These programs allow the Canadian Dairy Comission (CDC) to work with the private sector to balance the seasonal demand and supply of products for the domestic market. When milk production exceeds requirements for the Canadian market, the CDC buys butter and skim milk powder from processors at established support prices. Support prices are also used as a guide by provincial authorities when they establish milk prices at the farm level.

A pre-determined "normal" level of butter stocks is set as a target quantity deemed to be a necessary reserve to ensure the domestic market is supplied throughout the year. Within this level, a small quantity of Plan A bulk butter stocks is held as a buffer against seasonal deficiencies in the domestic market. Plan B is used by firms to balance the seasonality of their production and sales over the calendar year.

A Plan B program for skim milk powder encourages the production of various specialty types of skim milk powder when milk supplies are plentiful, thereby minimizing the demand for fresh skim milk solids in the fall when milk production is traditionally low and consumption is high.

To cover the financing, storage and transportation costs of normal butter stocks, an amount of $0.05 per hectolitre of milk is collected from the marketplace through the butter support price. Producers pay the total storage, transportation and interest costs incurred by the CDC on butter above the normal stock level, and other domestic seasonality programs.

For more information, please visit www.milkingredients.ca