An increase in the cost of milk and butter coming soon to the dairy aisle is the result of the rising costs facing farmers, says the owner of Lock City Dairies.
The Canadian Dairy Commission (CDC) is the body that oversees the supply management system for the dairy industry in Canada. It is recommending an increase in the farm gate milk prices, which amounts to six cents per litre.
That 8.4 per cent jump in the price of wholesale milk is nearly double the 2017 jump of 4.52 per cent, which was the previous record increase.
The increase in wholesale milk prices will be joined by a 12.4 per cent increase in the wholesale cost of butter.
Those increases are expected take effect early in the new year and will most likely be passed on to the consumer when they buy from retail sources like supermarkets and restaurants.
The CDC said in a recent news release that those increases will partially offset the increased production costs due to the COVID-19 pandemic.
Higher prices in milk and butter reflect an increase in costs incurred by farmers and are a long time coming, said Vic Fremlin, owner of Lock City Dairies in Sault Ste. Marie.
“In the last couple of years we have had quite a number of expenses that have really gone through the roof, like they have for many businesses across the country,” said Fremlin.
The price of just about everything associated with farming has gone up, said Fremlin, from feed to fuel and the cost of equipment.
“This year because of the dramatic price increases they had no choice, the farmers can’t stay in business.” Said Fremlin. “When inflation comes in on these big operations, it’s very devastating if they don’t have some kind of mechanism to make sure we are, if not profitable, at least be able to pay our bills.”
Lock City Dairies produces milk products from cows on Fremlin’s own farm land, as well as other farmers in the Algoma district. .
“We have to get a raise on this thing or you won’t have farmers and if you don’t have farmers you won’t get fed. Farmers just want to cover their costs,” said Fremlin.
The increase is expected to affect large producers, as well as smaller operations like Lock City Dairies. Fremlin said he hopes consumers will continue to buy his milk because that money stays in the community through the company’s support of charities like the United Way and the Sault Ste. Marie Soup Kitchen Community Centre, among others.
“We live in a great community and we just have to keep working at it,” said Fremlin.
The planned increase is based on a formula used to break down the amount payed to farmers based on the costs they incur, said Fremlin.
“Every farmer in Canada is going to get that eight per cent, they got to pay it to them,” he said.
Fremlin said the CDC often approves an increase in the gate fee, but recalls at least one time it was actually lowered.
“They were showing we were making more money than we need to make and we went backwards two per cent,” said Fremlin. “If prices drop down they will take it away, too.”
- SooToday.com
