Canadians flock across border for milk

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Milk is quickly turning into liquid gold for one Washington dairy farm during a time when most in the industry are barely making ends meet. 

The farm's key to success: dairy-loving Canadians eager to drive the distance to save a few dollars on milk.

While it’s not unusual for Canadians to cross into the U.S. for grocery products, a stronger Canadian dollar has combined with the popularity of milk to create the "udderly perfect" situation for Washington stores and dairies.

Edaleen Dairy, located near Lynden, Wash., opened a new shop in Sumas last year, conveniently located just minutes away from the border. The store was strategically placed to cash in on Canadian customers looking for milk at bargain prices, general manager Mitch Moorlag told The Vancouver Sun in this article.

Milk is tax-exempt in Washington, and one gallon of non-fat milk retails for CA$3 at the Edaleen Dairy, nearly half what a similar-sized jug costs at a Canadian supermarket.

The Canada Border Services Agency’s policy on dairy imports reports that a single shopper can bring up to 44 pounds of dairy products worth CA$20 or less in Canada per trip. A buyer can purchase six, one-gallon jugs of non-fat milk from the dairy for around CA$17 without having to pay extra duties at the border.  The same purchase in Canada would cost nearly double that, adding up to CA$30, according to The Vancouver Sun.



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Carroll Wade    
Jasper, N Y  |  August, 15, 2012 at 08:41 AM

Why wouldn't it be smarter for the American dairymen to get paid enough for the milk so they could cover their cost . The prices would equalize and then the Canadian citizens would not have to spend money on gas to shop here . People in the U S are paying way less than they should be . Farmers need to put a price on their production .

Mike    
In  |  August, 15, 2012 at 08:56 AM

I am glad at least one dairy farm has found a way to profit from the current dairy economics. It appears our fellow dairy farmers to the north are receiving a profitable farm gate milk price. My next comments are not aimed at starting a milk policy debate or energy policy debate - it is a simple economic, real life situation. Based upon University cost of production benchmarks - our 400 cow herd's cost of production is better than average , but below the top 10% - that is information for perspective. We purchase corn and proteins -- raise our corn silage and hay. Based upon current milk futures - the mail box milk price will be about $3 below our cost of production if current corn and protein prices remain at the average of June and July prices we paid this year. We have irrigated corn and hay - so drought reduced yields are not a factor. The business choice we have before us is sell the corn to a local ethanol plant for $8.14 /per bu and make a very nice profit. Or feed the corn to the cows and lose a lot of money. I don't think it takes a Harvard MBA degree to figure out this decision. And I don't know about other dairy farmers, but I do not ever want to experience another business year like 2009 and 2010. There are no more sacred cows on this farm - they are either bottles of milk or hamburgers. They are looking more and more like hamburgers lately. Consumers and milk processors need to think about the business decisions dairy farmers are making right now. Replacing lost milk production does not happen in a week or a month. Until milk futures reflect current cost of production realities - business decisions will be made that have a long term consumer price effect.

Conlee    
AB Canada  |  August, 15, 2012 at 11:04 AM

If the American dairymen want to get paid more for their milk then they just need to cut production down. The market is flooded with milk and so it's no wonder it's worthless and so volatile. That's why in Canada we have a supply management system if you restrict the amount of milk being produced then you guarantee a higher milk price. It's simply supply and demand. On a side note i would have to seriously question the source of the facts on this article. Milk prices in the store are dictated by retailers and competition. It may cost $X in one part of the country and $Y in the other so saying "The same purchase in Canada would cost nearly double that," is assuming to much. Vancouver area is a expensive place to live so of course milk prices are going to be high. In Alberta 4L of milk cost $4.25 and the dairy farmer is getting paid 75% of that. That leaves the processors and retailers with 25% of retail price. The only way the American dairy industry could achieve this is to limit supply.

