The Canadian Dairy Commission is delaying a planned increase to the farmgate price of milk by three months as the food industry grapples with pressure to stabilize food prices.
On Wednesday, the dairy commission said an increase of 1.77 per cent will go into effect on May 1, 2024, instead of Feb.1, when it would normally take place. The increase translates to just over a cent per litre.
Inflation is affecting Canadians and the entire dairy supply chain, from farmgate to consumers' plates, said CDC chair Jennifer Hayes in a statement.
"The CDC always strives to balance consumer impacts with sustainability of the dairy industry."
The commission, a Crown corporation, reviews the price dairy farmers are paid for their milk every fall. Price adjustments normally come into effect the following February.
In October, the commission said that according to its pricing formula, the price of milk at the farm level could go up by 1.77 per cent in February.
Ahead of the annual price announcement, the Canadian Federation of Independent Grocers called for a pause in price increases to farmgate milk, saying the grocery industry is in an exceptional situation this year.
The CFIG’s call triggered a mechanism that set aside the results of the pricing formula in favour of setting a price based on consultationswith stakeholders.
About a week later, the Dairy Farmers of Canada also recommended delaying the price hike.
Canada’s food supply chain is under pressure from the federal government to keep prices steady after high inflation and a rapid rise in interest rates have increasingly squeezed consumers’ budgets.
Like consumers, dairy farmers have also been feeling the pressures of inflation, the CDC said in a statement: "Despite stabilizing feed, fuel and fertilizer costs, producer gains were offset by higher interest rates."
This report by The Canadian Press was first published Nov. 1, 2023.
The Canadian Press
