Recommended increase in farm milk prices | A “necessary evil”, say producers and processors

The 8.4% increase in the price of milk at the farm, recently recommended by the Canadian Dairy Commission (CDC), is a “necessary evil”, argue some producers and processors. In the supermarket, if the price of a liter of milk, a pot of yogurt, cheese and butter is likely to increase, the announced increase may not be passed on entirely to consumers.

Nathaelle Morissette
Press

Julien arsenault
Press

“It’s a necessary evil for farms,” ​​launches straightforward Nathan Kaiser, co-owner of Laiterie Chagnon, who wears both the hat of a milk producer and a processor. The costs have increased so much in recent years and it never readjusted, he says on the phone. Margins kept going down, costs kept going up. It really became difficult. At least that will help a bit. In my opinion, that’s not even enough, he adds. Even in the dairy, the container, the boxes, everything has increased. ”

However, the producer of yogurt and butter at its Waterloo plant is sorry to make consumers pay the price. “It’s less pleasant,” he admits. [Mais] it will not go up any more than all the other products in the grocery store. ”

In Saguenay – Lac-Saint-Jean, Luc Boivin, general manager of Fromagerie Boivin, also believes that these increases “are necessary for the survival of the industry”.

“Dairy farmers across Canada need it,” he insists. There was still an explosion in costs of all kinds: fuel has increased, the cost of tractors, the cost of grain also for feeding the cows. ”

He also recalls that, on the shelves, the price of dairy products has increased little over the past five or six years.

“We have not had any weight reduction in the dairy sector,” he also maintains. The other food sectors have reduced their volumes, there is less in the bag of crisps, cookies, cereals… In dairy products, a pound of butter still weighs a pound. We haven’t applied much weight reduction. ”

Keep your head above water

For Dairy Farmers, the increase proposed by the CDC will make it possible to absorb “part” of the many increases facing dairy farms.

According to its communications director François Dumontier, for the period from June 2020 until last August, the prices of animal feed, fuel and fuels as well as fertilizers and herbicides respectively climbed by 24, 45 and 16%.

“At some point, our businesses need to remain profitable when there is an increase in costs,” he explained in a telephone interview. For a producer, that gives him about 6 cents a liter. ”

The producer price is indexed on the basis of a Commission formula which takes into account production (50%) and the consumer price index (50%). However, it can go further. This is what happened against a backdrop of inflationary pressures.

Mr. Dumontier has repeated more than once that the CDC’s announcement is not automatically synonymous with an equivalent increase in the price of fluid milk.

He acknowledged, however, that the surge in the price of milk may however weigh in the balance when the Régie des marchés agricoles etimentaire du Québec sets consumer prices – a decision expected in December.

“We will participate in the hearings of this one [la Régie] to ensure that the category remains competitive and that the impact on consumers is reasonable, ”said the Retail Council of Canada in a statement.

The organization that represents large grocery chains and other retailers considered that this “historic increase” in the price of farm milk announced by the CDC was “particularly difficult”, since it is a “product”. essential ”for“ Canadian families ”.

What types of increases?

On Twitter, the food industry specialist Sylvain Charlebois, professor at Dalhousie University, estimated that the prices of milk, butter and yogurt would probably “skyrocket” next year, an analysis with which Mr. Dumontier does not quite agree.

The prices of cheese, yogurt and butter are not regulated, he argued. In his view, it is up to the retailers to decide whether or not to pass the full increase on to consumers.

“For cheese, the margins can sometimes fluctuate between 40 and 50%,” said Mr. Dumontier. In theory, other links in the chain could decide to absorb certain costs to limit price increases. ”

Maurice Doyon, professor in the department of agrifood economics and consumer sciences at Laval University, agreed with the director of communications for the Producteurs de lait du Québec.

In some cases, the expert estimates that the CDC’s suggestion could result in an increase of 48 cents for 1 kg of cheese.

“If I buy a 250 g, it will cost me 12 cents more,” illustrates Mr. Doyon. There is a big distinction to be made between what happens on the farm and the consumer. The more a product is processed, the lower the share of the primary product. ”

The CCL’s announcements may attract attention since they are public, the expert said. Since the beginning of the year, the price of pork in Quebec has “increased by about 20%,” said Mr. Doyon, adding that this was not released by press release.