Dairy Farmers of Canada recommend delaying farmgate milk price adjustment

The Dairy Farmers of Canada are recommending that an upcoming adjustment to the farmgate price of milk be delayed amid ongoing food inflation and pressure on the food industry to stabilize prices.

In a statement on their website Friday, Dairy Farmers of Canada president David Wiens says the organization recommends that the Canadian Dairy Commission delay any price adjustment on milk until further notice.

“Dairy farmers and their families are also consumers and experience the high cost of food these days,” Wiens says in the statement.

The recommendation comes after the Canadian Federation of Independent Grocers last week called for a pause on any further increases to milk prices. The Canadian Dairy Commission is a Crown corporation that reviews the price dairy farmers are paid for their milk every fall, with adjustments to that price made in February.

This year, the commission's formula determined that price could go up 1.77% in February.

However, if one or more stakeholders invoke an “exceptional circumstance mechanism,” which the independent grocers did, the price adjustment will instead be set through consultations. The CFIG was the only stakeholder to invoke this mechanism, says Canadian Dairy Commission spokesman Philippe Charlebois in an email.

“As such, the application of the National Pricing Formula is suspended, and the CDC will host consultations with stakeholders to determine any farmgate price adjustments,” he says, adding the results will be communicated no later than Nov. 1.

CFIG senior vice-president Gary Sands wrote in his letter to the commission invoking the mechanism that the grocery industry is in an exceptional situation this year.

Grocery retailers, especially the biggest chains in the country, are under pressure from Ottawa to keep prices stable. Industry Minister Francois-Philippe Champagne recently announced the major grocers have promised to offer discounts, price freezes and price matching after he called on them to come up with plans to stabilize prices.

Sands applauded the DFC's call for a delay. “I think they've read the room,'' he says. “Things are very tough out there for Canadians right now, and this is not an appropriate time for those kinds of increases to go through.”

With the dairy farmers throwing their support behind delaying a price adjustment, “I don't see how the commission, quite frankly, can proceed with recommending anything but a pause,” Sands says.

Last year, the commission approved a rare second increase to the farmgate price of milk, citing rising costs for farmers amid high inflation. The 2.5% increase in September 2022 came after the farmgate price of milk rose 8.4% in February that year.

Wiens notes in the DFC statement that the price consumers pay for dairy products is ultimately determined by other players in the supply chain.

“Our hope is that our decision will result in other actors maintaining the price of dairy products,” he says.