The Canadian Dairy Commission has approved a second milk price hike this year, a very rare occurrence.
Posted at 4:27pm
The Crown Corporation, which oversees Canada’s milk supply management system, said Tuesday farm-gate milk prices fell about two cents a liter, or 2.5%, on January 1ah September.
This increase comes after milk prices dropped on January 1stah February.
The commission said that when prices were reviewed in the fall, the mid-year price increase for January 1ah September is subtracted from any adjustment for the next February. The prices are usually adjusted once a year.
The move follows a request by Dairy Farmers of Canada in May for a mid-year milk price hike due to high inflation.
The industry lobby group said farmers are facing unprecedented price hikes for the goods and services they need to produce milk.
The commission said in a memo to stakeholders including processors, retailers and restaurants that higher milk prices will partially offset higher production costs due to inflation.
“Feed, energy and fertilizer costs have been particularly hard hit, with increases of 22%, 55% and 45% respectively since August 2021,” the commission said.
The real increase in milk prices for consumers could be much higher as the different actors in the supply chain could also impose additional price increases.
“The impact of these adjustments on retail prices will depend on many factors such as manufacturing, transport, distribution and packaging costs throughout the supply chain,” the commission said.
Nevertheless, the increase approved by the Dairy Commission is well below the expectations of some industry observers.
“It could have been worse,” said Sylvain Charlebois, a professor of distribution and food policy at Dalhousie University.
“Based on the data we looked at, we expected an increase of more than 5%. I expected a lot more. »
In recent weeks, the Dairy Products Commission has come under pressure from various industry representatives to keep prices reasonable for Canadian consumers.
“The Canadian Dairy Commission is starting to listen to Canadians and their concerns about food inflation,” Charlebois said. “The CDC has tried to find a balance between what the industry needs and what consumers are feeling. »
Meanwhile, Agriculture Minister Marie-Claude Bibeau stressed the need for greater transparency in a mandate letter sent to the President of the Canadian Dairy Commission in mid-April.
Mme Bibeau said one of the priorities is for the board to review its approach to milk pricing decisions to ensure clearer and more transparent communication with Canadian consumers and dairy sector stakeholders.
The Commission issued a press release on the increase in farm gate milk prices and informed stakeholders about the price adjustment through a memorandum.