Restaurants and consumers are about to take another hit on dairy as the Canadian Dairy Commission (CDC) has recommended an increase in farm gate milk prices.
Dairy Farmers of Canada had asked the CDC to review the price that farmers get for their milk due to the current decades-high inflation. The CDC agreed to review the request to determine if a rare second price increase was warranted this year.
Upon reflection and under “exceptional circumstances,” the CDC is recommending that on September 1, 2022, the farm gate milk price increase by around 2.5 per cent, which equates to less than two cents per litre. The CDC says this increase in producers’ revenues will partially offset increased production costs due to inflation.
The new farm milk prices will become official once they are approved by provincial authorities in mid-July 2022.
The adjustment will see the price for milk used in the manufacture of dairy products such as milk, cream, yogurt, cheese, and butter intended for the retail sector and the foodservice industry increase by 2.5 per cent on average. The net impact on consumers will also be influenced by factors such as transportation, distribution and packaging costs throughout the supply chain.
This recommendation comes after farm gate milk prices rose six cents per litre, or roughly 8.4 per cent, on Feb. 1.
The industry has been 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.
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.
Next fall, during the regular price review, the September 1 adjustment will be deducted from any adjustment for February 1, 2023.