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Milk prices on the rise: Study

Retail milk prices are up almost across the country since last summer, thanks to production cost increases introduced in February, according to a new report from Field Agent.

The Fluid Milk Report tracks prices on 2% milk in markets across the country. On average, the price for four litres of 2% milk went up 3.1% since last June when the study was last published, and increased in 17 of 19 markets.

The main reason for the 3.1% increase was a 1.93% increase in the farm gate price that took effect on Feb. 1, said Jeff Doucette, general manager for Field Agent Canada.

The farm gate price is determined by the Canadian Dairy Commission, using a formula that takes into account production cost increases at the farm level, while still ensuring farmers make a profit. The farm gate increase was the “trigger” for a shelf price increase, said Doucette.

“It seems like processors and retailers have taken the opportunity to increase margins in this notoriously low margin business when they set the new price after Feb. 1,” said Doucette. “They added the farm gate increase plus a profit increase for the processors and/or retailers.”

In 14 markets Field Agency surveyed, the shelf price increase was greater than that taken by the farmers. “In Calgary, the average cost of four litres of 2% milk has gone up by 8.3% since June, more than four times the farm gate increase.”

The least expensive milk in Canada was at several Costco stores in Ontario where four litres of 2% sold for $4.45 (about $1.11/litre).

The most expensive milk was in Mac’s stores in Western Canada (B.C., Alberta, Saskatchewan and Manitoba) where two litres of 2% went for $5.29 ($2.65/litre).

The city with the cheapest milk is Sudbury it costs, on average, $1.13/litre and the city with the most expensive milk is Charlottetown with an average price of $1.74/litre.

The main reason for the widely different prices is the trade barriers between provinces and quota systems set by the provinces, said Doucette.

In smaller provinces, smaller farms and processing plants mean higher costs of production that are passed along to the consumer. “Compare this to Ontario which has bigger farms, more efficient processing and a larger population resulting in the lowest milk prices.”

To bring down costs in more expensive provinces it would take a national farm gate price, “squeezing out inefficient smaller farms,” said Doucette. Milk could be processed in more efficient plants in Ontario and Quebec and be shipped anywhere in the country. “[T]he system today forces moms to pay a high price for milk to prop up the dairy farming industries in each province.”


Milk products recalled in Ontario, Quebec due to sanitizer contamination

imagesThe Canadian Food Inspection Agency says the Agropur Co-operative is recalling some of its milk products in Ontario and Quebec due to the presence of sanitizer.

The recall involves Sealtest brand products, including skim milk, 1%, 2%, and 3.25% milk in various container volumes with best before dates of Feb. 8, 2020.

It also involves the L’ecole, c’est nourissant brand’s two per cent milk in 150 ml cartons, also with the Feb. 8 best before date.

Food contaminated with sanitizer may not look or smell spoiled, however, consumption may cause symptoms such as nausea, upset stomach or vomiting.

The CFIA says there has been one reported illness linked to the recalled products.

The agency says anyone who has the recalled milk should throw it out or return it to the store it came from.

Is lab-grown dairy the next food frontier

Screen Shot 2019-06-18 at 11.07.29 AMLab-grown meat is getting a lot of attention along with plant-based meat substitutes. Technology is driving the industry toward providing alternatives to conventionally-produced food products. Dairy proteins may be the next product produced in a lab, for use in fluid “milk” production and processed dairy products such as yogurt and cheese, to name a few.

Winston Churchill predicted the rise of synthetic foods in 1931.

“We shall escape the absurdity of growing a whole chicken in order to eat the breast or wing, by growing these parts separately under a suitable medium. Synthetic food will, of course, also be used in the future.”

While it took longer than 50 years, his prediction is coming true with meat proteins and now dairy proteins.

What is synthetic dairy?

Perfect Day Inc., a California-based start-up, has recreated the proteins found in conventional cow’s milk without the use of animals. The company developed a form of genetically modified microflora that produces both whey and casein through a fermentation process.

The approach can be loosely compared to the use of brewer’s yeast to produce alcohol. Yeast is used in controlled environments to create fermentation byproducts and the two processes simply employ different yeasts for a different purpose and output.

Perfect Day says their product is the exact same as the protein found in cow’s milk. Conventional milk is approximately 3.3% protein, of which 82% is casein and 18% is whey. The other main elements are water, fat and carbohydrates.

Perfect Day has the technology to remake the small fraction of milk that is protein, arguably the most important component to produce other foods. The company suggests its dairy protein is vegan and lactose-free, while providing the same high-quality nutrition as conventional dairy protein. This could have significant appeal for consumers.

Tough to mimic full-fat milks

Milk produced by dairy cattle is a versatile ingredient used in various products worldwide. More than 70% of milk sold from Canadian farms in 2019 is used for further processing, leaving the remainder to be consumed as fluid milk.

It may be difficult to produce full-fat milks that mimic the taste and texture of cow’s milk. Protein is just one component of fluid milk; milk fat is another, which would likely be the most difficult to mimic with plant-based alternatives. The structure of milk fat provides a specific taste and mouth feel when drinking milk, and this may be a tougher formulation challenge than creating proteins to be used in cheese or yogurt.

The early focus of Perfect Day’s communication was on fluid milk–the kind we drink–but the company has shifted its focus to processed products. Products such as yogurt and cheese are different than fluid milk, and may be more suitable for using lab-grown casein and whey. The synthetic proteins could be used to replace dairy milk ingredients or to complement them.

And, the potential use of animal-free dairy protein goes far beyond traditional dairy products such as cheese and yogurt. Hot dogs that contain milk powder and granola bars that contain modified milk ingredients are examples of the many foods that could use this alternative dairy protein.

The future

Many issues need to be resolved before these products arrive in our supermarkets. The economics of production have to work. Products need to be reformulated to incorporate the fermented proteins with other ingredients to replace the milk components.

The Canadian Food Inspection Agency currently describes milk as being produced by an animal. The U.S. Food and Drug Administration has not yet made a policy statement on classifying synthetic milk proteins.

Milk in Canada is also subject to a supply management system that includes quota for production.

Will synthetic casein and whey be subject to the same system? The regulatory environment will require significant clarification, and any changes will be vigorously debated by various interests.

Some consumers will highly value the fact that animals are not required to produce these proteins, creating a vegan, lactose-free product. There will also be a perception that synthetic dairy proteins will have a smaller environmental footprint. Other consumers will likely have concerns the proteins are produced using a genetically modified yeast.

Despite these uncertainties, we will likely see synthetic dairy products on grocery shelves within a few years.

Written by Michael von Massow, associate professor, food economics, University of Guelph and Mitchell Gingerich, graduate research assistant, Department of Food, Agriculture and Resource Economics, University of Guelph.

Originally published at Canadian Grocer.