburban

• Educated

• Demanding

• 85% or more shop in grocery stores

• 10 -15% shop in natural food stores

• Less than 5% shop in drug and mass market stores

• Are often willing to pay double

the price for organic dairy!

Organic Consumers

Sources: Organic Meadow Co-operative Inc.

162

Country # Producers

(All)

# Processors

(All)

# Processors

(Dairy)

Australia 1,438 N-A N-A

Denmark 2,753 53 36

Finland 3,991 33 15

France 13,298 391 180

Germany 19,813 N-A N-A

Italy 44,371 308 333

Netherlands 1,402 138 101

New Zealand 1,000 N-A N-A

Norway 2,702 107 38

Sweden 3,686 71 25

United Kingdom 5,383 650 212

United States 12,941 N-A N-A

Sources: European Commission Eurostat, 2008 data, retrieved June 2010

International Federation of Organic Agriculture Movements,

eds. Helga Willer and Minou Yussefi, Table: World Organic agriculture by country 2008

http://www.organic-world.net/statistics-world-area-producers.html

Number of Registered Organic

Producers and Processors Select Countries (2008)

163

EU organic milk production is at 2.5 billion kg…

• German production accounts for 18%

• Denmark for 16%

• Austria for 15%

• U.K. for 13%

• France 9%

• Netherlands 5%

• Balance of EU 24%

Organic Production

Abroad

Source: Zentrale Markt – und Preisberichtstelle (ZMP)

164

Germany

18%

Denmark

16%

Austria

15%

U.K.

13%

France

9%

Netherlands

5%

Other EU

24%

• Global organic sales combined reached US $50.9 billion in 2008. The majority

of consumption is in the U.S. and Europe.

Source: The Global Market for Organic Food & Drink, Amarjit Sahota, Organic Monitor

http://www.organic-world.net/fileadmin/documents_organicworld/yearbook/yearbook-2010/sahota-21010-market.pdf

• In 2009, U.S. consumer sales of organic foods reached US$24.8 billion

representing 3.7% of total food sales. Sales of organic dairy represent 15%

of all organic food sales.

Source: 2010 Organic Industry Survey, Organic Trade Association

• As of 2007, close to 30% of all fresh milk sold and 40% of all dairy products in

Danish supermarkets is organic

Source: The Danish Association of Organic Agriculture

http://www.organic.dk/market/import/index.htm

Organic Sales Abroad

165

• Total sales of organic dairy products in the Netherlands

reached C$194.1 million in 2009.

• This represents 3.6% of the total retail sales of dairy products

which reached C$5.4 billion in 2009.

• The chart below outlines total retail sales for select organic

dairy products in 2009:

Product Million $

Milk $135.88 million

Cheese $45.98 million

Butter $5.39 million

… in the Netherlands

Note: Conversions from Euros to Canadian dollars are based on average 2009 Bank of Canada rate of 1.5855

Source: Biologica, Bio-Monitor jaarrapport 2009

http://www.biologica.nl/sites/default/files/Bio-Monitor-jaarrapport_2009.pdf

166

An extensive variety of organic fluid milk, cream, ice cream, yogurt, cheese, butter,

are available under these and other brands globally.

Examples of Organic Products

Available Abroad

Denmark

Butter

United Kingdom

Probiotic Drinking Yogurt

Australia

Organic Milk

167

English

http://www.dairyinfo.gc.ca/pdf/organic_dairy_e.pdf

French

http://www.dairyinfo.gc.ca/pdf/organic_dairy_f.pdf

168

For further details about the

organic dairy industry in Canada,

please visit the Canadian Dairy

Information Centre website:

• Jim Byrne, British Columbia Milk Marketing Board,

604-854-4474, jbyrne@milk-bc.com

• Steve Cavell, Organic Meadow,

519-767-9694 ext. 435, cavell@organicmeadow.com

• Lyne Coté, Fédération des producteurs laitiers du Québec,

450-679-0530 ext. 8307, lcote@upa.qc.ca

• Wray Krompart, Dairy Farmers of Ontario,

905-821-8970, wkrompar@milk.org

• Susan MacKinnon, Agriculture, Fisheries and Aquaculture, P.E.I.,

902-368-5657, SDMACKINNON@gov.pe.ca

• Keri Sharpe, Agriculture and Food, Alberta,

780-968-6556, Keri.Sharpe@gov.ab.ca

• Canadian Organic Growers,

613-216-0741 or 1-888-375-7383, office-at-cog.ca

Organic Dairy Contacts

169

More information is available on the

Canadian Dairy Information Centre…

www.dairyinfo.gc.ca 170

Presentation by :

Pierre Doyle, agronome Assistant Director - Dairy

Agriculture & Agri-Food Canada

Ottawa, Ontario, CANADA

K1A 0C5

Tel. : 1-613-773-0235

Fax : 1-613-773-0300

Email : pierre.doyle@agr.gc.ca

Website : www.dairyinfo.gc.ca

171