Beginning in April, dairy producers will be facing payment changes as processors and industry move to meet consumer demands and trends.
The shift in focus to protein over butterfat increases the ratio paid for protein to 25 per cent of allocated funds, a 15 per cent increase, and decreases the ratio for butterfat to 70 per cent from 85 per cent.
“Always people think production is the driver. Forget about that,” Benoit Basillais, chief executive officer of the Canadian Dairy Commission, said at the 2025 Saskatchewan Dairy Conference in Saskatoon.
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“The consumer decides what you produce and not the other way around. And we always forget that.”
WHY IT MATTERS: Protein from various plant and animal sources is an economic driver in the current food production space.
The CDC has noticed a continuing strength of demand, and even an increasing demand, as consumers seek choices for good protein. Yogurt and cheese are increasing in popularity because of their high protein content.
For 2024 and into 2025, every class of dairy product has grown, including cream, butter, yogurt and cheese.
Consumers are returning to higher fat milk and cream and adopting yogurt, which has brought big changes to the industry.
“This milk, which used to go to butterfat, is now going to yogurt. So the butter makers have to buy cream. They don’t have milk,” Basillais said.
“So big change in the industry in terms of who gets the milk, where gets the milk. So, if you wonder why some processors are worried, that’s a major impact for them. It impacts their relationship, their competitiveness.”
However, butterfat composition has increased, and the industry has been over-producing for three years. The CDC suspects stocks will continue to remain high in 2026.
Processors are continuing to buy, so there isn’t a worry there, but there’s a strong likelihood of dairy products going on sale.
The dairy industry has adjusted to meet the new consumer demands, but a number of concerns still remain.
Market access is at the top of the list, along with a weakening supply management system, the balance of the milk class system and Canadian milk exports, particularly with the Canada-U.S.-Mexico Agreement review soon underway.
“The U.S. has frequently portrayed Canada’s dairy system as part of an unfair trade landscape,” said David Wiens, president of Dairy Farmers of Canada.
“And in truth, the United States already enjoys substantial care free access to our market under the current agreement.”
Dairy and trade in 2026
While the Canadian government has made promises to protect the system, the DFC continues to remind it of its promise to make no new trade concessions.
Earlier in the fall, DFC set up a website for producers and industry to share their concerns, which were sent to Global Affairs Canada. The main concerns were over how concessions stifle growth, reduce industry value and impact farm growth and on-farm investment.
“We’ll have to watch them very carefully that they don’t try to go down some of these avenues, no matter what form they take,” Wiens said.
“Concessions have a way at chipping away at Canada’s food sovereignty and security, and in many cases, the pieces that are given away are irreplaceable.”
Despite these concerns, there has been a silver lining in the trade battle with the United States: Canadians are being adamant in their choice of domestically produced food.
“Canadians care about buying homegrown foods, but they also want assurances that what they buy is produced with animal care, food safety and quality in mind,” Wiens said.
The DFC has also been advocating and working on interprovincial trade and finding ways to meet consumer environmental values.
