Producers to see a 2.3% price adjustment as feed and labour costs continue to rise
The Canadian Dairy Commission (CDC) has announced a 2.3255% increase in farmgate milk prices, effective February 1, 2026. The decision follows the CDC’s annual review and consultation process with producers, processors, and retail stakeholders across Canada.
The adjustment is based on the National Pricing Formula (NPF) — a system created by the industry to reflect real production costs and inflation. While Canada’s inflation rate stayed within the target range in 2024, dairy producers continued to face rising costs for feed and labour.
“Although Canada’s inflation rate stayed within the target range throughout 2024, producers faced ongoing financial challenges due to higher animal feed and labour costs,” said Jennifer Hayes, Chair of the Canadian Dairy Commission. “Next year’s increase aligns with inflation and reflects the real costs of producing milk while maintaining sector stability and consumer affordability.”
Helping Producers Manage Rising Costs
The 2.3% increase aims to help farmers manage higher input expenses while keeping consumer prices stable. It represents just over two cents per litre of milk sold to processors.
The CDC will also raise its carrying charges, which help offset the costs of storage programs. Combined, these adjustments mean a total processor price increase of 2.3750% for milk used in products such as cheese, yogurt, cream, and butter.
However, the CDC notes that a change in farmgate prices does not always lead to higher retail prices. The final cost of dairy products is also influenced by factors like packaging, labour, transportation, and distribution.
Input from Industry Stakeholders
The CDC worked closely with several industry organizations in this year’s review. These included Dairy Farmers of Canada, the Dairy Processors Association of Canada, the Canadian Federation of Independent Grocers, Restaurants Canada, and the Retail Council of Canada.
Together, the group reviewed how the National Pricing Formula should respond to both inflation and production costs. The formula combines 50% of the change in production costs and 50% of the change in the Consumer Price Index (CPI).
Dairy Prices Remain Stable
In 2024, the average CPI for dairy products increased by 2.7%, nearly matching the 2.5% increase for all food items. Over the past five years, dairy product prices rose 21%, close to the 24% increase for all foods. Comparable proteins such as eggs and meat climbed higher, up 28% and 26% respectively.
These trends show that while dairy prices have grown, they have done so in line with overall food costs, maintaining relative stability.
What Happens Next
The CDC’s price recommendation will become official once approved by provincial authorities later in 2025. The modest increase aims to balance two priorities: financial sustainability for dairy producers and affordability for consumers.
