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.

The 2023 cost of production survey results can be found here.

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The study published in Ecological Economics said 6.8 billion litres has been discarded since 2012. That could have supplied the annual dairy intake for 4.2 million Canadians, it found.

Sylvain Charlebois, one of three co-authors, said his colleagues from Europe and the United States initiated the study after a Canadian dairy farmer last year filmed himself dumping thousands of litres.

They developed a methodology to quantify the amount nationally.

“It was actually quite shocking,” Charlebois said after presenting the Robertson Lecture at the Johnson Shoyama Graduate School of Public Policy in Regina.

“My expectation was maybe 100 million litres a year. but it was just so much higher.”

The study found the waste over the last 12 years could be as much as 10 billion litres worth $14.9 billion. That represents seven per cent of milk production. The co-authors said it is a consequence of inefficiencies within the supply management system.

Charlebois, from Dalhousie University’s Agri-Food Analytics Lab, Thomas Elliot from Aalborg University and Benjamin Goldstein from the University of Michigan used a material flow analysis to examine the environmental, economic and nutritional costs of the dumped milk.

At the upper estimate of 10 billion litres, they said that contributed to about 8.4 million tonnes of carbon dioxide equivalent emissions, which compared to the yearly emissions of 350,000 vehicles.

They said milk dumping should be illegal in Canada and called for more transparency on how much surplus milk is produced and wasted to help the industry identify how to reduce the problem.

Charlebois said it’s imperative the Canadian Dairy Commission manage surpluses as it does with butter.

“We have a strategic reserve for butter so we should do the same with powdered milk and look at different opportunities, perhaps supply to food banks,” he said.

“Dairy farmers are already quite generous toward food banks. I’m just talking about the surpluses.”

The study said revised dairy quotas to better align with market demand and consumer preferences could prevent overproduction and said overproduction should be penalized.

“With supply management I do believe we shouldn’t waste one litre of milk, unlike the U.S.,” said Charlebois.

Jacques Lefebvre, chief executive officer of Dairy Farmers of Canada, said the nature of the study must be taken into account.

“The authors of the study acknowledge that much of their conclusions are drawn from ‘estimates’ rather than a robust data set,” he said.

“These data assumptions and calculations would need to be validated independently.”

He also said milk disposal is not a unique issue to Canada.

“Although supply management is aligned to the needs of the domestic market, when there is a surplus of milk, often it is linked to supply chain issues,” Lefebvre said.

“Milk is disposed only as a last resort after exploring all other alternatives. This is done in accordance with regulations and the costs are borne by the dairy farmers.”

Charlebois has long criticized the supply managed dairy industry.

During his presentation in Regina he said the system “is a wonderful thing but it’s being abused.”

He said Canada must be more consistent about its policies and used the construction of a baby formula plant in Kingston, Ont., as an example.

Canada Royal Milk is owned by the Chinese and was built for $284 million. Ottawa provided $30 million toward construction and the Ontario government provided $24 million.

“This plant now processes Canadian milk for Canadians and actually makes baby formula. My question to you, or to us, why isn’t that plant Canadian?” he asked the audience. “We know why.”

He said supply management doesn’t allow the sector to innovate and vertically integrate, and the Canadian “obsession for marketing boards has allowed the Chinese to build a plant in our own back yard.”

Fairlight, owned by CocaCola, has also built a plant in Peterborough, Ont. to produce lactose-free milk.

“That plant in Kingston is about to export products out of Canada with Canadian milk and we just gave $5 billion to Canadian dairy farmers because we signed three trade deals,” Charlebois said.

“That is not being consistent.”

He also said China received taxpayer funding for its plant while boycotting canola and pork because of the Huawei incident five years.

“That needs to be fixed,” he said.

Charlebois also said Bill C-282 to protect supply management in future trade deals should not pass.

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The increase will be 1.77 per cent, or about 1.5 cents per litre for milk going into processing plants, the Canadian Dairy Commission said Wednesday.

