OTTAWA, ON, Nov. 1, 2024 /CNW/ - In October 2024, the Canadian Dairy Commission (CDC) conducted the annual review of Canadian farmgate milk prices. As a result of the review and consultations with stakeholders, the CDC intends to implement the following changes on February 1, 2025.
The farmgate price of milk will decrease by 0.0237%, which translates to less than 1 cent per litre of milk sold to processors. This decrease is the result of the National Pricing Formula, a pricing mechanism that was determined by the industry. It considers dairy farmers' costs of production as well as the consumer price index.
While the general inflationary environment was above Canada's targets in 2023, on-farm productivity gains and certain input costs, such as feed, were lower and helped balance total costs of production.
This adjustment means the cost of milk used to make dairy products such as milk, cream, yogurt, cheese and butter for the retail and restaurant sectors will decrease by 0.0237%. The net impact of this decrease on retail prices is unknown since retail prices are also influenced by other factors in the supply chain such as labour, transportation, distribution and packaging costs. A change in price paid to farmers for their milk does not necessarily translate to a similar retail price change as it is only one of the elements that affect prices for consumers.
The CDC is grateful to the following stakeholders for their contribution to this year's milk pricing review process: Dairy Farmers of Canada, Dairy Processors Association of Canada, Canadian Federation of Independent Grocers, Restaurants Canada, and Retail Council of Canada.
The new farmgate milk prices will become official once they are approved by provincial authorities later in 2024.
Quote
"Despite a continued inflationary environment, producer efficiencies and productivity gains have contributed to help balance on-farm costs this year, resulting in a decrease in the cost of production. The National Pricing Formula combined with our consultation process have successfully captured this reduction. We thank our stakeholders for their continued participation and support in our pricing consultation process."
Jennifer Hayes, Chair
Canadian Dairy Commission
Quick facts
- The 0.0237% decrease is the result of the National Pricing Formula, a pricing mechanism that was determined by the industry. It takes into account 50% of dairy farmers' costs of production as well as 50% of the consumer price index.
- Regulating the price of milk is one of the elements of the supply management system for dairy. However, only the price of milk that farmers get is regulated. With the exception of fluid milk in some provinces, the retail price of dairy products is not regulated in Canada. After the milk leaves the farm, it enters the market where supply, demand and other factors influence the price.
- Farm gate milk price adjustments may have an impact on the retail price of all dairy products, although the size of the impact will depend on decisions of players along the supply chain regarding their own costs.
- In the last year, the average annual consumer price index for dairy products increased at a slightly lower rate (2.0%) than all food products (3.4%). In the last five years, the average annual consumer price index for dairy increased by 23.8%. This compares to 29.5% for meat, 40.2% for eggs, and 15.1% for fish.
Useful links
- Information on the methodology of the cost of production survey and pricing
- Details on the cost of production survey
- Frequently Asked Questions on the Price of Milk
SOURCE Canadian Dairy Commission
For more information, please contact: Philippe Charlebois, Executive Director, Corporate Services, Tel.: 613-220-5238, Email: [email protected]
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