Dairy Farm -- credit LNN

By Dori Modney with files from the Canadian Dairy Commission

Milk price increase will impact all dairy products

Nov 1, 2021 | 1:13 PM

LETHBRIDGE, AB. — A review of Canadian farm gate milk prices and various other costs used in administering Canada`s milk supply management system, has determined an increase in price is warranted.

The Canadian Dairy Commission (CDC) conducted the review and held consultations in October of this year, and confirmed the CDC intends to implement changes on February 1, 2022.

The farm gate milk price will increase by $6.31/hl (or $0.06 per litre), to partially offset increased production costs due to the COVID-19 pandemic, which caused revenues to remain below the cost of production.

As well, feed, energy, and fertilizer costs were particularly impacted, increasing by an average of 8.4% the cost of milk used to make dairy products for the retail and restaurant sectors. However, the increase in the cost to processors will depend on the butterfat and solids non fat content of the product they manufacture.

The CDC’s butter storage fees will be reduced by 33 per cent, from $0.0206 to $0.0137 per kg of butter. The Commission stores a certain quantity of butter to guarantee an adequate supply throughout the year, and to prevent shortages. In the case of butter sold at retail, for example, these fees represent half a cent per pound of butter (454 grams).

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Other information from the review lead the CDC to recognize a 5.0 per cent increase in milk processing costs such as packaging, labour, and transportation, which applies to butter sold by manufacturers to the CDC, in the context of its storage programs.

In order to reflect these changes, the support price for butter used by the CDC in its storage programs will increase 12. 4 per cent, from $8.7149 to $9.7923 per kg. also on February 1, 2022.

The CDC notes that impact of the adjustments on retail prices will depend on many factors such as manufacturing, transportation, distribution, and packaging costs throughout the supply chain. In the last five years, the consumer price index for dairy increased by 7.4%. This compares to 11.8% for meat, 20.6% for eggs, and 7.7% for fish.milk prices.

The new farm milk prices will become official once they are approved by provincial authorities in early December 2021