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11/01/2022

Milking Canadians no longer that simple

The Canadian Dairy Commission held a press conference to announce to Canadians what is likely to happen to dairy prices next year. This is a refreshing approach – let’s hope the Commission continues on its path to reforming itself
Sylvain Charlebois
Professor, Dalhousie University
Sylvain Charlebois profile picture

The Canadian Dairy Commission has just released its recommendations for 2023. Unlike last year’s shocking 8.4%, which was almost double the previous record, the increase won’t be as dramatic. As of February 1, 2023, most farmers in Canada will get about 2.2% more for their milk. Provincial boards have the final say, but it looks like next year the dairy section won’t see the price increases we have all seen in 2022.

According to Statistics Canada, food prices overall are up 10.3% over last year, and dairy products are now 9.7% more expensive compared to last year. The attention grabber in the dairy section was butter. In many parts of the country, butter is 20% more expensive compared to last year. Many people have just given up on the product, and are now opting for non-dairy alternatives. The Canadian Dairy Commission’s work has priced many dairy products out of the market, impacting demand for many products. And once you lose consumers, it may be for good.

While dairy farmers want a fair price for their work, many others, mostly in the western part of the country, including southern Ontario where farms are larger and more technologically focused, concerns about losing market share are looming. Prices need to be kept under control as much as possible. In Eastern Canada, which would include eastern Ontario, Quebec and the Atlantic, retail prices aren’t even discussed. It’s all about prices on the farm. Last year, that group won, which is why we saw farm milk prices increase by more than 11%. This year, the strategy appears to be about market retention while covering increasing production costs. This year’s recommendation is more balanced. The dairy industry needs to be taken care of while making sure food remains affordable for all Canadians.

But unlike in other years, the Canadian Dairy Commission actually bothered inviting media to a press conference to announce price hikes and answer questions. Such an approach was very refreshing. Typically, the Commission would just post a brief, 200-word abstract on their website, announcing the increase. It was simply insulting. With last year’s 8.4% increase, the approach was a complete disaster, undermining consumer trust. Social media just massacred the Commission due to its lack of compassion or sincerity. Many were left wondering how a Crown corporation could be so opaque and closed off to the public. It gave an illusion that both the Commission and dairy farmers were one, and it shouldn’t.

This year, not only was the presentation thorough, but journalists were also able to ask questions. The Commission is showing signs of openness, but more should be done.

For one, how numbers are calculated and what data is being used should also be made available when announcing changes to farm milk prices. The Commission conducts a survey every year to assess the cost to produce milk and butterfat in Canada. The Commission has always wrongfully argued that the identity of farmers who participate in their annual survey should be protected. In research, anyone can present data while preserving the identity of subjects. It’s not rocket science.

The key is to understand how efficient our dairy farms actually are, and what types of farms are included in the sample design. All these things matter when calculating costs. And as we witnessed this year, retail prices are strongly affected by how much dairy farmers end up getting. For every dollar paid for fluid milk at retail, about 40% to 60% of the cost goes back to the farmer, depending on the brand and location of purchase.

The governance of the Commission also needs to change. Right now, the Commission is controlled by two individuals severely compromised by their relationship with the dairy sector. The number of commissioners would need to expand to at least five academics, and food rescuing agencies can be added to the mix. Right now, the perception of conflict of interest is nothing less than disturbing.

By having a press conference, though, the Commission showed respect towards the Canadian public. That’s a start. Now some real changes are needed, and let’s hope it doesn’t stop there.

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