Milk prices in Canada could rise for the second time in a year following a rare request from Dairy Farmers of Canada for a mid-year price hike due to inflation.
The industry lobby says Canadian dairy farmers are struggling with unprecedented price increases for the goods and services they need to produce milk.
However, industry observers say people can’t afford another price hike.
They warn that dairy processors are likely to adopt additional increases if the application is approved, raising retail costs to unsustainable levels and increasing food insecurity.
“Businesses are accompanied by these increases, so it’s becoming a double success,” Gary Sands, senior vice president of public policy for the Canadian Federation of Independent Groceries, said Saturday.
“Canadians are facing very high affordability pressures. They have lost sight of the impact on the consumer.”
The Canadian Dairy Commission said on Thursday it had received a request from Dairy Farmers of Canada in late May to activate the “exceptional circumstances process” and allow for a rise in the price of milk by mid-year.
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The demand comes after milk prices on the farm rose six cents a liter, or about 8.4%, on 1 February. Dairy prices are usually reviewed once a year.
The commission said it would hold consultations later this month and issue its decision around June 17.
The federal agency, which oversees Canada’s dairy industry and supply management system, said the milk price increase would take effect on Sept. 1.
‘Lack of transparency’
Dairy Farmers of Canada declined to share the amount of increase you are looking for.
“Lack of transparency is a problem,” Sylvain Charlebois, a professor of food distribution and policy at Dalhousie University, said Saturday.
“They have just assessed the cost of producing milk in Canada and pushed for a record increase. Now they suddenly need more and give stakeholders only a couple of weeks to prepare for the consultations, which will not be public.”
A Holstein cow is grazing on a dairy farm near Calgary in 2016. (Jeff McIntosh / The Canadian Press)
Dairy farmers in Canada said in a statement on Thursday that the price of milk on the farm is being adjusted in a completely open process.
“This transparency is one of the many benefits that Canadians get from our supply management system,” the group said.
The usual price review once a year creates a gap between the actual cost of producing milk today and the annual adjustment, Dairy Farmers of Canada said.
“Exceptional circumstances require a half-year adjustment to alleviate this gap,” the group said.
In less than a year, fertilizer costs have risen 44 percent, fuel has risen 32 percent and animal feed has risen 8 percent, Dairy Farmers of Canada said.
Sands questioned whether the price of milk would be reduced if these entry costs were reduced.
“If these supply chain challenges that drive up costs start to decline in the coming months, will prices go down?”