The Canadian Dairy Commission has approved a second milk price hike this year, a very rare occurrence.
Posted yesterday at 4:27 p.m.
The crown corporation, which oversees Canada’s dairy supply management system, said on Tuesday farm gate milk prices will rise by about two cents per litre, or 2.5%, on 1er september.
This increase comes after milk prices increased by six cents per litre, or about 8.4%, on 1er february.
The commission said that when it reviews prices in the fall, the mid-year price increase approved for the 1er September will be deducted from any adjustment for next February. Prices are generally revised once a year.
The move follows a May request from Dairy Farmers of Canada for a mid-year milk price increase due to high inflation.
The industry lobby group said farmers are facing never-before-seen price increases on 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 partly offset higher production costs due to inflation.
“Feed, energy and fertilizer costs have been particularly hard hit, with respective increases of 22%, 55% and 45% since August 2021,” the commission said.
The real increase in milk prices for consumers could be much higher, as the various actors in the supply chain could also apply additional price increases.
“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 Commission said.
Still, the increase approved by the dairy commission is well below what some industry observers were expecting.
“It could have been worse,” said Sylvain Charlebois, 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 stakeholders to keep prices manageable for Canadian consumers.
“The Canadian Dairy Commission is starting to listen to Canadians and their concerns about food inflation,” said Charlebois. “The CDC has tried to find a balance between the needs of industry and what consumers feel. »
Meanwhile, in a mandate letter sent to the president of the Canadian Dairy Commission in mid-April, Agriculture Minister Marie-Claude Bibeau stressed the need for greater transparency.
Mme Bibeau said one of the priorities is for the commission to review its approach to milk pricing decisions to ensure clearer and more transparent communication with Canadian consumers and dairy industry stakeholders.
The Commission issued a press release on the increase in farm gate milk prices in addition to informing stakeholders of the price adjustment through a memorandum.