WINNIPEG — Manitoba milk producers will get a pay increase after their marketing board appealed the way prices are calculated.
The Manitoba Milk Prices Review Commission will authorize a small increase to the price of milk May 1 because of adjustments to its pricing formula imposed by the Natural Products Marketing Council after a hearing last month.
The council, which is a provincial body overseeing the regulated marketing agencies in the province, upheld four out of six complaints the Manitoba Milk Producers Marketing Board lodged against the commission.
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It ordered the two agencies to meet to try to resolve their differences on the remaining two issues — the butterfat base in the formula and herd replacement costs.
The producers’ marketing board was claiming victory after the council’s ruling became public last week.
“We’ve been shown to be reasonable with what we’ve been asking for,” said general manager Jim Wade.
But Daryl Kraft, chair of the pricing commission, said the adjustments will amount to less than a penny a litre. Kraft said the increase will generate $200,000 in relation to $61 million in annual fluid milk sales in the province.
The appeal challenged parts of the complicated formula used to determine how farmers should be compensated for their cost of production. The commission updated the formula in 1992 after reviewing it for the first time in a decade.
Consider farmers’ costs
The milk board contended changes to the formula made by the commission failed to consider real cost increases faced by farmers. For example, the commission lowered prices last summer at a time when feed costs were soaring due to a soggy hay crop.
And the price increase announced Jan. 1 to $59.20 per hectolitre from $56.03 was lower than producers expected because of adjustments to the butterfat calculations, cost of replacement heifers and transportation costs.
Wade said the commission unilaterally changed the way it calculates butterfat so producers must supply more for the same money.
“It removes $740,000 annually from producers’ income,” he said.
But Kraft said changes in the calculations were necessary because of 1992 provincial legislation. In the past, producers were paid on the basis of producing 3.6 kilograms of butterfat per hectolitre.
The commission adjusted the formula base to 3.73 kilograms of butterfat per hectolitre, Kraft said.
