Inside Milk
Substantial increase in milk price in Canada
Dairy farmers in Canada can count on a significant increase in milk prices. The Canadian Dairy Commission has announced a record increase of 8,4% for next year, mainly to offset rising costs. The expectation is that dairy will become considerably more expensive for Canadians as a result.
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To start at the beginning: the milk price in Canada is quite tightly regulated by the government. A national board, with ten representatives from the country's ten provinces, determines the milk price annually. The provinces are expected to follow the Canadian Dairy Commission's recommendation in December. The milk price increase will then be implemented from February 2022.
The 8,4% increase equates to 6 Canadian dollar cents per liter. It is intended to compensate dairy farmers for rising production costs. Just like here in Europe, energy, feed and fertilizer prices have also risen sharply in Canada. Production costs have increased as a result of the corona pandemic. All in all, the Canadian Dairy Commission speaks of a necessary correction in the context of the margin.
Support price for butter also increased
Insiders on the dairy market in Canada speak of a significant increase that will also hit consumers in the wallet. Especially because the support price for butter will also be increased by 12,4% to $9,79 per kilo, for which stocks will be purchased. This means that the bottom in the Canadian butter market is considerably higher.
This increase is significant. For comparison. Between 2016 and 2021, the increase totaled 12%. The estimated milk processing costs will also be increased by 5%, which is good news for dairy producers. Due to price increases in the chain, higher consumer prices are on the horizon. It remains to be seen how much the supermarkets will increase.