The commission had already published this increase in October, but said Wednesday that “exceptional circumstances” led to the decision to postpone its implementation.

The milk pricing formula includes 50 per cent of the year-over-year change in cost of production and 50 per cent of the change in the Consumer Price Index, or overall inflation.

After the commission published its proposal for the national pricing formula last month, however, the Canadian Federation of Independent Grocers (CFIG) invoked an “exceptional circumstances” process that leads to an additional round of consultations between the CDC and other stakeholder organizations.

Those stakeholder groups include the Consumer Association of Canada, Dairy Farmers of Canada (DFC), Dairy Processors Association of Canada, Restaurants Canada and the Retail Council of Canada, along with the CFIG.

During consultations, DFC said it recommended the delay because of ongoing food inflation.

Grocery stores have been under pressure from consumers and the federal government to stabilize prices, although some observers say most of the price increases are due to multiple factors within the supply chain.

Price changes for consumer products will vary on those factors.

Officials noted Wednesday the 1.77 per cent increase is well below the current overall inflation rate of 4.4 per cent.

— Karen Briere reports for the Regina bureau of the Western Producer.

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The Canadian Dairy Commission — the Crown corporation managing Canada’s milk supply — on Oct. 6 published the results of its Cost of Production survey, as a precursor to setting the annual milk price adjustment due to take effect Feb. 1, 2024.

The commission pegged the 2023 indexed Cost of Production (iCOP) at $93.09 per standard hectolitre, down 1.43 per cent from $94.44 in 2022, but marked the consumer price index (CPI) at 155.4, up 4.98 per cent from the 2022 level of 148.

The commission’s national pricing formula (NPF) is based on 50 per cent of the annual change in iCOP and 50 per cent of the change in the CPI, which in this case would result in an increase of 1.7736 per cent effective Feb. 1, 2024 — although the commission said that figure “is not necessarily equivalent to the next price adjustment.”

READ MORE: Farm-gate milk price increase predictable, says economist

The commission had given stakeholder groups until Friday (Oct. 13) to declare if they wish to invoke the “exceptional circumstances” process — which in turn triggers an additional discussion period with those groups but won’t necessarily lead to a change in the price adjustment.

The participating stakeholder groups include Dairy Farmers of Canada (DFC) as well as the Canadian Federation of Independent Grocers (CFIG), Dairy Processors of Canada, Retail Council of Canada, Restaurants Canada and Consumer Association of Canada.

With two out of three criteria met for invoking the exceptional circumstances mechanism — namely, an “unexpected event” in the view of the stakeholder making the request, and a spread of more than five percentage points between the change in iCOP and CPI — the CFIG has requested the process, the commission said in a statement Friday.

If the exceptional circumstances process hadn’t been triggered, the NPF result would have applied, and the commission would have moved on to hold consultations on the support price for butter.

Now, however, the commission said Friday its NPF result is suspended and the board will hold pricing consultations with stakeholder groups between Tuesday and next Monday (Oct. 23).

But the commission said it will still make a final milk pricing announcement by no later than Nov. 1, to take effect next Feb. 1.

‘In solidarity’

And while the NPF calculations may support a farmgate milk price adjustment of 1.77 per cent, DFC said in a separate statement Friday it will “recommend that this adjustment be delayed.”

“Dairy farmers and their families are also consumers and experience the high cost of food these days,” DFC president David Wiens said. “Recognizing the current level of food inflation and in solidarity with all Canadians, we have recommended the Canadian Dairy Commission delay its application of the price adjustment on milk until further notice.”

However, he added, the retail prices consumers pay for dairy are “ultimately determined by other players in the supply chain. Our hope is that our decision will result in other actors maintaining the price of dairy products at a time when food inflation hovers around nine per cent.”

The commission, in setting the 2023 iCOP, noted dairy farmers saw increases in most indexed key costs, including interest rates.

However, the commission added, those increases were offset by decreases in other costs, such as purchased feed; fuel and oil; and fertilizers and herbicides.

