One percent drop in price is effective March 1, but doesn’t surprise dairy industry leaders
Dairy producers will be paid roughly one percent less for their milk this year, which the Dairy Commission of Canada says may show that supply management is working.
“Nobody who usually criticizes supply management made a comment,” said commission spokesperson Chantal Paul.
The planned reduction is a response to a survey by Statistics Canada of more than 200 randomly selected Canadian milk producers, which showed that their costs have fallen.
In Ontario, the decrease will be fully implemented by March 1.
“This reduction follows a decrease in the cost of producing milk in Canada in the last year,” commission chair Randy Williams said in a news release.
“This cost decrease can be seen mostly in feed, milk transportation, fuel, and interest paid.”
The support price for skim milk powder fell from $6.4754 to $6.3109, which translates into a revenue decrease of 1.8 percent for industrial milk and, ultimately, a drop of around one percent in the gross blend price.
The gross blend price varies from month to month and region to region, depending on how milk is distributed among the various categories, Paul said.
The support price for butter is unchanged.
Support prices are the prices at which the dairy commission buys and sells butter and skim milk powder to balance seasonal changes in demand on the domestic market.
Phil Cairns, senior policy adviser with Dairy Farmers of Ontario, said producers in the province were told about the impending decrease three or four months ago.
“They haven’t overreacted, mainly because milk follows a national cost of production formula…. We built the expectation there would be no increase, or perhaps a decrease.”
The commission last reduced a support price in 1993.
“It was the support price of butter that was decreased, while the support price of skim milk powder was increased that year,” Paul said.
“I understand that skim milk and one percent milk were getting more popular, and people were moving away from whole milk,” she said.
“I think it was a way to encourage people to use more butterfat, making it more attractive. At least that was the theory.”
Today, butterfat appears to be back on the menu for a growing number of Canadian families.
According to the dairy commission’s 2013-14 annual report, butter consumption rose by 4.5 per cent over the past year while cream consumption rose by 2.8 per cent.
Paul said the consumption of fine cheeses has been increasing for a number of years, but that trend appears to have tapered off with just a .3 per cent increase over the past year.
Increasing consumption of butter and cream may be connected to fewer worries among consumers about saturated fats in general.
A recent book, The Big Fat Surprise, written by investigative science journalist Nina Teicholz, suggests that saturated fats have long been unfairly labeled as being unhealthy.
Teichholz said in a Jan. 26 interview on CBC Radio’s The Current that the attack on fat dates back to the 1950s when it was linked to an increase in heart disease.
“The science was not good at the start, very soft, and never got any better,” she said. “There’s been now, in the last decade, dozens of clinical trials, altogether on thousands of people, showing that higher fat, lower carbohydrates are better for losing weight, controlling diabetes and managing heart disease.”
While demand for butter and cream is increasing, Paul said it’s a challenge to market Canada’s skim milk powder.
The commission was able to reduce its skim milk powder stocks last year because of stronger world prices.
However, prices have plummeted recently, largely because of a decision by Russia to close its border to dairy imports from the European Union, Paul said.
Source: The Western Producer
