Milk Price to Go Up Again in February: Canadian Dairy Commission

Milk and dairy products are displayed for sale at a grocery store in Aylmer, Que., on May 26, 2022. (Sean Kilpatrick/The Canadian Press)

The Canadian Dairy Commission, which oversees federal and provincial dairy policies, will proceed with another round of wholesale milk price hikes effective Feb. 1.

The Crown corporation, which already introduced two price hikes in 2022—8.4 percent last February, and 2.5 percent last September—will have the farm gate milk price rise by another 2.2 percent starting next month.

The Commission said the hike took into account inflation, as well as production costs incurred by dairy farmers.

“Producers face increases in feed costs, fertilizer costs, fuel costs and interest rates,” it said in a statement, as reported by Blacklock’s Reporter.

The February hike to the cost of milk used for making dairy products such as ice cream, yogurt, cheese, and butter means further impact on the retail and restaurant sectors, which ultimately affects the consumers.

According to Statistics Canada on Jan. 17, the price for dairy products rose on average 8.6 percent in 2022 compared with the previous year.

Speaking at the House of Commons on Oct. 27, 2022, Conservative MP Philip Lawrence raised his concern for Canadian families dealing with food inflation.

“There are literally moms out there who are watering down milk,” he said.

Profiteering ‘Completely False’

Dairy farmers denied profiteering. Testifying before the Commons finance committee late last September, Martin Caron, general president of Québec’s Union des Producteurs Agricoles, said input prices for the agricultural sector rose 20 percent between the first quarter of 2021 and the first quarter of 2022, according to Statistics Canada’s farm input price index.

“Three of the major production inputs—feed, fertilizer, and fuel—experienced price increases of 100 percent, 60 percent, and 50 percent, respectively, which is much higher than the CPI [Consumer Price Index],” he said.

“It is important to remember that the price of agricultural products is only a fraction of the price of food we find on grocery store shelves,” said Caron, who is also a dairy producer himself.

“For example, for every $1 spent in Quebec on beef, less than $0.38 goes back to the producer. For yogurt, only $0.13 of every dollar consumers spend goes back to dairy farmers.”

Pierre St-Laurent, CEO of Empire Company Ltd., which operates the Sobeys chain, also denied profiteering, saying his company did not seek to profit from inflation in any way.

“Many people believe that retailers are deliberately profiting from inflation,” he testified before the Commons agriculture committee on Dec. 5. “I can’t speak for the other retailers, but I can assure you that this is completely false in the case of Empire.”

‘Writing Cheques’

In August 2019, the federal government announced $1.75 billion in compensation for Canadian dairy farmers, saying it was meant to offset a loss of market share that resulted from free trade agreements with Europe and countries on the Pacific Rim.

Canada’s approximately 11,000 dairy producers, about half of whom are in Quebec, would receive the money over eight years, with $345 million distributed that year.

Up to $468 million and $469 million in direct payments were made to the dairy farmers in 2020 and 2021. On Dec. 19, 2022, the Liberal government announced the fourth payment totalling $468 million.

In an interview with the Financial Post in August 2019, Sylvain Charlebois, director of the Agri-Food Analytics Lab and a professor in food distribution and policy at Dalhousie University, said the $1.75 billion compensation for dairy farmers would be based on “hypothetical losses” instead of hard evidence of lost profits due to trade deals.

“We’re setting out $1.75 billion to ‘quote-unquote’ compensate dairy farmers without really having a strategy to understand what the implications are from a trade perspective,” he said.

“That’s a key thing. We know that market access will increase and it’s likely we’ll need less domestic milk but we don’t know how much. So we’re just writing cheques.”

The Canadian Press contributed to this report.