Dairy prices rise

Thursday, August 7, 2008

by SUSAN MANN

The P5 decided in mid-July to raise the fluid milk by $1.45 a hectolitre effective Sept. 1. This is the same amount the Canadian Dairy Commission (CDC) approved as the increase for industrial milk, which is used to make cheese, butter, yogurt, and skim milk powder. It approved the industrial milk price increase in early July in response to a request from Dairy Farmers of Canada (DFC) for an emergency increase. Normally the CDC reviews costs of production data in the fall and announces any price changes in December for implementation the following February.

But this year DFC put in a special request for an immediate increase. DFC says dairy farmers need the increase to cover rapidly rising costs this past 12 months for items, such as feed (up 19 per cent), fuel and oil (up 42 per cent), and fertilizer and herbicides (up 46 per cent). “We’ve informed the processors that we would be seeking the same increase (for fluid milk price) as the CDC took on industrial,” says Bruce Saunders, chair of Dairy Farmers of Ontario.

The need for an emergency increase in the fluid milk price is the same as it was for the industrial hike. “The entire industry, both producers and processors, are experiencing these high costs, which is causing some hardship,” Saunders explains, adding normally the fluid milk price only goes up once a year on Feb. 1.

Will the price increase affect demand? It’s up to retailers and processors to determine what happens in the marketplace, Saunders says.

“I’m sure that there will be some reaction from the consuming public over it,” says Tom Kane, president of the Ontario Dairy Council, which represents processors. But the decision has been made “so it’s a done deal at this point in time.”

An agreement between processors and producers requires farmers to give 45-days notice to processors of any price increases. That 45-day notice requirement was met, Kane says. BF