The pandemic made 2020 a year to remember for Canada’s dairy sector, but there was a lot more to it. Changes to the Canadian dairy system following the launch of the Canada-U.S.-Mexico Trade Agreement (CUSMA) were also significant: increased market access, elimination of class 7 and limits to exports of skim milk powder and infant formula. Another major shift was the launch of the transition toward full milk revenue pooling between the P5 and the Western Milk Pool (WMP) provinces. 2021 will be a year of adjustments, but hopefully less eventful than 2020.
Although the pandemic forced temporary production cut measures, 2020 milk production exceeded 2019. Growth was not uniform across Canada. Current available 2020 data shows production likely grew slightly more than 1% in the P5 but stayed flat in the WMP. Production should keep growing in 2021, with the P5 and the WMP increasing production quotas in the fall of 2020.
Farm milk prices went through wild swings in 2020, especially in the P5 with strong milk prices at the start and end of the year. Early in the pandemic, the drop in the U.S. nonfat dry milk price contributed to a lower milk price in the P5. In the middle of the summer, butterfat revenues dropped from increased production of butter (in French only) for further processing. In the WMP, the pandemic impacted farm gate prices but to a lesser extent. Overall, farm milk prices increased by less than 1% on average in the P5 and the WMP.
On the cost side, grain prices were relatively low in the first half of the year. This contrasts with the second half as grain prices rallied following increased U.S. exports of corn and soybeans to China. Overall, estimated costs declined less than 1% in the East but increased slightly in the West.Click here to see more...