Study takes aim at milk prices

Wednesday, October 12, 2011

by SUSAN MANN

Canadians are finding milk prices here increasingly hard to swallow, according to a survey commissioned by a group representing Canada’s restaurants and foodservice businesses.

In a press release issued Wednesday the Canadian Restaurant and Foodservices Association says it’s time to address the inflated price of dairy products in Canada. It has launched a website to raise consumer awareness. Consumers can voice their concerns and sign a petition asking the government to reexamine the 40-year-old policies that govern how milk is priced in Canada.

In the online survey conducted by Innovative Research Group Inc., among a sample of 1,316 Canadians 18 years of age and older, 73 per cent reported the cost of staple foods is increasing, while nearly two-thirds would support a price cut for milk, cheese and other dairy products. Seventy per cent agree keeping the cost of milk and dairy products down is important.

Justin Taylor, association vice president of labour and food supply, says the main reason for launching the campaign is to get consumers “engaged and involved in decision making about the cost of their food.”

The current milk pricing system is complex and “hidden behind closed doors,” he says, noting it is now time for Canadians to start getting involved and to understand why the price of dairy is so high. It’s time to take a modern look at how to have a successful dairy industry in Canada that works better for all stakeholders, he says.

Based on figures from the Organization for Economic Co-operation and Development, Canadians currently pay roughly double the world average for milk and 63 per cent more than Americans, the association’s release says. As a result, Canada’s dairy supply management is costing Canadians about $2.4 billion every year.

Therese Beaulieu, assistant strategic communications director for Dairy Farmers of Canada, says the restaurant association’s main message to consumers is incorrect. “They are misleading people into thinking retail prices are double what they are elsewhere (in the world) and they are not,” she says, noting retail prices vary a lot by store, region and country.

The way retail prices are set in Canada has nothing to do with supply management, which was designed to regulate the price farmers get. “What the farmers get is only a portion of what the retail price is,” she says, noting Canadian farmers get a bigger share of what consumers pay than American farmers. But in the United States other stakeholders in the distribution chain get more of the retail price and farmers may not get their fair share. American taxpayers end up subsidizing farmers because they can’t always cover their cost of production, she says.

The restaurant association launched its website Tuesday. Taylor says he hasn’t checked yet on the number of responses to the petition. But so far more than 50 people are following them on Facebook.

Taylor says they’re very interested in having the discussion about what is driving dairy prices up. “It’s not just quota and it’s not just profits going to dairy farmers.” There are a lot of costs built into administering the supply management system, he says.

He notes Dairy Farmers of Canada has one of the largest marketing and public relations budgets in the country. “There are case studies about this in universities and colleges.”

Despite the fact that milk remains a nutritious option for families, Statistics Canada reports that Canadians are consuming 18 per cent less milk than they did 20 years ago, the association’s release says.

As part of Canada’s complex dairy system, milk is priced differently depending on its end use. Since 1994 the price of milk used to make cheese and yogurt has climbed 58.5 per cent while the Consumer Price Index has risen only 34.2 per cent.

Still, not everyone is down on supply management. Laval University Prof. Maurice Doyon outlined the importance of supply management as a coordination tool needed in the dairy market. In his recently released paper, called Canada’s Dairy Supply Management: Comprehensive Review and Outlook for the Future, Doyon provides some ideas to help the system progress. BF