Milk price hike expected to hurt cash-strapped families, help struggling farmers

Food banks are among those concerned about an upcoming increase in the price of milk and milk products.

"It's going to hurt," said Donna Linton, co-ordinator of the Volunteer Centre of Charlotte County, which operates the food bank in St. Stephen.

Effective Tuesday, the minimum price of milk in New Brunswick will increase by 10 cents a litre, the New Brunswick Farm Products Commission announced Monday.

That means a one-litre carton or plastic container of homogenized, two per cent, one per cent or skim will cost at least $1.93.

'Important' part of diet

It represents an increase of about 5.5 per cent.

"At the end of the day," said Dalhousie University food researcher Sylvain Charlebois, "families are really paying for this."

For an average family of four, he said, the increased cost of dairy could add about $200 to an annual grocery bill of $14,000.

"The dairy section is such an important part of our diets as Canadians," said Charlebois.

"This increase will impact many, many families."

Linton agreed.

"Milk is one of those comfort things," she said. People like to put it on cereal or in their hot beverages.

It's "not cheap," she said, but it's "a mainstay" in homes.

"If you have it, you're really pretty happy about that."

There are already some days the food bank can't afford to buy milk, said Linton, and the price increase will further reduce its buying power.

While food costs are inflating, the Volunteer Centre is also having to buy more, she said, to feed a growing number of families in need.

"We didn't need a price increase against us. That's for sure."

Ration system under study

The Volunteer Centre is looking at possibly rationing milk to families with children, said Linton, and substituting canned or powdered milk for others.

Pricing under the School Milk Program won't change this school year, said Monday's release.

But prices for regular consumers need to be higher, said farm commission chair Bob Shannon, so farmers in the province can keep operating.

They're paying 27 per cent more for feed than they were 18 months ago, said Wietze Dykstra, chair of the Dairy Farmers of New Brunswick, a group representing 168 farms.

Other costs have also increased, Dykstra said, such as machinery, equipment repairs, fuel, labour, packaging, manufacturing, transportation and distribution — some at rates outpacing inflation. 

Charlebois would like to take a closer look at the figures being used to justify the price increases.

"We still don't know exactly where these numbers are coming from," he said.

Milk prices are set annually, based in part on a cross-country study of the costs of production by the Canadian Dairy Commission.

Typically, the farmgate wholesale price goes up by two or three per cent. This year's increase was 8.4 per cent — almost double the previous record, noted Charlebois.

Cheese and butter prices are expected to increase by even wider margins.

It takes eight litres of milk to make a kilogram of many types of cheese, said Charlebois.

And the price of butterfat is going up by 12.4 per cent, which he suspects is largely a result of "buttergate," last year's controversy over the use of palm oil in cow feed.

"It really got the industry to look differently about how to produce butterfat. … If you don't use palm oil, you've got to use other means. And other options are typically more expensive."

So far, he hasn't been able to get the cost study data from the dairy commission.

"The government cannot just release data on people just like that," said Chantal Paul, the commission's director of corporate services.

"The dairy farmers own this data," she said. "It's not ours to distribute."

The study found overall costs were up about 13 per cent, said Paul, but the specifics are "commercially sensitive," and "not the kind of information that any enterprise would like to see become public," including how much debt farmers are carrying.

Paul suggested that because of the small number of farms in some areas, even if identifying information were removed, people might be able to tell where it was from.

"It would be kind of equivalent to releasing your income tax report," she said.

Researchers can get access to some of the information though, said Paul, if they propose a project and spell out what they need and what they plan to do with it.

"We evaluate if we can provide the data while maintaining the anonymity of the participants," she said.

Paul said the commission had yet to receive such a proposal from Charlebois. He said he's requested the data twice.

Paul also disputed Charlebois's assertion that the 200 farms in the study sample were "hand-picked."

She said they are "randomly selected," from a database, "like through a computer program," that assures a selection from each region and each farm size.

Questions about how system works

Charlebois is calling into question the whole way Canada's supply management system for milk works.

It was meant to take care of dairy farmers and save the family farm, he said, but doesn't seem to be doing that.

"In New Brunswick, right now, we're losing three dairy farms basically a month … because of consolidation. 

"And at the same time, retail prices are significantly higher compared to what we would find in the U.S."

Meanwhile, margins are closing between milk and alternatives such as oat or almond beverages.

"I'm concerned about the dairy sector," he said. "If you price yourself out of the market. People will just walk away."