Dairy Commission to hike price of milk at farm-gate by another 2.2 percent.
By Andrew Joseph, Farms.com; Image by Couleur from Pixabay
With inflation running rampant across all aspects of ag daily life, the Canadian Dairy Commission (CDC) is increasing the per litre cost of milk to help farmers cover input costs. The move will trickle down to increased costs to consumers.
The November 1, 2022, announcement stated that milk will rise by 2.2 percent per litre early next year, which will be passed on as approximately 1.74 cents per litre to dairy farmers. This increase is pending sign-off from the provincial milk boards.
The CDC is a Canadian Crown corporation that sets the farm-gate price dairy processors pay to farmers.
Only a 2.2 percent increase, it pales over past CDC price jumps since February 2022, where milk had already increased by 11 percent.
While economic pundits wonder how the CDC comes up with its numbers, the modest increase appears to keep in mind the already high costs for food and beverages already faced by the Canadian consumer.
If inflation causes the collapse of the dairy producers at the source, consumer prices for milk would surely skyrocket. The CDC sees this 2.2 percent increase as an acceptable increase that can be borne by the consumer without too much difficulty.
“This is really in response to that public request for more openness on our part,” stated CDC chair Jennifer Hayes during a news conference announcing the increase—the first time the organization has held a news conference to explain why it is increasing prices.
While dairy cost increases are not the only ones within the retail food and beverage industry, dairy, along with poultry and eggs are three commodities that are publicly announced because of the federal government controls each has on production, the blocking of imports, and the setting of farm-gate prices.
The Retail Council of Canada said it has worked with the CDC on this latest milk price increase noting that although it will impact consumers, it is, hopefully, more bearable by the consumer.
It should be noted that dairy prices typically increase at a lower rate than food items. According to the consumer price index, food retail prices rose by 10.3 percent in September over the same time in 2021, while dairy increased by 9.7 percent.
As well, the milk price increase and subsequently more money back to the dairy farmer is not a solution to the high inflation costs but is rather a band-aid.
Per Statistics Canada, farm input costs rose more than 17 per cent in Q2 2022 compared to the same period in 2021. The largest input causes are, of course, fertilizer at 80.8 percent up, and fuel costs—fuel, oil, lubes, etc.—up 78.5 percent.