Canadian consumers want dairy — but Manitoba might not be able to help in meeting the rising demand until changes are made in the processing sector.

At a Dairy Farmers of Manitoba (DFM) meeting this week, the group reports Canadian butter consumption has increased two per cent year over year, with drinkable yogurt retail sales also going up by 15 to 20 per cent annually, and full fat mozzarella sales moving upward about five to 10 per cent.

But Manitoba isn't increasing its dairy quota, in fact, according to the Canadian Dairy Commission, we're producing 3.04 per cent under quota, with the Western Milk Pool as a whole coming in 1.47 per cent under its quota. DFM says this is happening because current processing capacity isn't matching our production abilities.

"We've come to a point where it's difficult for us to continue to increase our production as the processing capacity has no longer kept up with actual demands of the Canadian marketplace," says DFM chair David Wiens. "So as the Canadian demands have gone up, we find ourselves in a position where our processors, particularly here in Manitoba, cannot handle the added volumes of milk. Then of course, in the end, if we don't have a home for the milk, it doesn't make any sense to produce the milk."

Wiens says there are other provinces starting to face the same problem, particularly in the butter/powder processing plants, which he says tend to be the oldest plants.

"Until we get some renewal and reinvestment in those plants, it will be difficult to continue to meet the demands of the current marketplace," Wiens says.

At the DFM meeting, Wiens explained they will be implementing a dairy ingredient strategy to create a more level playing field between processors, hopefully bringing more incentive for processors to expand or upgrade facilities in Canada.

The strategy will be the same program implemented by Dairy Farmers of Ontario, which introduced a new class of dairy ingredients as of April 1.

"We've looked at the program they have in Ontario, and we believe it should work quite well here in Manitoba as well, so our plan is to begin the process and to try to be ready with our class by August 1 of this year if all goes well," Wiens says.

He says this strategy would also help protect producer income.

In the whole situation of Manitoba's mismatched pace of production and processing, Wiens says the positive side of the issue is that Canadian dairy demand is growing. It's just a matter of responding to this opportunity.