Milk, cheese prices could soon jump 10 to 15 per cent

The price of milk and dairy products is expected to increase sharplyafter the federal Canadian Dairy Commission recommended a record 8.4 percent increase in wholesalemilk prices.

The increase which isalmost double the commission's previous record increase of 4.54 per cent in 2017 isintended to help offset soaring production costs due to the COVID-19 pandemic,according to the commission.

But for consumers facing pandemic-fuelledsticker shockin almost every aisle of the grocery store, it's yet another blow to the budget.

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"In New Brunswick, for example, my guess is that fluid milk could go up by eight to 10 per cent almost overnight in February," Dalhousie University food policy expertSylvain Charlebois told Shift New Brunswick.

That increase would migrate toother dairy products as well, including yogurt, ice cream and cheese.

"There is a multiplier effect," Charlebois said. "For example, you need eight to 10 litres of milk to make one kilo of cheese. Obviously it adds up, and so you could expect [cheese price] increases of 15 per cent, maybe. So that's huge."

Surging costs for dairy farmers

Dairy farmerswho haveborne the spiralling costs of production for 18 months saythe commission's recommendation is welcome news.

"We're certainly glad to see this price increase," said Paul Gaunce, chair of the Dairy Farmers of New Brunswick.

"If we look at the cost of production, it's certainly gone up a lot the last year and a half with, basically, COVID costs," Gaunce said. "Fuel's a lot higher, transportation ...electricity, fertilizer."

Then there's the cost of cattle feed.

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"That'sgone up almost 40 to 50 per cent," Gaunce said. "As a dairy farmer, [feed is]one of your biggest costs."

Gaunce said there is some concern that the price hikes might drive consumers to turn to alternatives to dairy products.

But there's equal concern that, without the increases, more dairy farmers will be driven to leave the sector.

"We're always concerned about losing market share and, you know, that will happen," Gaunce said.

"But I guess if you look at the big picture, all of food has gone up substantially and dairy has actually gone up less than any of the other products. And I still say when you look at drinks in the store, milk is the best bang for your buck."

How the commission works

In a typical year, the Canadian Dairy Commission hikes the price of milk by oneor twoper cent.

But this year, the Crown corporation, which sets yearly price recommendations,settled on a record price increase of8.4 per cent.

Charlebois saidthat's based on data collected insurveys of about200 Canadian dairy farmers, who are asked in detail abouthow much it costs to produce milk.

According to its website, the commission alsoconsults with industry stakeholders, as well as retail and restaurant groups.

From there, they work out an average cost "and that's how they come up with the recommendation every single year."

Gaunce, who farms in Keswick, N.B., said the commission pretty much nailed it with its final recommendation.

"It's very much in line ... with what we're seeing on our farms," he said.