Government-regulated support prices for skim milk powder will give dairy farmers an increase of slightly more than one percent for industrial milk effective Feb. 1, 2007, the Canadian Dairy Commission has announced.
While that is a smaller increase than has been the norm in recent years, food industry and processing officials questioned why prices are going up at all.
The price of table milk is set by provincial marketing boards and they typically use federal price supports as a template for setting fluid milk prices.
“The federal industrial support price is important because it does send signals on what the price should be in the fluid (table) market,” Canadian Dairy Processors’ Association president Don Jarvis said in late December. “It will be interesting to see if provincial boards actually follow this increase or ignore it, because in our opinion, this increase was not justified.”
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He said processors are happy that the increase is small.
They are not so happy that the dairy commission did not explain why any increase was needed.
“Going by the cost-of-production formula, it would have signalled a price decrease,” he said. “We really need more transparency on how these prices are set by the dairy commission.”
The Canadian Restaurant and Foodservices Association, a critic of regulated dairy pricing, denounced the latest price increase as an unwarranted decision and another blow to dairy demand in Canada.
The Toronto-based association said industrial milk prices have increased 53 percent in the past 12 years, double the rate of inflation. One of the results has been a decline in consumer consumption of dairy products and a slice into the margins of businesses that sell dairy products such as pizza.
“Canadian dairy prices have been artificially inflated for many years to the point that we pay among the highest prices in the world for dairy products,” association vice-president Ron Reaman said.
“The restaurant industry wants to grow the market for dairy products but it’s getting more and more difficult to do so within the existing pricing structure.”
Dairy Farmers of Canada communications official Thérese Beaulieu said the increase is reasonable.
“It is not even inflation but we think smaller increases are the appropriate way to go now,” she said Dec. 21.
The dairy commission said while butter support prices will not increase in 2007, support prices for skim milk powder used in many manufactured food products will, boosting the price for industrial milk at the farmgate by 1.06 percent or 0.75 cents per litre.
“I believe that this small increase is appropriate in the current marketplace,” dairy commission chair John Core said.
