It’s an annual rite of winter for critics of Canada’s dairy supply management system.
Government support prices for butter and skim milk powder increase and send a signal to the rest of the dairy chain to increase prices.
On Feb. 14, the Canadian Dairy Commission announced that support prices will increase slightly effective April 1, mainly because of the cost of cattle feed based on soaring grain prices. It will mean a 0.9 percent increase in prices that farmers receive for the industrial milk used to create dairy products.
It is the lowest increase in 15 years.
CDC chair Randy Williamson, a former processor, said in a statement announcing the increase that it reflects growing dairy producer costs.
“The change in support price reflects the increase in the cost of inputs, especially the cost of feed,” he said.
“However, it remains considerably lower than the rate of inflation for food, which currently stands at 2.4 percent.”
The Canadian Restaurant and Foodservices Association, one of the primary critics of the relentless increase in dairy prices, acknowledged that the increase is smaller than usual.
Still, CRFA president Garth Whyte estimated the increase will cost restaurants $23 million per year.
He said an increase of any size is unjustified in fragile economic times.
The association is particularly critical of increases in the price of cheese used to make restaurant and fast food products, and White said the CDC should create a special class of pricing for cheese destined for restaurant use.
He said restaurants have to compete with frozen pizza products that receive a 30 percent benefit on the cost of cheese.
“CFRA will keep pushing for lower dairy prices and a special class of pricing that makes cheese more affordable for restaurateurs,” he said in a statement.
Critics also complain that the dairy commission is biased toward the producer sector. At present, two of the three commissioners are producers, including chief executive officer Jacques Laforge, a former president of Dairy Farmers of Canada.
The CDC says its annual pricing decisions are based on cost-of-production surveys, processor margins, industry arguments, inflation rates and the commissioners’ “own judgment, experience and knowledge of the industry.”
The support price establishes what the commission will pay to remove excess butter and skim milk powder from the market to stabilize prices.
Table milk prices are established provincially, but the federal support prices influences the industry price structure.