Canadian consumers were told last week they will have a six-month reprieve from dairy product price increases, until February 1998.
Then, prices likely will rise as the first of the reductions in the federal dairy subsidy takes effect.
Until February, dairy support prices and the target price for industrial milk will remain frozen, the Canadian Dairy Commission announced Aug. 1.
It means dairy farmers will not receive compensation for input and production costs that have increased during the past year.
However, when the subsidy begins its five stage decline to zero in 2002, the dairy farmer lobby has said it will insist consumers make it up through higher prices.
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Dairy processors say it could add several percentage points to dairy product prices each year as the subsidy falls.
Meanwhile, the dairy farmer lobby last week published data to support its argument that despite some Canadian critics, supply management is a good deal for Canadian consumers.
Dairy Farmers of Canada said the regulated system provides farmers a reasonable income and makes dairy products available to the market at stable and “reasonable” prices.
The lobby published a comparison of Canadian and American consumer prices and farmer returns since the U.S. quit providing milk price supports, allowing prices to fluctuate by demand.
The result has been falling U.S. farmer incomes and rising consumer costs. In Canada, consumer prices have increased less during the past seven years.
The comparisons use 1990 as the base for both, although the average U.S. price in 1990 was lower than the Canadian price. The result is that U.S. prices have been increasing more rapidly, but they are calculated on a smaller base.
Recently elected Dairy Farmers of Canada president Barron Blois said in a statement issued by the group that the comparison proves a lack of price regulation means volatile, unpredictable farm incomes.
When farm prices go up, consumer prices also rise. When farm prices later fall, consumer prices do not.
“Price stability at the producer level is extremely important for consumers,” said Blois.
He said research indicates a basket of nutritious food, including dairy products, costs more in the U.S. than in Canada.
He attributed it in part to stable producer prices guaranteed under supply management.
