Canadian dairy farmers will see a slight drop in what they’re paid on farms for milk in 2025.
The Canadian Dairy Commission announced Nov. 1, 2024 that a decline in feed prices and the stabilization of other costs on dairy farms across the country means that the benchmark on-farm price for milk will decline by 0.0237 per cent starting in February 2025.
Why it matters: The set price for milk will help dairy producers plan for their business operations in 2025.
An increase in the consumer price index, which determines half of the milk price kept the decline in milk price from being greater.
A part of the supply management system, the Canadian Dairy Commission is the quasi-governmental body which determines farm-gate milk pricing in Canada.
The price that consumers pay at the grocery store for milk is influenced by the farm-gate milk price, but also other costs added by different steps in the supply chain.
The final price that farmers receive for their milk is also affected by regional dairy consumption trends and the world price for milk.
The 2025 farm-gate milk price reflects the lack of exceptional circumstances that have affected the price of milk during and after the COVID pandemic.
The Canadian Dairy Commission has been criticized for its lack of transparency, but a technical briefing held in advance of the announcement was attended by only two trade media journalists and one mainstream journalist from Quebec.
How is milk price determined?
The price for milk at the farm is determined by a cost production survey of 250 farms of different production types across the country. Survey results have a statistical margin of error of two per cent.
The 2023 indexed cost of production was $93.09 per hectolitre. The 2024 price, which takes into account the 2023 survey, and then an indexing of information from three months ending in August, shows a cost of production of $90.36 per hectolitre, a decline of 2.93 per cent, mostly based on the drop in the cost of feed, as global crop prices have declined in 2024.
Trend lines also show a stabilization of production costs in 2024, compared to 2022 and 2023.
The milk price is half based on the indexed cost of production and half on the consumer price index, which has increased 2.89 per cent, leading to a decrease in the farm gate milk price of 0.0237 per cent.