TORONTO – The Canadian Dairy Commission (CDC) has made a disappointing, Scrooge-like decision today by announcing the price of industrial milk will rise again in 2007. Demand for dairy products is dropping in Canada, in large part due to the steep rise in dairy prices over the last several years.
“Canadian dairy prices have been artificially inflated for many years, to the point that we pay among the highest prices in the world for dairy products. Yet in the face of declining demand, the dairy industry is increasing prices yet again,” says Ron Reaman, Vice President of Food Supply for the Canadian Restaurant and Foodservices Association (CRFA).
Industrial milk is used to make products such as cheese, butter, yogurt and ice cream, and the price of industrial milk is used as a benchmark for fluid milk prices set by each province. Although the latest price increase is a seemingly modest 1.06% effective Feb. 1, 2007, because fluid milk prices are determined provincially, the actual cost increase to consumers could be much higher. All indicators are that dairy prices should be coming down.
· The price of industrial milk has increased by 53% over the past 12 years, nearly twice the rate of inflation. Over the same time period, the cost of producing milk has fallen by 3.8%, according to dairy industry studies.
· Canadians, on average, are drinking 18% less milk than they did in 1980, and a further 12% drop is expected by 2020, according to a report prepared for Agriculture and Agri-food Canada. Canadians are buying nearly 30% less butter and 24% less ice cream than they did in 1980.
· Dairy farms report an average profit margin of 25% of operating revenue, or nearly twice that of the average farm operation (13.2%), according to Statistics Canada.
“The CDC had a clear opportunity to lower dairy prices while still providing a solid return to producers, but they opted to sit back and watch the market shrink. The restaurant industry wants to grow the market for dairy products, but it’s getting more and more difficult to do so within the existing pricing structure,” says Reaman.
The CRFA has created a new website (www.dairyplanet.ca) to present a three-point plan to ensure the long-term viability of Canada’s dairy industry: Increase domestic dairy consumption; implement a responsible transition to open markets; and grow the export market.