Dairy Farmers of Ontario’s (DFO) bold move to stop the exit of dairy farmers in the province appears to be working. Last year, DFO capped the price of a kilogram of quota at $25,000. At one point last year, the price almost hit $33,000 per kilogram, enough quota for one cow’s yearly production.

The quota cap, combined with the new entrant programs, has dampened the acquisition of new quota by established dairy farmers. In its March 2 policy statement, DFO said currently licensed producers with successful bids will receive 0.1 kilograms of quota. New entrants are next in line. They can receive up to 23 kilograms of quota while a single new producer without DFO assistance can receive up to 35 kilograms of quota.

Last month, DFO drew 10 names of new entrants from a lottery and will give them each 12 kilograms of quota without having to pay for it for five years.

About half the quota for sale in February 2010, 199 kilograms, went to new entrants and only four farmers sold their total quota. Twelve farmers exited the previous February.

In January, 2010 only three producers were selling their total quota and only new entrants were able to buy quota. In contrast, January, 2009 saw 14 dairy farmers selling all their quota.

"It is too early to determine whether this is a trend," said DFO communications officer Bill Mitchell. "We’ll have to wait and see."

Most farmers planning to exit the industry would have done so before the cap was introduced, he said. Selling quota is a business decision.

Between 2004 and 2010, more than a fifth of Ontario’s dairy farmers exited the industry. Ontario had 5,282 dairy farms in 2004 and 4,388 dairy farms in 2008. Today there are under 4200 dairy farms in Ontario, says Mitchell.

In central Ontario the number of dairy farms dropped from 619 to 491 between 2004 and 2008. In eastern Ontario the number dropped from 1,435 to 1,154 over the same period.

Part of that drop can be attributed to lower farm incomes because of closed borders through BSE. Many small farms with high quality cows lost their export market for breeding stock and squeezed by smaller profits decided to sell.

How much the new entrant programs will affect the industry is hard to say. The new entrant must have purchased 12 kilograms of quota or invested $300,000 in quota before he’s eligible for the quota. If he owns 23 kilograms of quota at start up, the amount he is loaned is cut back. While the loaned quota gives the new entrant a break, making a living off 24 cows will require sacrifices.

The average number of milking cows in an Ontario herd is between 50 and 60 cows.