The Canadian Dairy Commission (CDC) announced on Friday, October 29 an unprecedented 8.4 per cent increase in milk prices.
The increase, which equates to six cents per litre, affects the cost of milk used to make dairy products for the retail and restaurant sectors effective February 1, 2022.
However, the impact will actually be far greater in some places. For instance, it will increase the support price for butter used by the CDC in its storage programs by 12.4 per cent, from $8.7149 to $9.7923 per kg.
The new farm milk prices will become official once they are approved by provincial authorities in early December 2021.
The CDC argues it will partially offset increased production costs due to the COVID-19 pandemic.
“We’re seeing that the cost of production is really going up quickly and the revenues are not following,” Chantal Paul, a spokeswoman for the CDC, said, per CP24. “We felt that there was really a need for a relatively large increase this year to bring more balance between the costs and revenues for dairy farmers.”
Mathieu Frigon, president and CEO of the Dairy Processors Association of Canada, said dairy processors’ operating costs have also significantly increased over the past year. “We certainly were relieved to see that, within the 12.4 per cent increase in butter support price, (the commission) has recognized a five per cent increase in milk processing costs,” he said.
Meanwhile, Dairy Farmers of Canada (DFC) said in a statement that the cost of livestock feed alone has increased more than 27 per cent in the last two years, while equipment costs are up nearly 20 per cent and fuel is up more than 30 per cent, per the Financial Post.
The jump in milk prices is just the latest in a series of food price increases being seen by many in the restaurant and retail sectors. Statistics Canada figures show meat prices increased 10 per cent in six months amid rising inflation this year.
However, the Retail Council of Canada notes that this one is “particularly difficult” given that milk is an essential product for Canadian families and children in particular. The Council notes that while farm input costs have increased significantly and dairy farmers are understandably looking to recoup those costs, the system lacks any meaningful input on behalf of Canadian consumers. The three current members of the Canadian Dairy Commission are two dairy farmers and the former CEO of a milk marketing board.
“Simply put, consumer interests for Canadian families, or for that matter, the vital interests of the grocery or restaurant industries, go unrepresented on the CDC,” said an RCC statement.
Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, warned that the changes could see milk prices in grocery stores increase as much as 10 per cent while prices for dairy products like butter, cheese, and yogurt could soar as much as 15 per cent.
“This is definitely a record-setting increase,” Charlebois said, adding that the farm gate price hike of 8.4 per cent is nearly double the previous record of 4.52 per cent set in 2017. “From 2016 to 2021, the increase for butter was 12 per cent for all five years, just to give you an idea of how big an increase [the 12.3 per cent hike] will be next year.”