Milk price increases, restaurant operators stew. What else is new?

Wednesday, December 3, 2008

© Copyright AgMedia Inc

by BETTER FARMING STAFF

Canadian Restaurant and Foodservices Association spokesman Ron Reaman says he’s disappointed the Commission announced Wednesday that the price increases – nearly seven cents a kilogram for skim milk powder and more than five cents a kilogram for butter – will take effect Feb. 1, 2009.

The increases are the equivalent to a one per cent rise in industrial milk revenue for producers, or $0.74 per hectoliter (one hectoliter equals 100 litres). The increase applies equally to all provinces.

“We’re just really concerned that we are not going to be able to continue to pass through the kind of premium pricing on dairy products and be an effective sales channel for the dairy industry,” says Reaman.

He explains that the country’s foodservice industry is projecting a 2.2 per cent decline in overall sales and growth in 2009 and adds milk consumption has dropped in recent years.

The association also objected to an unscheduled industrial milk (used to make products such as ice cream, cheese and yogurt) price increase of two per cent on Sept. 1.

Tom Kane, president of the Ontario Dairy Council, which represents dairy processors and marketers, calls the Feb. 1 increase routine.

“It was expected,” he says. “I don’t think there’s surprises in it.”

“It happens every year as of Feb. 1.”

While no dairy processor wants the price increase, “it is part of the system,” he says. “We don’t have much say in the matter.”

He says industry figures show consumption of milk products have decreased slightly but are remaining relatively stable, despite the economic climate.

In the Commissions news release, its chair, Randy Williamson, states: “Our data show that Canadian dairy producers’ revenues are lagging behind the increases that we saw in the cost of feed, fuel and fertilizers for most of 2008.”

The new price for butter includes a reduction of two cents per hectolitre in the carrying charges collected by the Commission to pay for butter stocks storage. BF