Milk Price Increase Disappoints Farmers

OTTAWA - Dec 16/05 - SNS -- The Canadian Dairy Commission (CDC) authorized a small increase for skim milk powder and no increase in butterfat price.

Effective February 1, 2006, the support price for skim milk powder will increase from $5.7282 to $5.8337 per kilogram. The support price for butter will remain unchanged at $6.8695 per kg. Support prices are the prices at which the CDC buys and sells butter and skim milk powder to balance seasonal supply and demand changes on the domestic market.

For dairy producers, the higher support price should translate into an increase of 1.79 cents per liter for milk used to make products such as yogurt, cheese, butter and skim milk powder. "The actual increase to producers may vary slightly depending on the pricing decisions made by provincial authorities using support prices as a reference," the CDC cautioned.

While the CDC says the changes fulfill "the commitment it made in 2002 to ensure that 50% of Canadian dairy producers would receive their cost of production by February 1st 2006"; the Canadian Dairy Farmers of Canada asserts the change fails to meet that commitment.

It argues the increase is "well below inflation for consumers." Association president Jacques Laforge said, "We must point out however, that the CDC has missed an opportunity to meet its commitment to farmers.

"In 2002, the CDC recognized that dairy farmers were efficient and said it would ensure that the support price allow 50% of farmers to cover their cost of production. We are disappointed that this announcement falls short of that commitment."