At the close of the cost indexation period in August, the commission said, “several indices seem to stabilize,” such as land and building repairs, and machinery and equipment repairs. — Glacier FarmMedia Network

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The Public Service Alliance of Canada (PSAC) announced after midnight Monday it had reached tentative agreements for workers in four bargaining units who negotiate with the federal Treasury Board of Canada Secretariat.

Among others, the deal covers thousands of workers with the federal agriculture department and related agencies such as the Canadian Grain Commission, Canadian Dairy Commission and Canadian Pari-Mutuel Agency.

Affected units, whose separate collective agreements all expired in the summer of 2021, include:

• program and administrative services, whose 99,000-odd workers at Agriculture and Agri-Food Canada and other federal departments administer programs and handle communications and information services;
• technical services, whose 10,500-odd workers include Canadian Grain Commission employees handling primary product inspections, among other technical and scientific staff;
• educational and library services (about 1,100 workers) and
• operational services (about 10,000 workers), in charge of operating federal buildings and services.

PSAC said its bargaining teams will recommend that workers vote to ratify the tentative agreement. A “full explanation” of the agreements will be provided “in the coming days” once they’ve been translated, after which PSAC members would decide whether to ratify the deal in online voting.

“During a period of record-high inflation and soaring corporate profits, workers were told to accept less — but our members came together and fought for better,” Chris Aylward, PSAC national president, said in a release early Monday. “This agreement delivers important gains for our members that will set the bar for all workers in Canada.”

The federal Treasury Board Secretariat had said in a separate statement Saturday that its negotiators on Friday had tabled “a final updated comprehensive offer that addresses all remaining PSAC demands.”

Affected workers have been on strike since April 19, leading Canadian ag groups to express concern over resulting service disruptions, particularly those affecting grain transportation.

Employees with the affected Treasury Board units are now required to return to work beginning Monday morning at 9 a.m. ET, or on their next scheduled shift after that date.

PSAC said Monday the tentative deal reached for Treasury Board units includes wage increases totaling 12.6 per cent compounded over the life of the agreement, running retroactively from 2021 and through 2024.

The union said it secured an additional fourth year in the agreement that “protects workers from inflation,” plus a $2,500 one-time lump sum payment.

PSAC said the deal also provides its Treasury Board members with “access to additional protection when subject to arbitrary decisions about remote work,” including a letter of agreement requiring managers to assess employees’ remote work requests individually, rather than by group.

The union said it has also negotiated language in the tentative deal to “ensure that in the event of layoffs, PSAC members will not lose their job if they can perform the duties of a contractor already working with the federal government.”

That language “will protect public service jobs and reduce contracting out in the federal public service,” PSAC said, reiterating its position that privatization and contracting out lead to “higher costs, more risk, and reduced quality of services for Canadians.”

Mona Fortier, the federal minister responsible for Treasury Board, said in a separate statement later Monday that “we respect the right to negotiate and appreciate Canadians’ patience and understanding over the past two weeks… These deals are fair, competitive and reasonable, and bring stability to public servants and Canadians.”

Federal Labour Minister Seamus O’Regan later Monday tweeted congratulations to Treasury Board and PSAC officials for reaching their deal, saying “The best deals are made at the table.”

Strike action continues separately Monday for about 35,000 PSAC-represented federal employees at the Canada Revenue Agency (CRA). PSAC said in a separate statement early Monday that “key issues” remain in dispute for that bargaining unit, including wages, telework and job security.

CRA officials said in a release later Monday they and PSAC have now “resumed in-person negotiations with a view to reach a new collective agreement as soon as possible, that is both fair to employees and reasonable for taxpayers.”

PSAC also separately represents about 4,100 federal employees at the Canadian Food Inspection Agency, whose collective agreement expired at the end of 2021. That bargaining unit in March declared an impasse in talks and filed for conciliation. — Glacier FarmMedia Network

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Federal Agriculture Minister Marie-Claude Bibeau on Sept. 27 announced Shikha Jain will be the CDC’s commissioner for a four-year term effective Sept. 15.

