As of May 1, Canadians have begun to notice a rise in milk prices due to the annual review of farm gate milk prices by the Canadian Dairy Commission (CDC). This price adjustment is not related to health concerns such as avian flu but rather reflects changes in the economic environment affecting dairy production.
Farm gate milk prices, which are the prices dairy farmers receive directly at their farms, are crucial in determining the cost of milk and dairy products across the country. These prices are set through a regulated supply management system, which aims to stabilize dairy farmers’ incomes and align milk supply with domestic demand.
The CDC, responsible for setting these prices, considers various factors including feed, labor, and other operational costs. This year, the price of milk has been adjusted by 1.77%, an increase of approximately $0.0153 per liter. This change is based on the National Pricing Formula, which accounts for half of the dairy farmers’ production costs and half of the consumer price index.
The price increase, although seemingly small, reflects broader economic pressures such as inflation and rising interest rates, which impact the entire dairy value chain from production to consumer sales. Last year’s increase was slightly higher at 2.2%, driven by rising costs for feed, fertilizer, and fuel, alongside higher interest rates and supply chain disruptions.
The new prices, reviewed last October and approved by provincial authorities in December, came into effect on May 1, 2024, after a delay from the initially planned date in February. This adjustment affects not only the price of milk but also other dairy products like cream, yogurt, cheese, and butter across retail and restaurant sectors.