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Thursday, March 4, 2010

Agriculture, Food and Rural Affairs Tribunal speaks out on exemptions from dairy quota transfer assessment

Lucien and Murielle Martel operated a dairy herd of about 60 cows until April 2008.  At that time they sold their entire milk production quota of 66.17 kgs. at a price of $31,505.00 per kg.  Under the Dairy Farmers of Ontario (DFO) 2006 regulatory policy, the sale was subject to a 19.06 percent transfer assessment.  In this case, the assessment to be paid to DFO was more than $337,000. 

The Martels requested an exemption from the transfer assessment because they asserted that they were forced to sell the quota because of Lucien's back condition.  He alleged that he could no longer do the job of a dairy farmer and was told that his back condition would not improve. 

After the DFO rejected the request for an exemption, the Martels appealed to the Agriculture, Food and Rural Affairs Tribunal.  At the hearing, the DFO confirmed that it has received about 80 exemption requests since the transfer assessment was introduced in November, 2006.  Of those requests, DFO has granted 4 exemptions, and one other exemption was given as a result of negotiations during an appeal.  I have also already posted this year at least 2 decisions of the Tribunal granting full or partial exemptions where the exemptions had been refused by the DFO.

In this case, the Tribunal found it important that Lucien Martel continued to carry out cash cropping activities on his farm.  On that basis alone, the Tribunal decided, the exemption request must be denied.  In dismissing the appeal, the Tribunal provided some guidance to the DFO on what circumstances might engage the "special consideration" exemption from the transfer assessment:
  • death of the primary dairy operator;
  • catastrophic accident ending the farming career of the primary dairy operator;
  • fatal disease of the primary dairy operator;
  • ongoing plan to exit the dairy industry interrupted by the November 2006 policy;
  • undue hardship;
  • other compassionate grounds
Overall, there must be something unique or extraordinary to warrant an exemption from the policy.

Read the Tribunal's decision at: Ferme Martel Inc. v. Dairy Farmers of Ontario