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Feds increase borrowing capacity to half a billion dollars for dairy commission

Last week, the House of Commons and Senate passed C-16, which authorized the Canadian Dairy Commission to borrow up to $500 million to purchase, sell, and market dairy products.

Last week, the House of Commons held first and third reading—and ultimately passed—bill C-16, otherwise known as An Act to amend the Canadian Dairy Commission Act.

The act was composed of a single amendment: replace Subsection 16(2) of the Canadian Dairy Commission Act with the following:

The total aggregate amount outstanding at any time of loans made under subsection (1) and amounts drawn under subsection 16.‍1(2) shall not exceed five hundred million dollars.

Currently, 16(2) of the Canadian Dairy Commission Act states the same thing but limits the outstanding loan amounts to $300 million instead of the newly proposed $500 million.

So what are the loans under subsections (1) and 16.‍1(2)?

Well, here’s subsection 16(1):

16 (1) At the request of the Commission, the Minister of Finance may, out of the Consolidated Revenue Fund, make loans to the Commission on such terms and conditions as are approved by the Governor in Council for the purpose of exercising any of the powers of the Commission described in paragraphs 9(1)(a) and (b).

And here’s subsection 16.‍1(2):

The Commission may, with the approval of the Minister of Finance, establish and use a line of credit with any member of the Canadian Payments Association for the purpose of exercising any of its powers set out in paragraphs 9(1)(f) to (i).

But now we’re left with paragraphs 9(1)(a), (b), and (f) to (i), which state the following:

(a) purchase any dairy product and sell, or otherwise dispose of, any dairy product purchased by it;

(b) package, process, store, ship, insure, import or export any dairy product purchased by the Commission;

(f) establish and operate a pool or pools in respect of the marketing of milk or cream

(g) establish the price, or minimum or maximum price, paid or to be paid to the Commission, or to producers of milk or cream, the basis on which that payment is to be made and the terms and manner of payment that is to be made in respect of the marketing of any quantity of milk or cream, or any component, class, variety or grade of milk or cream;

(h) collect the price paid or to be paid to the Commission, or to any producer in respect of the marketing of any quantity of milk or cream, or any component, class, variety or grade of milk or cream, or recover that price in a court of competent jurisdiction;

(i) subject to an agreement entered into under section 9.1, establish and operate a program in respect of the quantities and prices of milk or cream, or of any component, class, variety or grade of milk or cream, necessary for the competitive international trade in, and the promotion and facilitation of the marketing of, dairy products

Phew. That’s a mouthful.

Okay, let’s see if we can get through this.

Basically, the first subsection indicates that the federal finance minister can loan money to the Canadian Dairy Commission so that the commission can buy dairy products and then sell, package, process, store, ship, insure, import, and export any dairy products they purchase.

The second subsection gives the commission permission to establish and use a line of credit with any member of the Canadian Payments Association (also known as Payments Canada, and which include over 100 lending institutions) to exercise these powers:

  • Establish and operate pools for marketing of milk or cream
  • Establish prices to be paid to the commission or milk and cream producers, including payment terms, regarding marketing dairy products
  • Collect such prices in marketing dairy products
  • Set quantities and prices for the international trading, promoting, and marketing of dairy products

The current legislation allows the commission to borrow up to $300 million as it goes about buying, selling, and marketing dairy products.

During debate on the bill, Marie-Claude Bibeau, the agriculture minister, indicated that the increase was prompted by volatility in the dairy market caused by spikes in demand during the early stages of the COVID-19 pandemic and steep drops in demand as schools and restaurants shut down and consumers no longer stockpiled dairy products. The volatility caused logistical challenges throughout the supply chain, from dairy farmers to those who manufacture dairy products.

Bibeau claimed that increasing the loan limit by $200 million could allow the commission to increase its storage capacity, allowing it to hold onto surplus dairy products, which it can then sell as demand increases later. This would mitigate the need for farmers to adjust production to meet demand fluctuations during the pandemic.

Last Thursday, Parliament approved the bill to increase the commission’s borrowing capacity to $500 million. The Senate passed the bill two days later, without any amendments.

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By Kim Siever

I live in Lethbridge with my spouse and 5 of our 6 children. I’m a writer, focusing on social issues and the occasional poem. My politics are radically left. I recently finished writing a book debunking several capitalism myths. My newest book writing project is on the labour history of Lethbridge.

I’m also dichotomally Mormon. And I’m a functional vegetarian: I have a blog post about that somewhere around here. My pronouns are he/him.

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