The purpose of this study is to estimate the effect of Ontario’s Nutrient Management Act (NMA) on farm level profitability of dairy sector. NMA came into force in 2003 and sets standards for the storage and handling of nutrients for regulating farms that fit certain criteria to reduce the risk of nutrients entering surface water or groundwater, especially for farms with herd size that can produce Nutrient Units above a certain level (i.e. 300 Nutrient Units). While the Act may affect its regulated farms by incorporating additional compliance costs, it may not have the same effect on unregulated farms. Increase in the weighted-average production costs of all farms may lead to elevated milk price within a national cost of production (COP) pricing formula for dairy industry. A theoretical framework that describes the pathway by which farms’ economic performance can be affected by NMA is developed in this study. To empirically test whether NMA has effect on farm level profitability, a RE model is estimated by using the unbalanced panel data from Ontario Dairy Farm Accounting Project (ODFAP) from year 2000 to 2010. The empirical results of this study indicate that NMA may not have statistically significant effect on the profitability of regulated farms with no less than 300 Nutrient Units (NUs). A discussion is further developed to take into consideration factors that may affect this empirical results. / OMAFRA funding code: 200222

This study investigates the impact of nutrient management regulations on pig farms in Ontario, Canada. Using mathematical programming, small, medium and large farrow to finish and finishing pig farms are examined using uniform and crop requirement based manure application. The model scenarios characterize the cost of compliance when nutrient application standards are applied from the Nutrient Management Act and a previously proposed standard from the Clean Water Act. Compliance costs for scenarios with uniform manure application are ≤6.47%; while compliance costs for scenarios with crop requirement based manure application are ≤0.25%. The Nutrient Management Act has two calculations for nutrient application standards, producers must comply with the less binding calculation. Compliance costs for producers under the less binding standard following a uniform manure application strategy are ≤1.53%; while producers following a crop requirement based manure application strategy have no compliance costs. The proposed Clean Water Act standard is more restrictive than the Nutrient Management Act standards. / Ontario Pork, OMAFRA

This study examines the compliance cost of current and proposed environmental and species regulations on Ontario beef cattle farms. A mathematical programming model was used to simulate regulatory scenarios under the Ontario Nutrient Management Act (2002), the Ontario Clean Water Act (2007) and the Ontario Endangered Species Act (2007). Both the feedlot and cow-calf models are examined using a uniform manure application and optimal nutrient management strategy in each scenario. Under the Nutrient Management Act, feedlot operations using a uniform application strategy face compliance costs of up to 3.09%, but can eliminate compliance costs altogether by switching to an optimal nutrient application strategy. Compliance costs for cow-calf farmers are up to 9.57% under a land reduction scenario and 8.68% with a previously proposed land restriction. The Endangered Species Act scenario causes cow-calf farmers to face compliance costs of up to 6.60% due to restricted use of alfalfa and pasture land. / OMAFRA