Amidst unceasing pressure for the stabilization of food prices, the Canadian Dairy Commission (CDC) has announced a delay in the previously planned increase in the farmgate price of milk. The intended increase, which amounts to 1.77%, has been postponed from its regular scheduling of February 1 to May 1, 2024, representing a three-month delay. This increase equates to just over a cent per litre.
CDC chair, Jennifer Hayes, attributed the overall influence of inflation as the driving factor behind the move. Not only are the customers feeling the sting, but the entire dairy supply chain, right from the original farmgate to the consumer’s table, is impacted by this economic pinch.
Hayes emphasizes that the CDC consistently seeks to strike a balance between the sustainability of the dairy industry while considering the impact on the consumer base.
The CDC, established as a Crown corporation, carries out an annual review of the milk prices that dairy farmers receive. Ordinarily, these price modifications are implemented the subsequent February. The commission had previously projected the farm-level milk prices potentially escalating by 1.77% by February, based on its indigenous pricing formula.
On the lead-up to the yearly price declaration, the Canadian Federation of Independent Grocers (CFIG) pleaded for a temporary halt on the price rise for farmgate milk. The association reasoned that the grocery industry finds itself grappling with exceptional circumstances this year.
The proposal from the CFIG ignited an alternate process that substituted the routine pricing formula’s outcome with a price determined through stakeholder consultation. Subsequently, the Dairy Farmers of Canada also supported postponing the rise in price.
Gary Sands, CFIG’s Senior Vice-president, expressed gratitude for the decision. Sands stated that while this pause does not necessarily mean that retail prices for dairy items will not continue to rise, farmgate milk alone is but a part of the various elements constituting the prices charged to retailers by dairy processors.
In recent times, Canada’s food supply chain is under federal pressure to maintain stable prices in the wake of soaring inflation and rapidly rising interest rates, which are battering consumers’ budgets. Dairy farmers are also bearing the inconvenient brunt of inflation, despite a balance in feed, fuel and fertilizer expenses, as the gains have been nullified by the escalating interest rates.
As the planned rise anticipates May, Sands suggests the commission reassess the expedience of such an increase. If deemed unnecessary, Sands insisted on advocating for an extended delay. In the wake of the CDC announcement, it is expected that other supply-managed sectors, such as chicken and eggs, will equally feel the pressure to momentarily halt price increases.