Cost of Dairy Products to Rise Following Federal Commission’s Plan to Increase Milk Prices

Milk is pictured at a grocery store in North Vancouver on Sept. 24, 2018. The Canadian Press/Jonathan Hayward

The Canadian Dairy Commission (CDC) plans to increase the price of farm gate milk on Feb. 1, 2022, which is expected to push up the cost of other dairy products.

“The increase in producers’ revenues will partially offset increased production costs due to the COVID-19 pandemic which caused revenues to remain below the cost of production,” the CDC said in a statement on its website, adding that feed, energy, and fertilizer costs have been especially impacted by the pandemic.

The decision was made after the CDC conducted a review of milk prices in October, as well as several other costs used in administering the supply management system. The new prices will be announced once they are approved by provincial authorities in December.

After the policy is implemented, the price of milk used by processors who make dairy products for the retail and restaurant sectors will increase by 8.4 percent. There will also be a 5 percent increase in milk processing costs such as in packaging, labour, and transportation, the CDC said.

The change will also affect butter-related products, with the support price for butter used by the CDC in its storage programs to increase by 12.4 percent (from $8.7149 to $9.7923 per kg).

The CDC’s butter storage fees will be reduced from by 33 percent. The Crown corporation stores a certain amount of butter to ensure an adequate supply throughout the year and to prevent shortages.

“The impact of these adjustments on retail prices will depend on many factors such as manufacturing, transportation, distribution, and packaging costs throughout the supply chain,” the CDC said.

Over the past five years, the consumer price index for dairy increased by 7.4 percent, compared to 11.8 percent for meat, 20.6 percent for eggs, and 7.7 percent for fish, according to the CDC.

Sylvain Charlebois, director of Dalhousie University’s Agri-Food Analytics Lab, told CTV News that the 8.4 percent price increase is “a precedent,” and that there hasn’t been a recommendation for such a large price increase in the commission’s 54-year history.

While he understands the need to increase prices to address supply chain disruptions caused by the pandemic, Charlebois doesn’t believe the costs should be transferred to consumers.

“It’s not farmers who are going to be paying,” he said. “It’s really Canadian taxpayers and consumers.”