Annually, the Canadian Dairy Commission (CDC) decides the farm gate price of milk for the year. The Crown corporation has therefore ruled that for 2022, the price of milk paid to producers will increase by $ 6.31 per hectolitre (or $ 0.06 per liter), an increase of 8.4%, as of 1er February 2022. We are probably witnessing the largest increase announced in more than 50 years.
For butter, we can expect an increase of 12%, probably due to the “Buttergate” which revealed the overuse of palm oil by the industry. The costs and prices of butter will explode. In other words, over the next few months we will have to pay more, much more for our favorite dairy products.
The CDC is the cornerstone of supply management in Canada. It sets farm gate prices to ensure that producers get a fair price for their labor.
As a dairy farmer in Canada, therefore, it turns out to be virtually impossible to lose money as each producer always receives compensation for cost increases created by droughts, floods, pandemics and changes in consumption trends.
The CDC must publish its decision on the income of dairy producers in Canada annually by 1er November. She justifies the increase this time around by targeting higher energy costs, increased wages and the cost of feed for the cows. All of these elements are directly or indirectly linked to the pandemic.
Lack of transparency
Compensating producers is part of the equation, because under the supply management program, it has to be done. But the approach used by the CDC is problematic because of the cruel lack of transparency, despite the fact that this body belongs to all Canadian citizens. This Canadian Crown corporation employs over 70 people.
In its announcement, the CDC claims to have carried out an assessment of the country’s farm gate price and various other costs associated with the production and administration of the supply management system. However, it has not yet made the study public. She still does, but these reports often lack important details. For example, although it is explained that the sample usually includes more than 200 farms, we do not know the method used for data collection and whether or not there is an audit by a competent accounting firm. Primary data that comes directly from producers is not accessible at all. Each year these studies seem to be rushed and take about six or seven pages at most. Reports almost always use the same words, only the numbers differ. The approach strikes us as frankly rudimentary.
PHOTO MARTIN LEBLANC, PRESS ARCHIVES
“The Canadian Dairy Commission claims to have carried out an assessment of the farm gate price of milk in the country and various other costs related to the production and administration of the supply management system,” writes Sylvain Charlebois.
Few Canadians are aware of the very existence of the CDC, created in 1967, even though its decisions affect us practically on a daily basis. Its CEO, Serge Riendeau, is a former milk producer; its president, Bob Ingratta, also has ties to the dairy sector. Jennifer Hayes, a new commissioner appointed since 2020, like Riendeau, has actively participated in the Union des producteurs agricoles du Québec and also maintains special ties with dairy production. These three form the board of directors of one of the most obscure crown corporations in the country.
In other words, the lack of perspective, beyond milk production, remains glaring. Consumers and other links in the chain are not represented at all.
The CDC is starting to pay attention to food processing. Moreover, this year it gives the right to a clause which makes it possible to increase the processing price by 5.4%. But that’s nothing to help consumers, who are struggling these days.
The CDC’s decision will have consequences for our portfolios. For Quebec consumers, the price of milk, already regulated in the province, will also increase from the 1er February. The decisions of the Régie des marchés agricoles etimentaire du Québec (RMAAQ) are still heavily influenced by the CCL. The RMAAQ will render its decision in a few weeks.
However, consumers now have access to an array of choices beyond dairy protein. Several oat, soy or almond-based products are available to consumers. With the coming dairy price hikes, even milk and other goat milk products are looking more and more attractive.
In short, with supply management supported by a CCL without transparency, we take good care of our dairy producers while forgetting the less well-off consumers. The latter will shy away more from our good dairy products, now perceived as luxury products. In order to gain more sympathy, the CDC should focus on its governance problem while demonstrating more transparency.
What do you think? Express your opinion