Charlevoix: What's really behind the rise in milk prices

Evaluating the cost of producing milk.

The CDC does not publish any data on cost accounting, recommending increases in farm milk prices in most years, ultimately leading to retail and Canadian it affects the family.

Dairy prices have increased by an average of 10% to 15% since February. However, some of the CDC's data was recently leaked, allowing us to better understand how the cost of milk production is determined.

The CDC has announced not just one, but two rate hikes for him this year. The first price increase hit a record 8.4% in February, and the second 2.5% will take effect on September 1st. According to the data, these increases appear to be completely unfounded.

The CDC typically bases its recommendations on annual surveys conducted by hired consultants. They survey over 200 dairy farms across the country to measure the cost of producing milk. The 2021 survey results were recently announced at a secret meeting. Standardized production costs decreased by 1% from $85.42 per hectoliter to $84.57 per hectoliter. The CDC has raised the price of milk by 2% in 2020, despite this year's record price hike announced in October 2021. All was going on while the cost of producing a hectoliter in Canada was either slightly higher or lower.

According to reports, some costs feed will rise to $0.76 per hectoliter and fuel to $0.28 per hectoliter. However, other costs per unit fell and outpaced more expensive items. Capital costs decreased by -0.54 dollars per hectoliter. The CDC's pricing formula includes all aspects of dairy farming, from infrastructure to veterinary medicine to promotion, with the exception of subsidies given to dairy farmers for virtual losses incurred from trade transactions. The margin of error for this year's survey is 2.06%, lower than in 2020 (2.35%).

That said, early results from the 2022 study suggest costs are rising, which should affect prices in 2023, not this year. Disappointingly, the government, the Canadian Dairy Commission, may have bowed to pressure from the dairy industry by raising farm-off-the-farm prices without adequate substantiating data to justify the increases. the fact that is high. It's all anecdotal. This demonstrates that CDC governance is responsible for the reputation of the dairy industry and Canadian consumers.

The idea that dairy production costs per unit can be reduced may sound counterintuitive. After all, inflation affects every aspect of our lives. Farmers, industry experts and even the general public in Canada agreed with the argument that everything is more expensive, even for dairy farmers.

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But The reality is that many dairy farms now operate with very few people. Technology is handling the most intensive aspects of dairy farming.

Dairy genetics have also come a long way. Some US estimates suggest that the dairy industry produces 60% more milk and 30% fewer cows than it did 50 years ago. According to Agriculture and Agri-Food Canada, in 2021 Canada had 977,000 dairy cows, producing 95 million hectoliters of milk. In 1990, Canada had approximately 1.4 million dairy cows, producing 73 million hectoliters of milk. This means a 43% decrease in cow numbers and a 31% increase in production. The cost will be reduced by that amount.

In last year's "Buttergate" episode, Canadians reported that dairy farmers used palm oil derivatives imported from Indonesia or Malaysia to produce more butterfat. I know you're producing, but you're sticking with the same modus operandi.In addition to making your butter hard, using palmite is another way to cut costs while increasing your bottom line. This practice was banned for a while, but dairy farmers are doing it again.

Canadian dairy farmers are simply discouraging rather than banning this practice. Dairy farming is self-regulated and has little government oversight for quality assurance.

Although two versions of farming collide in the Canadian dairy industry, dairy farming in general is simply becoming more efficient. more efficient, lowering the cost per unit of production. Most of these farms are west of Toronto as far as British Columbia.

A farm east of Toronto offers an entirely different scenario. These farms are much less efficient, are smaller on average, and just want "fair pricing" backed by the CDC's focus on price increases.

Over the years, the idea of ​​'fair pricing' has driven the price of milk on the farm. Most of these farms are located in eastern Ontario, Quebec, and the Atlantic Ocean. Quebec has half of all dairy farms in Canada. It is no coincidence that most of the loudest voices defending supply control and our quota system come from that part of the country.

As a result, Canadian milk prices are higher than the world average. about 30% higher.

This shows how morally and ethically compromised the CDC is.We need to distance ourselves from the dairy sector immediately. Increased transparency, honesty and improved communication will improve the public image of Crown companies. Most federal companies always publish data to help Canadians understand and evaluate their work, but the CDC does not.

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What is clear here is that dairy farmers are just as much victims as Canadians. Dairy farmer himself, politician Marie Claude he even Bibaux Minister of Agriculture, always he is hypnotized by gibberish and numbers from the CDC, does not fully understand the system and Dairy Farmers We rely on the loud and influential voice of Canada. Unfortunately, leaked documents were required to understand the CDC's recommendations based on weak evidence and hearsay.

For years, many speculated that his CDC was misleading the public. Now we know there was indeed "blowing evidence" of the Canadian dairy industry.

— Sylvain Charlebois is Senior His Director of the Agro-Food Analysis Lab at Dalhousie University and a former faculty member at the University of Regina.