Dairy farmers seek second milk price hike this year, citing inflation

Milk prices in Canada could rise for the second time in a year following a rare demand from Dairy Farmers of Canada for a mid-year price hike due to inflation.

The industry lobby group says Canadian dairy farmers are grappling with unprecedented price increases on the goods and services they need to produce milk.

Still, industry watchers say people can’t afford another price hike.

They warn dairy processors are likely to add further increases if the request is approved, pushing retail costs to unsustainable levels and increasing food insecurity.

“Businesses are adding to these increases, making it a double whammy,” said Gary Sands, senior vice-president of public policy for the Canadian Federation of Independent Grocers, on Saturday.

“Canadians are facing very significant affordability pressures. They lost sight of the impact on the consumer. »

The Canadian Dairy Commission said Thursday it received a request from Dairy Farmers of Canada in late May to trigger the “exceptional circumstances process” and allow a mid-year milk price hike.

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The demand comes after farm gate milk prices rose 6 cents per litre, or about 8.4%, on Feb. 1. The prices of dairy products are generally revised once a year.

The commission said it would hold consultations later this month and deliver its decision around June 17.

The federal body, which oversees Canada’s dairy industry and supply management system, said the milk price increase will take effect on September 1.

‘Lack of transparency’

The Dairy Farmers of Canada refused to share the amount of the increase they are asking for.

“The lack of transparency is a problem,” said Sylvain Charlebois, professor of distribution and food policy at Dalhousie University, on Saturday.

“They just assessed the cost of producing milk in Canada and imposed a record increase. Now, out of the blue, they need more and they’re only giving stakeholders a few weeks to prepare for the consultations, which won’t be public. »

Dairy farmers seek second milk price hike this year citing
A Holstein cow stands in a pasture on a dairy farm near Calgary in 2016. (Jeff McIntosh/The Canadian Press)

The Dairy Farmers of Canada said in a statement Thursday that the farmgate milk price is adjusted through a fully open process.

“This transparency is one of the many benefits Canadians derive from our supply management system,” the group said.

The usual once-a-year price review creates a gap between the true cost of producing milk today and the annual adjustment, Dairy Farmers of Canada said.

“Exceptional circumstances necessitate a mid-year adjustment to close this gap,” the group said.

In less than a year, the cost of fertilizers has increased by 44%, that of fuel by 32% and that of animal feed by 8%, according to the Dairy Farmers of Canada.

Sands wondered if the price of milk would be lowered if these input costs went down.

“If these cost-driving supply chain challenges start to ease in the coming months, will they bring prices down? »

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