SASKATOON – Despite big increases in operating costs, dairy prices will remain unchanged for the rest of the 1995-96 dairy year.
The Canadian Dairy Commission announced last week that after its regular six-month review, there would be no change in the target price for industrial milk and support prices for butter and skim milk powder.
A spokesperson for a dairy farmers lobby group said the decision will tighten the squeeze already faced by the nation’s dairy producers.
Since current prices were established last Aug. 1, overall cash costs have increased by 4.8 percent, with fertilizer costs jumping by 12.3 percent and feed costs rising by 10.3 percent.
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“If those trends continue, that must result in an upward price adjustment this coming August,” said Rick Phillips, policy director for Dairy Farmers of Canada.
The target return for producers will remain at $53.23 per hectolitre of milk containing 3.6 kilograms of butterfat. An additional 12 cents is added to cover the cost of holding stocks and administration. Industrial milk is used to make dairy products like cheese and ice cream.
The support prices remain at $5.43 per kg for butter and $3.93 for skim milk powder. Those are the prices at which the dairy commission will buy those products, and thus act as a floor price in wholesale trade.
The dairy commission said that in deciding to leave prices unchanged, it considered a formula measuring producers’ cost of production, advice from industry members, market conditions and the economic climate.
Industry sources say among the issues considered by the commission would be the effect of any increase on consumption and the relative prices between Canada and the U.S.
Phillips said while the cost of production formula plays a major role in the decision making, it wasn’t considered significant enough for an increase yet.
