Source: Dairy Farmers of Canada
Canadians are being squeezed by inflation the likes of which we haven’t seen in almost a generation. Dairy farmers and their families are no different. In addition, they are facing never-before-seen price increases for the goods and services they need to produce milk. In less than a year (Jul. 2021 to Mar. 2022), costs have increased drastically for fertilizer (+44%), fuel (+32%) and animal feed (+8%), just to name a few. The upward pressure on costs is expected to continue.
That is why DFC requested that the Canadian Dairy Commission (CDC) consider an advance adjustment in the farmgate price of milk. Normally the CDC adjusts dairy farmgate prices once a year to reflect changes in the production cost. This adjustment is based on numbers from the past year and do not reflect the current prices of inputs, which are skyrocketing. This methodology creates a gap between the true costs of producing milk today and the next annual adjustment. The exceptional circumstances require a mid-year adjustment to alleviate this gap.
By and large, Canadians understand that dairy farmers are not the cause of food inflation but have to adapt to the current reality just like everyone else. Unlike producers of other goods and services, who can adjust their prices behind closed doors, the farmgate price of milk is adjusted in an entirely open and transparent process through the CDC. This transparency is one of the many benefits Canadians get from our supply management system.
Dairy farmers understand the pressures that consumers are facing in all walks of life and as consumers too, we share those same concerns. It is important to note that dairy farmers do not set prices at retail, or in foodservice and the farmgate price of milk is just one of the many factors that go into the cost structure for the price paid by consumers for dairy products.
After the challenges of the pandemic and the war in Ukraine, Canadians understand, as perhaps never before, how vulnerable they are to supply chain disruptions. Self-sufficiency in our food production is essential; supply management is a pillar of food sovereignty that has and will continue to protect Canadians now and into the future.