Jain, who lives at Guelph, is the CEO for GET Corp., a green tech firm focused on conversion on dairy farms’ organic wastes to renewable natural gas.

A former chief administrative officer for Dairy Farmers of Ontario and CEO for Career Colleges Ontario, Jain “brings extensive experience in strategic and operational planning and is recognized as a trusted and collaborative leader,” the federal government said in a release.

“There is no doubt that Shikha Jain’s extensive experience in strategic planning and sustainability in the dairy industry will be assets for the Canadian Dairy Commission,” Bibeau said in the same release.

“Her guidance will be valuable as the CDC is moving forward with the government’s agenda to advance innovation and (greenhouse gas) emissions reduction.”

The commission is tasked with co-ordinating federal and provincial dairy policies; it administers support prices for butter and skin milk powder and the national marketing quota.

Jain’s appointment fills the vacancy on the CDC’s three-member board of directors, after the appointment of Benoit Basillais as the commission’s new CEO this summer and former commissioner Jennifer Hayes as CDC chair late last year.

CDC governance was flagged in a special report from the federal auditor general’s office in March last year, calling on the commission’s board to keep in touch with the ag minister’s office on a “timely basis” to make sure its board table is fully occupied.

That report found no board meetings had to be cancelled or any decisions left unresolved, but nevertheless, having an empty chair at a three-member board table “poses a significant risk that the board would be unable to make decisions and operate effectively,” the auditor general’s office said at the time.

That poses a risk particularly for the CDC. Its requirement for members to have “significant dairy industry experience” — with one member also serving as CEO — makes it somewhat more likely that a “real, potential or perceived” conflict of interest could pop up, requiring at least one member to abstain from voting on certain decisions. — Glacier FarmMedia Network

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Federal Agriculture Minister Marie-Claude Bibeau on Wednesday announced Benoit Basillais, the CDC’s director of policy and economics, became the Crown corporation’s new CEO effective Monday.

Basillais replaces Serge Riendeau, the dairy producer and former Agropur Co-operative president who’s been the CDC’s chief executive since 2018.

Basillais, who studied agricultural economics in France and has a master’s degree in rural economics from Laval University, has worked for the CDC since 2003. Starting there as an economist, he was named director of policy and economics in 2016.

The new appointee “is very familiar with both the stakeholders and the issues facing the dairy industry,” Bibeau said in a release Wednesday.

“Now as CEO, I trust that he will make a significant contribution to the success of the dairy industry while increasing the transparency of the pricing mechanism.”

The CDC is tasked with co-ordinating federal and provincial dairy policies; it administers the dairy production control mechanism used to avoid production shortages or surpluses. Its CEO serves as one of three members of the commission’s board of directors, along with the chairperson and a commissioner.

Former CDC commissioner Jennifer Hayes was named as its chairperson at the end of 2021, which leaves just the commissioner’s seat vacant at the board table.

CDC governance was raised in a special report from the federal auditor general’s office in March last year, which called on the commission’s board to keep in touch with the ag minister’s office on a “timely basis” to make sure it maintains a full complement at the board table.

That report found no board meetings had to be cancelled or any decisions left unresolved, but having one empty chair at a three-member board table nevertheless “poses a significant risk that the board would be unable to make decisions and operate effectively,” the auditor general’s office said.

That poses a risk particularly for the CDC. Its requirement for members to have “significant dairy industry experience,” with one member also serving as CEO, makes it somewhat more likely that a “real, potential or perceived” conflict of interest could pop up, requiring at least one member to abstain from voting on certain decisions.

Maintaining a full slate of CDC board members, the report noted, is the responsibility of the federal Governor in Council — that is, Canada’s governor general on the advice of the federal cabinet.

An Agriculture and Agri-Food Canada spokesperson said via email Thursday the department is
in the midst of the ongoing process to fill the CDC commissioner position “following the open, transparent and merit-based processes for selecting Governor in Council appointees” — and thus can’t yet say when a commissioner appointee will be named.

