Why milk, butter and other dairy products just got more expensive

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Toronto — The federal increases in the farm gate milk price are now in effect, putting more pressure on dairy processors, restaurants and consumers.

The farm gate milk price rose by $6.31 per hectolitre on Feb. 1. The Canadian Dairy Commission, which is the federal crown corporation responsible for setting the prices and quotas for the dairy industry, said food manufacturers could see the cost of milk increase an average of 8.4 per cent, depending on the amount of butterfat and solids non-fat content in the product.

Sylvain Charlebois, director of Dalhousie University’s Agri-Food Analytics Lab, says this kind of increase could result in some dairy processors, such as cheese makers, struggling to survive.

“Industrial milk in Canada is three times the price of milk that you would find in the U.S. So, it’s very expensive to produce cheese and yogurt,” he told CTVNews.ca over the phone on Friday.

Researchers at the Agri-Food Analytics Lab said in their 2022 Food Price Report that Canadian consumers can expect to pay six to eight per cent more for dairy products – a steeper price hike than that expected for fruits, meat, seafood, vegetables and baked goods.

The commission also increased the support price for butter storage from $8.7149 to $9.7923 per kilogram, representing an increase of 12.4 per cent. The advocacy group representing Canada’s dairy farmers have said that these price hikes were necessary to offset the COVID-19-induced increases in production costs. The commission also cited increases in the feed, energy and fertilizer costs and said there was a 5.0 per cent increase in packaging, labour and transportation costs.

“The increase will partially offset a significant rise in production costs incurred by farmers since the start of the COVID-19 pandemic,” the Dairy Farmers of Canada told CTVNews.ca back in November.

However, Charlebois has called for an end to the quota system and wants to see new supply to enter the Canadian dairy market.

“Our sector is just not competitive,” he said. “What you need to do is open up the system to other dairy farms. Right now, you and I, we can’t become dairy farmers. It’s an exclusive club.”

Charlebois also believes the Canadian Dairy Commission should take into account the impact that price hikes would have on dairy processors, restaurants and other industries down the supply chain.

“They’re raising prices by 8.4 per cent without even considering what would happen to get pizzerias, artisan cheesemakers, anything else. They don’t care. It’s not part of their calculation,” he said.

With files from CTVNews.ca’s Anthony Vasquez-Peddie