Canadian Dairy Commission recommends 8.4% increase in farm gate milk prices

The Canadian Dairy Commission is recommending an 8.4% increase in farm gate milk prices, a large hike that is expected to raise the cost of dairy products on store shelves in the New Year.

The federal Crown corporation says the price increase is expected to be approved by provincial authorities next month and take effect Feb. 1.

The commission says the higher price processors will pay will help offset increased production costs for farmers due to the COVID-19 pandemic.

It says feed, energy and fertilizer costs have all been particularly impacted, causing farmer revenues to fall below the cost of production.

Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, says the price hike is nearly double the previous record of 4.52% set in 2017.

He says the retail price of milk in grocery stores could increase as much as 10% while prices for dairy products like butter, cheese and yogurt could soar as much as 15%.

Meanwhile, the dairy commission says it also recognizes a 5% increase in milk processing costs such as packaging, labour and transportation.

It also says it's raising the support price for butter used in its storage programs to manage supply and demand by 12.4%.