Regional and Farm Level Adjustments in Southern Ontario's Dairy Industry 1968-1974

Abstract

<p>Through legislation introduced in 1965 a new institutional setting was established for the dairy industry in Ontario. This legislation, known as The Milk Act 1965, provided for the formation of the Milk Commission of Ontario and the Ontario Milk Marketing Board. Since its formation the Marketing Board has played an important role in restructuring the dairy industry and producing a shift in the location of fluid milk production in Southern Ontario.</p> <p>The analysis of regional data showed that over the six year period from June 1968 to June 1974, the combination of high attrition rates among regular fluid milk producers and their replacement by new shippers in more outlying areas had increased the distance that fluid milk was being transported. High land values contributed to the rapid attrition of fluid milk producers in the more urbanized areas. At the same time the programmes of the Board such as price and transportation pooling, quota negotiability and the graduated entry of industrial producers into the fluid milk market were having an impact. The net effect of these economic and institutional factors was to produce a shift in fluid milk production to locations more distant from the primary Toronto market.</p> <p>Because of the importance of the graduate entrant milk producer or new fluid milk shipper in this regional supply shift, attention focused on this group of producers. Based on the location of graduate entrant milk producers over the 1968 to 1972 period, two sample study areas were selected. A random sample of 200 graduate entrant milk producers in the two areas were selected for interviewing. The concentration of graduate entrant milk producers in Eastern and Western Ontario made some regional comparisons possible.</p> <p>In terms of fluid milk quota holdings, dairy herd management levels and acres in corn in 1973, there were no significant differences. Eastern Ontario was characterized by significantly larger industrial milk quotas, milking herds, farms and percentage income derived from milk sales. On the other hand, Western Ontario was distinctive in having significantly larger milking herd averages and incomes from milk sales.</p> <p>Herd enlargement behaviour among the random sample of graduate entrant milk producers was related to personal, management, and farm characteristics in a series of predictive multiple regression models. Throughout the analysis the economic variables, herd size and farm size in 1968, accounted for the greatest variation in the dependent variable. This was not entirely unexpected for in previous studies milking herd size was an important predictor variable. However, the inverse relationship between herd enlargement and milking herd size in 1968 was not evident in previous studies. The presence of fluid milk quota purchases in a number of the cases reflected the importance of the institutional factor in farm level adjustment. The positive relationship between herd enlargement and land additions reflects the importance of available land resources for dairy herd expansion. The role of immigrant Dutch dairymen was significant in accounting for herd expansion in Western Ontario.</p> <p>The highest level of explanation was obtained in the Eastern Ontario cases indicating that the models were most suitable in an area where dairying was the dominant agricultural activity.</p>