Misinformation is currently circulating in traditional and social media concerning how adjustments to the farm-gate price of milk are established. Dairy Farmers of Canada (DFC) is therefore providing the following clarification on the process.
· Farm-gate milk price adjustments are managed by the Canadian Dairy Commission (CDC).
· The CDC bases its decisions regarding farm-gate milk prices on data from the preceding two years. This enables the CDC to get a full picture of the cost of production.
· As stated by the CDC, price adjustments are based on a combination of the indexed cost of production for milk, the overall consumer price index in Canada, and other Statistics Canada indices.
· Given that cost of production data has a delay, StatsCan indices are used to index the overall cost of production forward to the current year.
· The 8.4% and 2.5% price adjustments announced in February and June, 2022 were based on 2020 data collected by the CDC.
· The CDC’s 2020 final analysis demonstrated significant production cost increases in areas such as cattle feed (27%), fuel (30%), machinery (19.5%) and seeds for crops (20%).
· An increase in the calculated cost of production does not automatically result in an equal increase in the price of milk. Although the average increase of the cost of production was 13.4%, the price of milk did not increase by the same ratio.
· Contrary to what has been reported, the 2021 preliminary data obtained by media has no relation with the 2022 price adjustments, which are based on 2020 production cost increases. The final CDC 2021 report on production costs will be used to determine the 2023 milk price adjustments.
Source : Dairy Farmers Of canada