Dairy Farmers of Canada (DFC) has requested a rare mid-year milk price hike due to inflation, an increase which would mark the second jump in dairy prices this year.
Canadian dairy farmers are battling never-before-seen price increases on goods and services they need to produce milk, DFC said in a statement Thursday.
This request comes after farm gate milk prices rose six cents per litre, or roughly 8.4 per cent, on Feb. 1.
The industry is warning that it can’t afford another price hike, as extra increases will push retail costs to untenable levels and increase food insecurity in the country.
“The companies piggyback on top of those increases so it becomes a double hit,” Gary Sands, senior vice-president of public policy with the Canadian Federation of Independent Grocers, said Saturday, according to Canadian Grocer. “Canadians are facing very significant affordability pressures on basics like milk and eggs. [DFC has] lost sight of the impact on the consumer.”
The Canadian Dairy Commission will hold consultations later this month and announce a decision around June 17. The federal body, which oversees Canada’s dairy industry and supply management system, said the milk price increase would be effective Sept. 1, if approved.
Sylvain Charlebois, Dalhousie University professor of food distribution and policy, told Canadian Grocer that the fact that DFC has declined to share how much of an increase it’s seeking is a problem.
“They just assessed the cost to produce milk in Canada and pushed through a record increase,” he said. “Now, out of the blue, they need more and they’re giving stakeholders only a couple weeks to prepare for consultations, which are not going to be public.”
Dairy prices are normally reviewed once a year in Canada. This annual process can create a gap between the true cost of producing milk and the annual adjustment, DFC said.
“The exceptional circumstances require a mid-year adjustment to alleviate this gap,” the group said. DFC cited the fact that fertilizer costs have gone up 44 per cent, fuel is up 32 per cent, and animal feed has increased eight per cent in less than a year.
Charlebois added that soaring dairy prices would push consumers into the dairy-alternatives aisle. “You’re going to see the dairy industry continue its decline because more Canadians will look for substitutes,” he said.