The June 30 order in council to appoint Basillais as CDC CEO sets his term at four years.

Basillais “brings with him a complete understanding of the issues faced by the sector,” AAFC said in its statement Wednesday, adding his background and “extensive knowledge of the Canadian supply management system allows him to identify and present innovative approaches to each unique situation.”

Riendeau, whose term as CEO was extended in April 2021 for one additional year, “has worked to improve collaboration between segments of the dairy supply chain, and supported the modernization of supply management,” AAFC said. — Glacier FarmMedia Network

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The Canadian Dairy Commission said Tuesday it will recommend that the farm gate price for milk be increased effective Sept. 1 by $1.92 per hectolitre.

That increase, which works out to 1.92 cents per litre, “will partially offset increased production costs due to inflation,” the CDC said in a release, noting the costs of cattle feed, energy and fertilizer costs have risen 22, 55 and 45 per cent respectively since last August.

The CDC on Tuesday separately announced an increase to its support price for butter, also effective Sept. 1, boosting that rate from to $10.0206/kg, up from $9.7923.

The new farm gate milk prices are to become official on approval from provincial dairy authorities, which is expected in mid-July, the CDC said.

The Sept. 1 milk price adjustment translates to a 2.5 per cent increase on average for the price for milk used in the manufacture of retail and foodservice dairy products such as milk, cream, yogurt, cheese and butter, the commission added.

The farm gate price for milk is typically raised or lowered just once a year at the CDC to reflect changes in costs of production — a schedule Dairy Farmers of Canada said “creates a gap between the true costs of producing milk today and the next annual adjustment.”

DFC had said June 2 that the current “exceptional circumstances” call for a mid-year adjustment to help bridge that gap. The last such mid-year adjustment was made in 2018, the CDC said.

The CDC said Tuesday it “considered possible impacts of a price increase on consumers and demand” in its decision.

Dairy products “must remain affordable” for Canadians, the commission said, also noting dairy farmer revenue had improved in recent months on last February’s farm gate price increase as well as rising world dairy prices.

Factors such as transportation, distribution and packaging costs elsewhere along the supply chain will also play parts in the “net impact” on consumers, the commission said.

Make allowance

According to the Dairy Processors Association of Canada (DPAC), the CDC’s separate increase in the support price for butter works out to 2.3 per cent, reflecting both the mid-year farm gate milk price increase and an increase in the regulated “make allowance” of butter of 2.5 per cent.

The support price for butter is used by the CDC when buying and selling butter under its domestic seasonality program, which kicks in when regulated Canadian milk production exceeds domestic market requirements, at which point the CDC buys butter from processors at the established support price.

The make allowance, or processor margin, refers to the costs incurred to process milk into butter, including labour, packaging and other inputs.

DPAC said Tuesday it had asked the CDC, during its consultations last week, to consider making an upward adjustment in the make allowance. It cited estimates which suggest processor costs have risen more than 12 per cent since last August, mainly on prices for energy, packaging and materials as well as milk.

As for the farm gate milk price increase, DPAC said it doesn’t traditionally take a position for or against an adjustment the CDC recommends.

However, DPAC said, making a mid-year adjustment “will allow for dairy prices to increase more incrementally, and may mitigate the impact on consumers.”

The CDC said Tuesday that while the consumer price index for dairy has increased by 7.7 per cent over the last five years, it rose 14 per cent for meat, 21 per cent for eggs and 32 per cent for fish over the same period.

Over the last 12 months, it noted, farm gate milk prices in the European Union have risen by about 23 per cent. Class I (fluid milk) and class IV (butter and skim milk powder) prices in the U.S. have risen by 49 per cent and 55 per cent in the same period, compared to 6.6 and 38.3 per cent in Canada. — Glacier FarmMedia Network

CORRECTION, June 21: An earlier version of this article incorrectly stated the per-litre value of the announced milk price increase as 0.192 cents.

