The Dairy Farmers of Prince Edward Island (DFPEI) established Order DFPEI 2023-07, effective October 1, 2023, under the Natural Products Marketing Act. This order introduces a structured system for transferring production credits between milk producers (quota holders) within the province, aiming to improve flexibility in milk production management and facilitate transactions through a regulated credit transfer exchange.

The order specifies critical terms such as “credit,” which refers to an unused unit of milk production equal to 1 kg of butterfat quota, and “credit transfer,” denoting the reallocation of these credits between producers, potentially for a fee. The “credit transfer exchange” is the platform controlled by DFPEI to facilitate these transactions. Producers can transfer credits among themselves while adhering to specific conditions outlined in the order. A significant stipulation is that starting January 1, 2024, the credit transfer exchange will be the only authorized mechanism for such transfers.

The order imposes limits on the amount of credits that can be transferred. Producers can transfer up to 25% of their monthly production quota, although this percentage may be reduced for those with violations related to milk production standards, ranging from 20% to 0% depending on the number of violations recorded within a 12-month period. DFPEI will operate the credit transfer exchange, which will open on the first business day of each month for producers to submit offers to buy or sell credits. These offers must specify quantities and prices and can be submitted through a designated producer portal or alternative methods, with varying fees.

The exchange will close on the 18th day of each month, or the next business day if that day falls on a weekend or holiday. DFPEI will determine a “clearing price” based on accumulated offers, ensuring a balance between the credits offered for sale and those sought for purchase. Payments for credits will be deducted from the buyer’s final payout from DFPEI for the month prior to the exchange, ensuring a streamlined financial process. Sellers will receive payments for credits sold as a credit against their payouts.

DFPEI is mandated to maintain thorough accounting records of the exchange’s operations and will provide audited financial statements at its annual meeting. Additionally, the order prohibits the assignment of credits to lenders, reinforcing the independence of credit transfers from any financial obligations tied to quota assignments. The new order also revokes the earlier DFPEI Order 2021-06.

By regulating the credit transfer process and introducing an exchange system, the order aims to balance production needs and market demands while ensuring compliance with established standards.

Prince Edward Island (DFPEI 2023-07) October 21, 2023