Patrick    
Central Wisconsin  |  August, 15, 2012 at 02:11 PM

The thing is with Canada is their quota system of milk pricing. On the outset this sounds like a great idea. The amount of milk being produced (under quota) is limited and the price can be strictly controlled. Any over production is usually trucked into the United States causing a surplus of milk which can keep the U.S. milk price artificially low. Isn't is great when you can dump your surplus at below market value? Sure is! However, eventually value of the farms' quota can be an enticement for the farmer to retire from farming. If I'm not entirely misinformed I have read that the farm population of Canada is less the 1 percent of the population as a whole. That in and of itself is not a good thing since diversity strenghtens the economy. Canada looks good on the books but in the long run,.... not so much.

Jesse    
Canada  |  August, 16, 2012 at 09:50 AM

Our surplus milk is turned into milk powder and used for animal feed so the price is incredibly low. We DO NOT ship milk into the US. The Americans are always finding ways to dump their milk into Canada in the form of chocolate milk, yogurt etc. The amount of milk overproduced in Canada is nothing compared to amount of overproduction on the US 'factory farms'. There's a reason why we in Canada have to put a blue cow on our products, so the consumer can tell the difference between Canadian milk and the hormone filled American product. Do your research before you accuse Canadians of the very thing Americans are guilty of. If all countries had a quota system, over production wouldn't be an issue. As it stands, the US 'factory farms' are the cause of such suplus. I am more than willing to pay an extra dollar for pure Canadian milk than to drive across borders to save a buck on a not-so-pure product.

Mike    
In  |  August, 16, 2012 at 09:55 AM

We have a milk balancing plant in our area and based upon the activity there - the milk surplus disappeared several weeks ago. Based upon local slaughter numbers, increased dairy cow sales and hot summer weather - at least locally - production has responded to the low summer milk prices. It is down. But there appears to be too long of a delay between what is happening with production at the farm and the market price response. I get a milk production survey from our state statistical agency on a regular basis asking for cow numbers and daily milk shipped. Is this the best way to gather production information? Random sampling? Every milk cooperative knows exactly how much milk was picked up at a farm everyday. Seems to me we should be able to accurately track production - to the pound - every day. Markets respond to information - as long as the information is based upon guesses and statistical sampling - that will be part of the risk reduction formula. Real time accurate information would seem to provide a better information for processors to hedge future needs, which will send better market signals to producers. Which will result in better decisions at the farm. Volatility is not good for anyone.

Patrick    
Central Wisconsin  |  August, 16, 2012 at 05:22 PM

So I'm guessing that your not a farmer then? Easy enough to tell by your use of the phrase "factory farm". I see people using that phrase as nothing more then an excuse for refusing to do what may be the only work they may be qualified to do. The original "shovel ready" job! And yes, Canadian milk has found it's way into U.S. milk processor holding tanks as has milk from Mexico. Sure the price for over-quota milk is incredibly low if sold in Canada, but drive across that border and processors will practically kill each other over a nickel. If your going to complain about our "hormone filled American product", please DO complain. A LOT! Because in the end it is the consumer who ultimately decides what they are going to purchase and from who. As for the little blue cow, I believe nation of origin labeling laws have something to do with that. Good point on the quota system. What if,....? The what if is happening in Canada. Whatever dairy farms that are left are getting larger. Canadian farmers are retiring on the sale of their quotas. And why not? it's worth as much as their farms are. Sell the quota, sell the farm and move to Florida. Canada by the way is actively advertising around the world for people to re-populate farms. What happened to your next native generation of farmers? If things were so good, you should be up to your ears in young farmers but your not.

Linda    
Wisconsin  |  August, 17, 2012 at 12:36 PM

I always chuckle at the ignorance of letters like yours Jesse. There is NO such thing as hormone free. A cow is a mammal and as such produced estrogen, progesterone, insulin, bovine somatropin (BST-- which tells her to produce milk) etc and all of those are present in her meat and milk naturally. Basically any cow not producing hormones is a dead cow. I have yet to see a study showing that there are different levels of these in US, Canadian, or organic milk. Interestingly the studies that are done show no measurable difference and that can't be spun so people do not see them. It is all perception. Canada uses import quotas as part of its milk pricing protection. In the US when prices go up so do imports-- including from Canada. So when our prices are higher than international product prices, our product is displaced in our own country and the export market that is currently taking 12% of our milk stops buying... leaving more to depress our prices. The subject is alot more complicated than just reduce output. Without addressing imports no plan can succeed.


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