Dairy price hike fails to impress

Tuesday, November 30, 2010

by SUSAN MANN

The Canadian Dairy Commission has disappointed both dairy farmers and the Canadian restaurant association with its announcement Friday on butter and skim milk powder support price increases.

Dairy Farmers of Canada says the price increase is too low, while the Canadian Restaurant and Foodservices Association called for industrial milk prices to be rolled back 15 per cent to bring prices in line with inflation. Last year the association wanted a 16 per cent cut but the commission announced the prices would stay where they were.

In its press release, the commission says effective Feb. 1 2011 support prices for skim milk powder will increase to $6.2721 a kilogram from $6.1783. The butter support price will rise to $7.1922 a kg from $7.1024. Support prices are the amounts the commission buys and sells butter and skim milk powder to balance seasonal demand changes on the domestic market.

For dairy farmers the support price increase translates into a revenue increase of 1.5 per cent or $1.12 a hectolitre for industrial milk used to make products, such as yogurt, cheese, butter and skim milk powder.

Jacques Laforge, Dairy Farmers president, says dairy farmers haven’t had an increase in the industrial milk price for 24 months. But their input costs have risen. For example, fuel is up 23 per cent, while feed costs increased seven per cent during the past year.

It has been the commission’s longstanding practice to ensure that at least 50 per cent of the dairy farmers participating in the cost of production survey can recover their costs.
To achieve this goal, the commission would have had to raise prices enough to ensure a $3 per hL increase in prices paid to farmers for industrial milk, Laforge says.

With Friday’s announcement only 40 per cent of dairy farmers can recover their costs, he says.

Restaurant association spokesman Justin Taylor says the price increase will drive dairy consumption down even further. Record high dairy prices and low disposable incomes are already driving consumers to choose menu items other than dairy in restaurants. BF