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Industry NewsMilk prices to rise as CDC recommends another rate increase

Milk prices to rise as CDC recommends another rate increase


On May 27, 2022, Dairy Farmers of Canada asked the Canadian Dairy Commission (CDC) to review the price that farmers get for their milk due to the current inflation. As a part of the CDC’s mandate to provide efficient dairy farmers with the opportunity to obtain a fair return for their labour and investment, the dairy commission agreed to review the request to determine if a price increase was warranted before next year. After reviewing the points of view expressed during the consultations as well as economic data, the CDC has recommended that on September 1, 2022, the farm gate milk price increase by $1.92/hl (less than 2 cents per litre).

The adjustment will increase by 2.5 per cent on average 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. This increase will be reflected in the milk class prices according to a ratio of 60 per cent on butterfat and 40 per cent on other milk components. The net impact on consumers will also be influenced by factors such as transportation, distribution and packaging costs throughout the supply chain. The price paid to farmers is only part of the price paid by consumers.

The increase in producers’ revenues will partially offset increased production costs due to inflation. Feed, energy, and fertilizer costs have been particularly impacted, with increases of 22 per cent, 55 per cent and 45 per cent respectively since August 2021. Next fall, during the regular price review, the September 1 adjustment will be deducted from any adjustment for February 1, 2023.

In making its decision, the CDC reports that it considered the possible impacts of a price increase on consumers and demand, stating that dairy products must remain affordable for Canadian families; and dairy farmer revenue has improved in recent months, partly due to last February’s price increase and partly due to the rise in world prices, which affects a significant part of the milk that farmers sell on the domestic market.

In the last five years, the consumer price index for dairy increased by 7.7 per cent. This compares to 14 per cent for meat, 21 per cent for eggs, and 32 per cent for fish.

“The CDC is grateful to the following stakeholders for presenting their views on a potential increase and the impacts a price adjustment would have on their sector: Dairy Farmers of Canada, Dairy Processors Association of Canada, Consumers’ Association of Canada, Retail Council of Canada, Canadian Federation of Independent Grocers and Restaurants Canada,” the CDC included in its statement.

The new farm milk prices will become official once they are approved by provincial authorities in mid-July 2022.

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