Why the cost of milk is set to go up — again
Dairy Farmers of Nova Scotia say they don't take cost hike lightly
The price of milk is going up again after the Canadian Dairy Commission made a rare mid-year announcement that producers will get an extra 2.5 per cent come September.
It's the second increase announced this year by the Crown corporation that oversees Canada's dairy supply management system. In February, milk prices jumped 8.4 per cent.
"As dairy producers, we don't take this lightly at all, let me be very clear," Gerrit Damsteegt, chair of the Dairy Farmers of Nova Scotia, told CBC Radio's Maritime Noon on Thursday.
"And it's not that we're asking for this increase to fill our pockets because there's lots of people [having] a hard time to pay their bills."
Experts say consumers can expect to pay much more than 2.5 per cent extra at the grocery store due to increases elsewhere in the supply chain.
Damsteegt's conversation with host Maritime Noon Bob Murphy has been condensed and edited for clarity and length.
You can listen to the full interview here:
How much will the two increases help cover the increase in your expenses?
It certainly will offset some of the costs.… We as dairy producers don't take it lightly to ask for another increase. But when we look at the increase of fuel, which we experience as all Canadians, when we make crops, we use a lot of fuel. Fertilizer is another real big one. The prices were up but even escalated more with what's going on in Europe with Ukraine and Russia. And then also our inputs in feed commodities like soy and corn, canola, these have gone up tremendously as well. And that's the major ones, but beyond that, a lot of other things have gone up.
So will these increases even come close to touching those expenses?
That's really hard to say. I don't believe they will. But nevertheless … we are also very aware that for the consumer we don't want to ask for too much. And let me be very clear: the Canadian Dairy Commission has approved this increase. But I want the public to know when fuel goes down or fertilizer prices go down, our price will be reduced as well. There always needs to be a justification for a price increase, and if our input costs go down, our price goes down.
In the meantime, in dollars-and-cents terms, what will the 2.5 per cent increase that you're receiving amount to per litre for you?
I can't put an exact number to that per litre but it's probably in the vicinity of about a penny or a penny and a half per litre … But it's almost impossible for me to say because it's used in so many different commodities, because my milk could go in fluid milk, but it also could go in cheese or in other products. And all of these products are classified in different categories. So for me to say exactly this is how much it's going to go up, I can't tell you that. Every producer gets the same price, but what we're going to get paid each month depends on the utilization of the milk.
So if we're talking about fluid milk, can you say what the increase per litre would be for that?
I can tell you that at the farm level, it might be in a vicinity of one cent a litre.
And for that 8.4% increase back in February, that would be around five or six cents a litre?
It was in that vicinity, that's correct. But to put things in perspective, when you look at fertilizer just this year alone, prices are up 50 to 60 per cent. When you look at fuel prices, we all know what we pay for fuel. When you look at commodity prices, just look at the price of bread in the store. You know, I think about bread, I think about meats, I think about anything, shampoo, you name it. Even if you go to Tim Hortons, a cup of coffee has gone up all the time. The one big difference between dairy and all the other ones I named is that dairy, where it's a regulated industry, we need to apply for an increase. We can't just decide next week we're going to increase it.
And for that very reason, we seem to get the attention from the media and the public on this because it's announced. But when bread goes up five cents a loaf or any other product, it just happens. When coffee goes up, and your cup of coffee, it just happens and we just move on. But dairy seems to get the attention every time.
It is difficult times for so many people, as you point out. Do you worry that the price increases potentially could drive people away from dairy products?
I hope not. Will people go to alternatives? Maybe, maybe not. I would just like to point out that we know the nutritional value of dairy products, the nutritional value of milk with the vitamins and minerals and so on. When you look at some of the alternatives, they don't have that. And further to that, we are all concerned about the climate, we're all concerned about the environment, about sustainability, and I dare say dairy can compete in regard to all of that because the carbon footprint of dairy is quite different than some of the other products.
With files from CBC Radio's Maritime Noon