Butter, skim milk powder support prices increase
Saturday, December 3, 2011
by SUSAN MANN
Rising feed and fuel costs for dairy farmers has prompted the Canadian Dairy Commission to increase the support price for butter and skim milk powder effective Feb. 1, 2012.
The move has also increased the Canadian Restaurant and Foodservices Association’s ire as it again called on the commission to reduce prices.
Support prices are what the commission uses to buy and sell butter and skim milk powder to balance seasonal demand changes on the domestic market. They’re also used as references by provincial marketing boards to price industrial milk used to make products, such as yogurt, cheese, butter and skim milk powder. The support price for butter rises to $7.2810 a kilogram from $7.1922 while for skim milk powder it is being increased to $6.3673 a kilogram from $6.2721.
For farmers, the support price increase translates into a 1.5 per cent or $1.14 a hectolitre increase in revenue for industrial milk. Provincial authorities determine the price farmers get for fluid milk and cream through a process that’s independent from the commission’s Friday announcement.
Phil Cairns, Dairy Farmers of Ontario senior policy adviser, says in Ontario the price for fluid milk is decreasing by 66.5 cents a hectolitre effective Feb. 1, 2012. For provincial farmers the combination of the industrial price increase and fluid decrease will result in their blend price increasing by half a percent.
The fluid price decrease is being implemented in Ontario to correct an increase in August that was higher than it should have been, Cairns says.
About the industrial increase, the commission’s data shows the cost of producing milk in Canada has increased by 2.2 per cent in 2010. Commission chair Randy Williamson says in a press release feed costs have increased by almost 10 per cent and fuel prices have risen by more than 20 per cent.
“This 1.5 per cent increase in support prices is about half of the current inflation rate for food,” he says.
Justin Taylor, restaurant association vice president of labour and supply, says they recognize the commission didn’t implement as high of an increase as it could have.
But “we’re disappointed to see the price is increasing again especially at a time when our customers are really trading down to more value menu items,” he says, noting food costs for other items, such as chicken and beef have also risen.
As for the impact of the support price increase on retail prices, the commission’s press release says that’s influenced by many factors throughout the supply chain, including manufacturing, transportation, distribution and packaging costs.
In a Nov. 28 letter to Prime Minister Stephen Harper, Garth Whyte, restaurant association president and CEO, called on the government to appoint a commission CEO upon current CEO John Core’s retirement at the end of December who will work to create a dairy system in Canada that is fair and transparent to farmers, processors, restaurateurs and consumers.
Canadian restaurateurs buy more than $2.7 billion worth of dairy products annually and “we are concerned that dairy consumers’ concerns do not receive the consideration that they should under the current system,” he says in the letter, also sent to federal Agriculture Minister Gerry Ritz, and adds that “more reasonable pricing” will help restaurateurs sell more dairy products.
Reducing the price dairy farmers get for their milk would have little, if any, impact on how much consumers pay for dairy products in supermarkets or restaurants, it says in a fact sheet on Dairy Farmers of Ontario’s website. BF