Dairy farmers can expect roughly a 1.5 per cent uptick in per-hectolitre revenue for industrial milk starting in February, from a raise in the support prices used to pencil out that revenue.
The Canadian Dairy Commission on Friday announced increases in the support prices for butter and skim milk powder to take effect Feb. 1, 2012.
The data collected by the commission shows a 2.2 per cent increase over the past 12 months in the cost of producing milk, CDC chairman Randy Williamson said in a release.
"In particular, the cost of feed increased by almost 10 per cent and the cost of fuel, by over 20 per cent," he said. "This 1.5 per cent increase in support prices is about half of the current inflation rate for food."
The supports to be raised are the prices at which the CDC buys and sells butter and skim milk powder, as a way to balance seasonal demand changes on the domestic market.
Provincial marketing boards use the CDC’s support prices as their references when pricing the industrial milk used to make products such as yogurt, cheese, butter, ice cream and skim milk powder.
The support price for butter, starting Feb. 1, will rise to $7.281 per kilogram, from the $7.1922 set at this time last year. That will include a reduction of two cents per hectolitre in the carrying charges collected by the CDC to pay for the storage of the normal butter stocks.
The support price for skim milk powder, meanwhile, will rise Feb. 1 to $6.3673 per kg, up from $6.2721. The margin received by processors for the skim milk powder purchased by the CDC will increase by 12 cents per hectolitre, to account for rising processing costs, the commission said.
In all, the increases are expected to translate to a revenue increase of about $1.14 per hectolitre paid to dairy producers for industrial milk.
"Bringing the cheese"
The support prices are based on an annual CDC survey on the cost of milk production, followed by consultations on milk prices with producers, processors, retailers, restaurateurs and consumers.
The commission, in setting those supports, says it also considers dairy processors’ margins and indicators such as the Consumer Price Index.
The Canadian Restaurant and Foodservices Association (CRFA), a longtime critic of the pricing of Canadian dairy goods, noted the increase comes in below the CDC’s estimated 2.2 per cent increase in the cost of production.
However, the CRFA added Friday, prices have climbed nine times faster than cost of production over the previous 16 years.
"Those of us who are stuck bringing the cheese platter to a holiday party this year already know how pricey dairy products are," Justin Taylor, CRFA’s vice-president for labour and supply, said in a release. "Thanks to the CDC’s decision, we will be paying even more next year."
"If we want to grow the dairy market in this country, we need more reasonable prices," CRFA CEO Garth Whyte said.
Dairy Farmers of Canada had no comment available Friday other than to say the CDC has "exercised its discretion" in weighing farmers’ increased costs for items such as feed and fuel against the current economic climate.