Drop in the price of milk on farm in 2025

Drop in the price of milk on farm in 2025
Drop in the price of milk on farm in 2025

OTTAWA, ON, the 1st nov. 2024 /CNW/ – In October 2024, the Canadian Dairy Commission (CDC) conducted its annual review of milk prices on Canadian farms. To follow up on this review and the consultations it held with stakeholders, the CDC intends to apply the following changes on 1is February 2025.

The farmgate price of milk will be reduced by 0.0237%, or less than one cent per liter of milk sold to processors. This decline was calculated using the National Pricing Formula, a pricing mechanism that was established by the industry. The formula takes into account the production costs of dairy producers as well as the consumer price index.

Although the general inflationary environment was higher than the targets of the Canada in 2023, productivity gains on the farm and the reduction in the cost of certain inputs, such as animal feed, have helped to balance production costs overall.

This adjustment means that the cost of milk used to make dairy products, such as milk, cream, yogurt, cheese and butter, intended for the retail and food service sectors will decrease by 0.0237%. The net impact of this decline on retail prices remains unknown, as these are also influenced by other factors in the supply chain, such as labor costs, transportation, distribution and packaging. An adjustment in the price that producers receive for their milk does not necessarily result in a similar adjustment in the retail price, as it is only one of the elements that affects the price paid by consumers.

The CDC would like to thank the following stakeholders for their contribution to the milk price adjustment process this year: the Dairy Producers of Canadathe Dairy Processors Association of Canadathe Canadian Federation of Independent Grocers, Restaurants Canada and the Retail Council of Canada.

The new farm milk prices will become official when provincial authorities approve them later in 2024.

Citation

“Despite the persistent inflationary environment, producers’ efficiency and productivity gains helped balance dairy farm costs this year, thereby lowering the cost of production. The national pricing formula and our consultation process clearly captured this reduction. We would like to thank our stakeholders for their continued participation and support of the pricing consultation process. »

Jennifer Hayespresident
Canadian Dairy Commission

Quick facts

  • The 0.237% decrease was calculated using the National Pricing Formula, a pricing mechanism that was established by the industry. The formula takes into account the production cost of dairy producers, up to 50%, as well as the consumer price index, up to 50% as well.
  • Milk price regulation is one of the elements of the dairy sector’s supply management system. However, only the price that producers receive for their milk is regulated. The retail price of dairy products is not regulated in Canadawith the exception of fluid milk in certain provinces. After leaving the farm, the milk enters the market where supply, demand and other factors affect the price.
  • The farm-gate milk price adjustment can impact the retail price of all dairy products, but its magnitude depends on the decisions of stakeholders along the supply chain regarding their own costs. .
  • Over the past year, the average annual consumer price index (CPI) for dairy products increased at a slightly slower rate (2.0%) than that for all food products (3.4%). %). In the past five years, the average annual CPI for dairy products has increased by 23.8%. In comparison, the index for meat increased by 29.5%, that for eggs by 40.2% and that for fish by 15.1%.

Useful links

SOURCE Canadian Dairy Commission

For further information, please contact: Philippe Charlebois, Director General, Integrated Services, Telephone: 613-220-5238, Email: [email protected]

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