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under-production

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under-production

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    EFFECTIVE AUGUST 1, 2009

     SASKATCHEWAN MILK CONTROL BOARD

     CONTINUOUS DAILY QUOTA POLICY

PART I - Definitions

    For the purpose of the policies outlined in this document, the following definitions apply:

a) Board means the Saskatchewan Milk Control Board;

    b) catastrophe includes severe illness or death of the registered quota holder; destruction

    of the production facilities; severe infection of the producing herd by an uncontrollable

    disease or by a disease which results in a requirement from health authorities that the

    herd be slaughtered; or any hardship suffered by a quota holder that the Board considers

    to be similar in nature to the ones listed above;

c) complete dairy unit” means a continuously operative dairy farm business, including all

    lands and buildings and milking cows used in the operation of the business;

d) credit days” are calculated by dividing a producer’s cumulative credits by daily quota;

e) credits” means the difference between a producer’s actual production and daily quota

    allocation, (in kgs of butterfat);

    f) cumulative creditsare the total credits accumulated by a producer, including transfer

    credits;

    g) daily quota means a fluid and market sharing quota in kilograms of butterfat allocated

    to a producer by the Board, per day;

    h) direct transfer means the transfer of daily quota directly between two producers; it

    excludes transfers through the Quota Exchange. In all cases, direct transfers require

    Board approval;

    i) immediate family means a grandfather, grandmother, father, mother, husband, wife,

    son, daughter, brother, sister, grandson, granddaughter, son-in-law or daughter-in-law;

    j) incentive day credits” are temporary quota allocations that are intended to stimulate

    production for a specific month;

k) monthly quota allocation” is daily quota multiplied by pick-up days;

l) negative credit limit” is the maximum negative cumulative credits that may be

    accumulated by a producer;

m) positive credit limit” is the maximum positive cumulative credits that may be

    accumulated by a producer;

n) pick-up days” are used to determine a producer’s monthly quota allocation. Pick-up

    days are calculated by determining the number of days from the last pick-up of the

    previous month to the last pick-up of the current month;

    o) pro-ratameans calculated on a proportionate share, based on kilograms of butterfat;

p) producer means:

     (i) an individual who maintains cattle for the purpose of producing qualifying milk

    and has obtained any approvals and licenses that may be required pursuant to the

    regulations made pursuant to The Animal Products Act and The Public Health Act, 1994;

    or

     (ii) a partnership, association or corporation whose members or shareholders are

    personally engaged in the day to day operation of a production unit that maintains cattle

    for the purpose of producing qualifying milk and has obtained any approvals and

    licenses that may be required pursuant to the regulations made pursuant to The Animal

    Products Act and The Public Health Act, 1994;

q) total production quota” (TPQ) see “daily quota”;

    r) transfer credits are negative credits that are transferred from one producer to another

    to change each producer’s cumulative position.

PART II - Registration

    Page 2 of 13

    All producers must register with the Board. Only one registration number shall be allotted to each complete dairy unit, even if there are multiple owners.

PART III - Continuous Daily Quota Maintenance Policy

; On August 1, 2009, each producer’s annual quota allocation will be converted to a daily

    quota as follows:

    Annual Total Production Quota ? 365 days = daily quota

    This conversion does not change a producer’s total production quota, just the basis on

    which it is measured.

    ; Daily quota will be allocated on a monthly basis, by multiplying daily quota by pick-up

    days:

    daily quota × pick-up days = monthly quota allocation

    ; Monthly quota allocation will be measured against actual butterfat production to

    determine a producer’s credit position. Over-production will be referred to as positive

    credits, while under-production will be referred to as negative credits.

    actual butterfat production monthly quota allocation

    = credits for the month

    Credits accumulated on a monthly basis, both positive and negative, will be combined to

    determine a producer’s cumulative credit position which is carried forward indefinitely;

    there is no dairy year end.

    ; The cumulative credit position will be divided by the current month daily quota

    allocation to determine the credit day position.

    cumulative credit position ? current month daily quota

    = credit days

PART IV - Credit Days

    Page 3 of 13

Positive Credit Days

    ; The positive credit day limit +10 days.

    ; Producers may accumulate up to +10 credit days and receive full payment for those

    shipments.

    ; Credit days produced in excess of the +10 credit day limit (excess kilograms of butterfat)

    will receive zero payment, with the revenue from this excess production being shared by

    all producers in the monthly pool. This excess production will be subject to all relevant

    deductions. The credit day position carried forward to the next month will be capped at

    +10 days. Producers cannot recoup these dollars in future months.

Negative Credit Days

    ; The negative credit day limit is -30 days.

    ; Producers may accumulate up to -30 credit days without penalty.

    ; Credit days accumulated in excess of -30 days are deemed to be lost production

    opportunity and cannot be carried forward by a producer. There is no opportunity to

    recoup lost negative credit days in future months. This lost production will not be

    reallocated to other producers.

PART V - Incentive Day Credits

    To stimulate production, the Board may issue incentive day credits. Incentive day credits are used