Canada’s dairy farmers will receive a 3.5 percent, two-cents-per-litre increase in milk prices Feb. 1.
The announcement has unleashed the usual storm of controversy and debate about regulated dairy prices.
The dairy farmer lobby said it was too little, failing to compensate farmers for the impact of bovine spongiform encephalopathy and the impact it had on cull cow values.
The Consumers Association of Canada called it a ripoff of consumers.
The Canadian Dairy Commission said it was doing its job, setting support prices for dairy products at levels meant to compensate farmers for most costs, take into account inflation plus processor and consumer interests.
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The commission, a government crown corporation headed by former Dairy Farmers of Canada president John Core from Ontario, establishes prices at which it will buy surplus butter and skim milk powder to keep market prices stable.
This sets a floor and influences the prices paid by processors for industrial milk and prices set by provincial milk boards for consumer table milk.
In 2002, the CDC promised dairy farmers prices would rise enough to allow at least half of them to cover their full costs of production by 2006.
This year’s increase is larger than those normally triggered by inflation and cost increases.
“This increase will bring full coverage of costs up to 40 percent of farmers,” said commission communications official Chantal Paul. “Last year, it was 37 percent.”
Dairy Farmers of Canada conceded there was progress in covering more farmer costs.
“This increase is an additional step taken by the CDC to move towards fulfilling its commitment to close the price gap to ensure that 50 percent of dairy producers can cover their cost of production by the year 2006,” said the dairy farmer lobby. “However, it ignores the incremental cost burden that producers must currently bear.”
It was referring to losses from BSE-diminished returns for older cows culled from dairy herds, usually between 10 percent and 20 percent of the herd each year. The dairy lobby insists the government BSE aid packages, including a cull cow program, are not adequate.
DFC noted that the dairy processor margin increased by the same 3.5 percent as dairy farmers received.
The consumers’ lobby was scathing, arguing the dairy commission has failed to fulfil its duty to consumers because it always grants an increase to producers in its annual price setting.
“We think the government has a problem because the CDC is not performing as it ought to,” CAC vice-president Peggy Kirkeby said in an interview from Edmonton. “We do not think consumers are treated fairly in the process.”
A statement from the consumers’ association called on new prime minister Paul Martin to review the way the CDC operates.
