ONTARIO – Milk may be good for the body, but it can be hard on some consumers’ wallets.
On May 27, the Dairy Farmers of Canada asked the Canadian Dairy Commission to review the price of milk. After the review, it was determined that the price of farm gate milk will increase by $1.92 per hectolitre or less than 2 cents per litre.
Furthermore, the increase will affect milk-based products at a ratio of 60 per cent on butterfat products and 40 per cent on other milk components.
The Canadian Dairy Commission states in their release, “an important part of the CDC’s mandate is to provide efficient dairy farmers with the opportunity to obtain a fair return for their labour and investment. The CDC, therefore, agreed to review the request to determine if a price increase was warranted before next year.”
The reason for the increase is partly to offset the increased production cost and ensure producers’ revenues aren’t affected.
However, the price paid to farmers is only part of the price paid by consumers.
The net impact on consumers is influenced by factors such as transportation, distribution and packaging costs throughout the supply chain.
Additionally, inflation in feed, energy, and fertilizer costs has steadily increased since August of last year. The highest cost is energy at a 55 per cent increase with a 22 per cent increase in feed and a 45 per cent increase in fertilizer, which are all contributing factors for the price increase.
The CDC also states, “in making its decision, the CDC considered the possible impacts of a price increase on consumers and demand. Nutritious dairy products must remain affordable for Canadian families.”
In the last five years, the consumer price index for dairy increased by 7.7 per cent. This compares significantly to a 14 per cent increase for meat, a 21 per cent increase for eggs, and a 32 per cent increase for fish.
Next fall, the CDC says there will be another price review and if the market stabilizes, the 2.5 per cent adjustment will be deducted from any adjustment made for Feb. 1, 2023.
