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Canadian Dairy Commission Decides To Reduce Skim Milk Powder Support Price

The Canadian Dairy Commission (CDC) late last week announced a reduction in the support price for skim milk powder that will be effective March 1, 2015.

On that date, the support price of skim milk powder will decline from $6.4754 to $6.3109 per kilogram. The support price of butter will remain unchanged at $7.4046 per kilogram. It had been increased to that price effective February 1, 2014.

Support prices are the prices at which the CDC buys and sells butter and skim milk powder to balance seasonal changes in demand on the domestic market. They are also used as references by provincial marketing boards to price industrial milk.

For Canadian dairy producers, this decrease in the support price should translate into a revenue decline of 1.8 percent or $1.49 per hectoliter for industrial milk used to make products such as cheese, yogurt and skim milk powder.

“This reduction follows a decrease in the cost of producing milk in Canada in the last year. This cost decrease can be seen mostly in feed, milk transportation, fuel, and interest paid,” explained Randy Williamson, chairman of the CDC.

“We are optimistic that this price reduction will help grow the demand for dairy products,” Williamson added.

“Restaurants want to support the growth of the dairy industry... This decrease helps us stop our industry’s declining use of dairy, and promote growth instead.”
Donna Dooher, Restaurants Canada

Restaurants Canada (formerly the Canadian Restaurant and Foodservices Association), which has long decried the regular increases in dairy prices and has advocated on behalf of its members to reduce those prices, welcomed the CDC’s decision to reduce the support price for skim milk powder.

“We applaud the CDC for listening to us and taking this all-important first step to keep Canadian dairy affordable for restaurateurs and consumers,” said Donna Dooher, Restaurants Canada’s interim president and CEO.

The cycle of regular price increases caused dairy consumption in Canada to stagnate, with dairy being priced off Canadian menus as restauratuers turned to other menu options, according to Restaurants Canada.

“Restaurants want to support the growth of the dairy industry, along with other Canadian agricultural sectors,” Dooher said. “This decrease helps us stop our industry’s declining use of dairy, and promote growth instead. It’s a win for everyone.”

Restaurants Canada fully expects dairy processors to pass on the full price reduction to restaurateurs.

The margin received by processors for butter and skim milk powder purchased by the CDC, as well as the carrying charges collected by the CDC to pay for the storage of normal butter stocks, will remain unchanged, the CDC said.

Prices received by Canadian dairy producers for fluid milk are determined by provincial authorities through a process that is separate... send me more information