Local milk producers welcome rising milk prices as production costs rise

A recommended increase in the price dairy farmers receive for their product comes as a relief to farmers in eastern Ontario who have been dealing with rising production costs.

Last week, the Canadian Dairy Commission recommended a 8.4 percent increase in farm milk prices, equivalent to an extra six cents per liter.

The Crown company made the recommendations based on rising costs for feed, energy and fertilizer, but local farmers say feed costs have hit them hardest.

Peter Ruiter, who owns Blackrapids Farm in Ottawa, says he has never seen feed prices, especially grain, rise as fast as they have in the past year.

“It’s squeezing my whole yard,” Ruiter said. “You squeeze yourself back, try to reformulate your rations, but I’m only trying to do the best for my cows, so I try to feed them properly.”

Dairy farmers say the price of soybeans and other grains has made it more expensive to feed their cows. (Nati Harnik / Associated Press)

‘Player catch-up’

Trevor Cunning of StarHill Farms in Vankleek Hill, Ont., Says he estimates the price of his feed has risen 20 to 25 percent in the past year.

“It reflects the market, grain prices are good right now, so feed companies … obviously need to charge more. It’s just part of the business,” Cunning said.

For Ruiter, the rising costs meant he had to cut back on some other expenses, such as vacation time and equipment, but said he still ran in the red for a few months last year.

“We had not predicted that the price of grain would rise in the air,” he said. “So the last year we’ve been playing catch-up.”

Ruiter said the price increase will help bring his farm back to profitability, but Cunning said it will probably only be enough to offset his rising costs.

“I do not know if we are going to make more money than we did before, but I think it will help us pay our expenses,” Cunning said.

The price increase is likely to affect how much consumers pay for dairy products at the grocery store. (Jonathan Hayward / The Canadian Press)

Milk, butter, cheese, yogurt should be more expensive

It is unclear how much of the increase will be passed on to consumers.

Milk prices vary across the country, and some merchants use milk as a “loss leader” to attract customers, according to Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University.

Overall, he told the Canadian press that the retail price of milk in grocery stores could rise as much as 10 percent, while the prices of dairy products such as butter, cheese and yogurt could rise as much as 15 percent.

“This is clearly a record high increase,” Charlebois said, adding that the 8.4 percent farm price increase is almost double the previous 4.52 percent record set in 2017.

Ruiter said he feels bad about consumers potentially having to eat the price increase, but said that without it, he would not be able to keep up.

“I love the job, but it’s a little too big an investment to be a hobby,” he said.

The price increase is expected to be approved by the provincial authorities next month and take effect on 1 February.

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