August 1993

Presented to the 1993 Annual CAEFMS Workshop, Memorial University of Newfoundland

Abstract:

Manufactured dairy product sales have decreased nationally. In the Atlantic Provinces dairying is the largest farming sector and the regional industry has shared the industry milk (or MSQ) decreases with the rest of the Canadian dairy industry. As well, fluid milk sales have decreased in three of the four provinces. The region's slower population growth has to offset the decline in per capita fluid milk sales of recent years - which has been similar in magnitude within the Maritime provinces and at the national level. These market developments have resulted in fewer dairy farming operations and low levels of plant utilization. The Newfoundland fluid milk market and industry has been rapidly developed since the late 1970's.

Consumer expenditures for dairy products across the region are about 9% below the national level and total consumption of milk solids is about 6% lower. There are wide variations in consumption levels for particular products across the region. In a number of significant cases both the highest and the lowest provincial average consumption levels in Canada are found within the four provinces. Factors explaining the differences in regional vs. national consumption levels include lower incomes, higher and lower prices for various dairy products and substitutes, lower levels of immigration, the tendency for the region to lag behind national consumer trends, and the greater rural population. This last factor is more fundamentally associated with the causes of the difference (both positive and negative) in rural compared with national consumption levels, e.g. physical work environments, incidence of having meals outside the home, etc.

The high level of fluid milk sales in Nova Scotia is a notable feature of dairy markets in the region (and it stands in sharp contrast with the lower sales of neighbouring New Brunswick).

The most promising areas for demand-increasing efforts are considered to be fluid milk and cream in Newfoundland, cheese, yogurt, fluid milk in New Brunswick, whipping cream (particularly in New Brunswick), and sour cream. If the national dairy policy contained incentives and provisions for allowing the regional industry to pursue well-defined market opportunities, high levels of interest and willingness to invest in market development efforts and successful initiatives could all be expected.

Introduction:

Dairying is the largest farm sector in the Atlantic region. In 1992 milk and cream sales returned $200 million and accounted for one-quarter of the market receipts of primary agriculture. At the processing level in 1988 there were 41 dairy plants that made shipments valued at $463 million. The regional industry has shared the decreases in manufactured dairy product demand (and MSQ) with their counterparts across Canada. In addition fluid product sales have also been decreasing in at least three of the four provinces. A declining number of dairy farms and low levels of plant utilization have resulted.

Dairy product sales and consumption levels in general within the region are below national levels although there are wide variations across the four provinces. In some cases, both the highest and the lowest per capita provincial average consumption levels are found with the four provinces. This is the case for fluid milk, butter and perhaps, at times, ice cream.

This paper presents a comparative survey of dairy product consumption/sales across Atlantic Canada with some consideration paid to the factors influencing these differences and trends in this regard. Particular attention is given to opportunities for increasing or maintaining sales. Some implications for policy makers and the industry are considered. In the case of fluid products there is a direct relationship between consumer sales and regional dairy production levels. This is not the case for industrial products. The situation for these parts of the dairy products market is still of considerable interest and possible significance for the regional industry as well as of pertinence for the overall national marketing system.