Price of dairy going up Feb. 1

Ottawa– The price of milk processed into yogurt, ice cream, cheese and butter is going up 2.2 per cent effective Feb. 1.

The Canadian Dairy Commission this week announced an increase in the support price of butter and a reduction in the support price of skim milk powder effective Feb. 1, 2016. The support price of butter will increase from $7.4046 to $7.7815. The support price of skim milk powder will be reduced from $6.3109 to $4.4176/kg.

“These adjustments in support prices acknowledge the 3.11 per cent rise in the cost of producing milk and are adapted to changing market conditions,” said Alistair Johnston, chairman of the CDC, in a news release.

The CDC expects these adjustments in support prices to add up to an overall revenue increase for for dairy producers of approximately 2.2 per cent for milk processed into milk, yogurt, cheese and butter. Prices received by producers for fluid milk are determined through a process that is separate from this announcement, the release said. Overall increases to producers will depend on the pricing decisions made by provincial authorities.

The impact of these adjustments at the retail level will be influenced by many factors such as manufacturing, transportation, distribution and packaging costs throughout the supply chain.

The margin received by processors for butter and skim milk powder purchased by the CDC under the Domestic Seasonality Programs will remain unchanged. Carrying charges collected by the CDC to pay for the storage of normal butter stocks will also remain unchanged.

“Canada’s antiquated supply management system has created a huge disparity between Canada and the rest of the world when it comes to the price of basic dairy products like cheese and butter,” said Donna Dooher, president and chief executive officer of Restaurants Canada, reacting to the changes in a news release. “Our industry wants to grow the market for Canadian dairy products, but relentless price increases are having the opposite effect.”   

Last year’s one-off price reduction of 1.9 per cent was passed on to dairy processors but was not passed along to restaurateurs or consumers, Restaurants Canada said in its release.