Price of milk, yogurt and cheese likely to 'skyrocket' next year.
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The Canadian Dairy Commission, a crown corporation that sets the price that dairy farmers get for their milk, is recommending an increase of 8.4 per cent, to make up for big jumps in the cost of feed, fuel and equipment. PHOTO BY COLE BURSTON/GETTY IMAGES

Sylvain Charlebois, a professor and often-quoted expert in Canadian food matters, got a call on Friday night from a friend who works in dairy processing.

The Canadian Dairy Commission, a crown corporation that sets the price that dairy farmers get for their milk, had just put out a statement recommending an increase of 8.4 per cent, to make up for big jumps in the cost of feed, fuel and equipment.

Charlebois, who runs the Agrifood Analytics Lab at Dalhousie University in Halifax, thought it must be a mistake.

“You’re crazy,” he remembered telling his friend. “That’s too much.”

But the price hike, if approved by provincial authorities, will take effect in February, amounting to an extra six cents per litre for processors that buy milk from farmers and turn it into retail-ready products. That, in Charlebois’ estimation, is an increase of historic proportions that will ripple through the food chain, most likely causing the price of milk, yogurt and cheese to “skyrocket” in supermarkets next year.

It was the sort of thing that deserved more than a news release posted to a government website on a Friday afternoon, he thought. So the professor took to Twitter to vent his frustration, launching what would end up being a public, weekend-spanning diatribe against the way supply management is carried out in the dairy industry.

“Dairy farmers want more money? Fine, but stop hiding your numbers and show verified data and more transparency to the Canadian public,” Charlebois wrote in one tweet on Sunday.

“It’s so opaque, it’s unbelievable. And their decisions will impact many, many Canadians,” he said later in an interview. “What I’m always disappointed in is how they communicate it to the public, which they don’t. They just post something on their website that nobody looks at.”

Canada’s often-divisive supply management system for dairy, poultry and eggs is meant to shelter farmers from wild price fluctuations in the market by setting a universal price at the farm gate, while also setting a cap on domestic production and limiting the amount of imports allowed into the country.

In the dairy sector, the price is set provincially, based on a recommendation from the dairy commission in Ottawa. The provinces are expected to accept this year’s recommendation.

“They’re going to price themselves out of the market,” Charlebois said. “Imagine you’re a yogurt producer or a cheesemaker and you have to pay that much.”

Mathieu Frigon, chief executive of the Dairy Processors of Canada, sided with Charlebois, saying in a statement that the commission needs to “share its rationale with industry and consumers.”

The commission responded to Charlebois’ criticisms on Sunday, saying its recommendation for an price increase is informed by an annual study on the cost of production for dairy farms, designed with help from Statistics Canada, involving an accounting firm and an economic study group that collects and verifies data from a sample of 220 farms.

“I’m really not sure what more he would want,” said Chantal Paul, the dairy commission’s director of corporate services.

She agreed this year’s increase is abnormally high — the last two annual increases hovered around 2 per cent — but the extra six cents a litre won’t fully offset the added costs of production on farms in some cases.

“It is high. It is higher than what we normally see. I’ve been at the Canadian Dairy Commission for almost 20 years. To my recollection, it is the highest,” she said.

The Dairy Farmers of Canada (DFC) said in a statement that the cost of livestock feed alone has increased more than 27 per cent in the last two years, while equipment costs are up nearly 20 per cent and fuel is up more than 30 per cent.

Still, DFC president Pierre Lampron argued that even with the latest price increase, dairy products are “below the increases observed for many other foods since the beginning of the pandemic.”

It’s been over a year since the COVID-19 pandemic caused milk prices to plummet…

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