Sharing The Costs Of Bringing Milk To Market – for Sep. 13, 2010

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Milk trucks still rumble along Alberta’s country roads, but gone are the days when they delivered to the local dairy. Local creameries and dairies have become obsolete, as major processors centralized their plants in Edmonton, Calgary and Lethbridge.

Though one of the top-five milk producers in the province, the Lavoie family dairy operation in the community of St. Isidore in the Peace River country is far removed from the main dairy production core near Edmonton and Calgary.

“Entreprises Lavoie operates 500 kilometres away from a processing plant, but will pay the same flat rate for transportation as a dairy farm that might be only 20 kilometres away,” says Gerd Andres, policy and transportation manager for Alberta Milk, the organization that represents the province’s more than 600 milk producers.

Alberta Milk manages a transportation pool on a cost-recovery basis, with all producers sharing costs equally. “Back in the early 1990s, Lavoie milk would have been hauled into the town of Peace River, only a few kilometres down the road, so it would have been very affordable,” Andres says.

But today there are no longer any processing plants in the Peace River region; Grande Prairie’s closed about a decade ago; Peace River’s around 1993. “Before the trend to centralization, each processor contracted their own trucking so there were literally milk trucks passing each other all the time,” says Andres.

Producers, processors and haulers put their collective heads together, and a decision was made to rationalize transportation to pool the rate and improve efficiencies.

“Producers opted for the pool structure since no one really knew who was going to be close to a processing plant and who wasn’t,” says Andres. It means transportation costs are the same for each producer, whether he or she is right outside of Calgary or in northern Alberta.

Milk produced at Entreprises Lavoie near Peace River is shipped overnight, usually to the Saputo plant in Edmonton. Other major processors include Lucerne, which has a plant in Edmonton, and Parmalat, with a fluid milk processing plant in Calgary and a smaller yogurt plant in Lethbridge. A cheese-making plant in Lethbridge is growing and is now considered one of the top three in all of Canada, said Andres.

Alberta Milk is working with the Western Milk Pool on a harmonized transportation system across all four western provinces. Still in the planning stages, the organization is exploring ways to rationalize the transportation system, not from a provincial perspective, but from across Western Canada, said Andres.

Currently, B. C. sends some milk to Alberta and Alberta milk is sometimes dispatched to Saskatchewan all because on a certain day a certain processor doesn’t have the capacity. “We are looking at the least cost of moving milk across the four western provinces, as well as within the province,” says Andres.

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