The cost of dairy products will rise again in Canada, but relief could be on the way: expert

The cost of dairy products is expected to rise again across Canada, but a food policy expert says relief may be on the horizon if other food prices stabilize before the end of the year.

The Canadian Dairy Commission (CDC) approved a rare second milk price increase this year after allowing the price of milk to rise 8.4%, or six cents per litre, in February. On September 1, farmers will collect a 2.5 percent additionalor two cents per liter, for milk.

The price surge comes as dairy farmers face their own higher production costs, said Sylvain Charlebois, a professor of food policy and distribution at Dalhousie University.

“Basically what dairy farmers are arguing is that it’s costing more to produce milk, which is true,” Charlebois told CTV’s Your Morning on Friday. “So the Canadian Dairy Commission basically agreed to a raise, and that raise will be accepted by every board across the country… So farmers will get more money starting September 1, but for all of us, it means that milk prices and dairy product prices will go up once again.

Charlebois said consumers will likely see an even bigger increase in their grocery bills, based on how the previous 8.4 percent increase affected consumers.

“Fluid milk is up 25 percent since January,” Charlebois said. “8.4 percent on the farm really equates to 25 percent retail, so you can imagine what can happen to 2.5 percent in the fall.”

In addition to the increase in farm milk, dairy processing companies appear to be applying their own price increases to milk, contributing to a larger overall increase in groceries.

In a letter to its customers, Lactalis Canada said it must implement a national market average increase of five percent this September in response to the CDC price increase and “significant inflationary costs.” Arla Foods Canada issued a similar notice, saying price increases for its products from September reflect higher costs of dairy ingredients and “inflationary impacts on freight and packaging.”

The price of food purchased in grocery stores. increased 9.7 percent year-over-year in May as the cost of almost everything in shopping carts rose, Statistics Canada said last month. Some consumers squeezed by inflation have resorted to eating less, according to Canada Food Banks. Last month, the agency released data suggesting nearly one in four Canadians are “eating less than they think they should” due to inflation.

But even as milk prices are expected to rise again, Charlebois said relief could be on the way for Canadians hit by food inflation. Charlebois expects food prices to rise a bit more before falling again.

“Food inflation may have peaked in Canada. So food prices will continue to rise, but not at the same rate. Things are likely to slow down now,” Charlebois said. “We expect the latter part of 2022 to be kinder to consumers on a budget than what we already saw in 2022.”


With archives from The Canadian Press

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