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The CDC said June 2 it had received a request from Dairy Farmers of Canada for the increase “due to the current inflationary environment.”

If it’s approved, and if the approval sticks to what DFC is requesting, the increase would take effect Sept. 1 and would be deducted from any increase coming out of the CDC’s “routine” milk price review this fall.

The CDC said its board will consult with stakeholders on the matter from Monday to Wednesday next week (June 13-15) and will announce its decision “in the days following these consultations.”

Normally, DFC said in a separate statement June 2, the CDC adjusts dairy farmgate prices once a year to reflect changes in costs of production, based on “numbers from the past year.”

Those numbers, DFC said, “do not reflect the current prices of inputs, which are skyrocketing.” Between last July and this March, costs have risen on inputs such as fertilizer, fuel and cattle feed, by 44, 32 and eight per cent respectively, DFC said.

The CDC pricing methodology “creates a gap between the true costs of producing milk today and the next annual adjustment,” the dairy farmer group said, and the current “exceptional circumstances” call for a mid-year adjustment to help bridge that gap.

Canadians, DFC said, generally understand dairy farmers “are not the cause of food inflation but have to adapt to the current reality just like everyone else,” and dairy farmers also understand the pressures consumers “in all walks of life” face right now.

“It is important to note that dairy farmers do not set prices at retail, or in foodservice, and the farmgate price of milk is just one of the many factors that go into the cost structure for the price paid by consumers for dairy products,” DFC added. — Glacier FarmMedia Network

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Bibeau on Tuesday announced Quebec dairy farmer Jennifer Hayes as the CDC’s new chair for a four-year term starting Dec. 23, 2021.

Hayes, who had served as commissioner on the CDC’s three-person board since January 2017, is the first female chairperson in the commission’s 56-year history, Bibeau noted.

Active in Quebec’s Union des producteurs agricoles (UPA), Hayes comes to the role with “extensive governance experience,” Bibeau said.

Bibeau added she’s “confident that (Hayes) will continue to be an asset to the commission and help the industry remain competitive, productive and innovative.”

Hayes co-owns PineCrest Farms, a dairy and beef operation on Quebec’s Gaspe Peninsula at Shigawake, about 150 km east of Campbellton, N.B.

As CDC chairperson, she replaces Bob Ingratta, a former British Columbia Milk Marketing Board CEO whose two-year term on the national commission expired Dec. 16.

Hayes’ appointment follows recommendations made in a special report from the federal auditor general’s office in March 2021. It called on the CDC board to keep in touch with the ag minister’s office on a “timely basis” to make sure the three-member commission keeps a full complement at the board table.

With Ingratta out and Hayes now promoted, the commission’s only other current board member is its CEO, former Agropur president Serge Riendeau — who Bibeau re-appointed last April for an additional one-year term ending in May 2022.

The auditor general’s report found no board meetings had to be cancelled or any decisions left unresolved, but having one empty chair at a three-member board table nevertheless “poses a significant risk that the board would be unable to make decisions and operate effectively,” the report said.

That poses a risk particularly for the CDC. Its requirement for members to have “significant dairy industry experience,” with one member also serving as CEO, makes it somewhat more likely that a “real, potential or perceived” conflict of interest may pop up, requiring at least one member to abstain from voting on certain decisions.

At the time of the report’s release in March, the CDC said it agreed with the recommendation and was “already in communication” with Bibeau’s office — and with the section of Agriculture and Agri-Food Canada responsible for such appointments — “especially as the term of one of the board members is almost over.”

All that said, the auditor general’s report also noted maintaining a full slate of members is a job “outside the corporation’s control” because those appointments are made by the federal Governor in Council — that is, by Canada’s governor general on the advice of the federal cabinet.

Last April, when announcing Riendeau’s extension as CEO, Bibeau said the federal government had launched appointment processes for a new full-time CEO and new part-time chairperson for the CDC. — Glacier FarmMedia Network

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