Source: Canadian Dairy Commission (CDC)
In October 2023, the Canadian Dairy Commission (CDC) conducted the annual review of Canadian farm gate milk prices. As a result of the review and consultations with stakeholders, the CDC has postponed the farm gate milk price adjustment, representing an increase of 1.77%, to May 1, 2024, instead of February 1, 2024. This increase translates to $0.0153/litre (or just over 1 cent per litre).
Like most Canadians, dairy farmers have been feeling the pressures of inflation. Despite stabilizing feed, fuel and fertilizer costs, producer gains were offset by higher interest rates.
This adjustment means the cost of milk used to make dairy products such as milk, cream, yogurt, cheese and butter for the retail and restaurant sectors will increase by an average of 1.77%. The net impact on consumers is also influenced by other factors in the supply chain such as transportation, distribution and packaging costs. The price paid to farmers is only part of the price paid by consumers.
The CDC is grateful to the following stakeholders for their contribution to the annual milk pricing process: Dairy Farmers of Canada, Dairy Processors Association of Canada, Consumers’ Association of Canada, Retail Council of Canada, Canadian Federation of Independent Grocers, and Restaurants Canada.
The new farm gate milk prices will become official once they are approved by provincial authorities.
Quote
“Inflation is impacting Canadians and the dairy value chain from farm gate to consumer’s plates. The CDC always strives to balance consumer impacts with sustainability of the dairy industry. We thank our valued stakeholders for their useful feedback in helping us make this decision.”
Jennifer Hayes, Chair
Canadian Dairy Commission
Quick facts
- The 1.77% increase is the result of the National Pricing Formula, a pricing mechanism that was determined by the industry. It takes into account 50% of dairy farmers’ costs of production as well as 50% of the consumer price index.
- Regulating the price of milk is one of the elements of the supply management system for dairy. However, only the price of milk that farmers get is regulated. With the exception of fluid milk in some provinces, the retail price of dairy products is not regulated in Canada. After the milk leaves the farm, it enters the market where supply, demand and other factors influence the price.
- Farm gate milk price adjustments may have an impact on the retail price of all dairy products, although the size of the impact will depend on decisions of players along the supply chain regarding their own cost increases.
- In the last year, the average annual consumer price index for dairy products increased at a comparable rate (8.9%) to all food products (9.1%). In the last five years, the average annual consumer price index for dairy increased by 21%. This compares to 26% for meat, 36% for eggs, and 17% for fish.
