Milk price | Independent grocers call for suspension of increases

(Toronto) The Canadian Federation of Independent Grocers calls on the Crown corporation that manages the supply and pricing of dairy products to suspend any further increases in milk prices, amid political pressure to maintain food prices at a low level.

The Canadian Dairy Commission reviews, each fall, the price paid to dairy producers for their milk and announces whether this price will increase or decrease the following February.

The Commission has already informed several industry groups, in a note published on Friday, that the farm price of milk could increase by 1.77% in February based on its calculations and its investigation into the cost of production.

However, if one or more of these stakeholders were to invoke an “exceptional circumstances mechanism”, the price adjustment would not be set by the formula, but rather through consultations, the Commission said.

The Canadian Federation of Independent Grocers invoked this mechanism in a letter sent to the Commission on Friday. The federation’s senior vice president, Gary Sands, wrote that the grocery industry is in an exceptional situation this year.

The food industry is currently under pressure to maintain price stability, with Industry Minister François-Philippe Champagne calling on major grocers to come up with plans to stabilize prices.

On Thursday, Minister Champagne announced that major grocers had promised to offer discounts, price freezes and aligned prices.

Mr Sands says any increase in milk prices at the start of the supply chain would defeat the government’s aim of stabilizing food prices.

In his letter, he urged the Commission to suspend any planned price increases and to “hold further consultations in the context of the Government of Canada’s current desire to achieve price stability.”

It is particularly difficult for small, independent food retailers to manage these increases without passing them on to consumers, Mr. Sands observed in an interview.

“Here we are in a period where the government has told the public that we are trying to achieve price stability,” he said.

Minister Champagne and Minister of Agriculture Lawrence MacAulay received a copy of the letter.

The Retail Council of Canada, whose members include major grocers and which was one of the stakeholders receiving the memo, declined to comment. Restaurants Canada, which also received the note, also declined to comment.

Increased transparency

This is the second time that such a note has been sent to stakeholders, as well as to the media and the public, as part of the commission’s recent efforts to be more transparent, underlined Philippe Charlebois, spokesperson for the Canadian Dairy Commission.

He stressed that stakeholders had until Friday to choose whether or not to invoke the exceptional circumstances mechanism, adding that the Commission could not reveal whether a group had already chosen to do so or, if so, confirm its identify.

Next week, the Commission plans consultations with stakeholders, indicated Mr. Charlebois. If the mechanism is invoked, the February price adjustment will be determined through these consultations rather than the Commission’s formula.

The Canadian Dairy Commission acknowledged receipt of the letter, said Sands, who further praised the organization for heeding recent calls for more transparency in how it determines producer prices. This is the first time that the Federation has been informed of the process leading to the annual adjustment of dairy product prices, he said.

Last year, the Commission came under scrutiny amid soaring inflation and rising costs for farmers, as it approved a rare second increase in the producer price of milk.

Industry observers expressed concerns at the time about the lack of transparency in how pricing decisions were made.

Over the past year, the Commission has met with the Canadian Federation of Independent Grocers to discuss what factors into their pricing decisions. “They continue to improve,” Sands said.