The Stability Story in Canada’s Dairy Industry18 December 2012
The fluctuations of the dairy markets and the performance of Canadian dairy farmers are analysed after a turbulent year for milk prices. The effects of industry regulations are investigated by Dairy Farmers of Canada.
In 2012, the world dairy markets saw prices go down again, while feed prices are increasing. American dairy farmers are generally losing money as a result, a situation that is similar to the story of Canadian pork producers and other sectors. The Farm Bill has expired on September 30th, temporarily leaving the US dairy farmers without a safety nets until Congress returns in November. The ongoing debate around the Dairy Security Act, which focuses on the margin between farm-level milk prices and feed costs, clearly indicates the failure of existing programs to create a stable environment.
Retail and Farm Price of Dairy Products in the UK (1995 = 100)
On the other side of the ocean, farmers have protested
low prices in the streets of Brussels, Scotland and Great
Britain. A number of co-ops and retailers were proposing
to reduce the price they paid to farmers as these farmers
faced increased costs. The UK farmers organised the
“SOS Dairy” campaign, complete with a social media
component and a song that went viral. Thankfully, the
public support made the buyers back away from the
In the mid 1990s, the United Kingdom deregulated its dairy industry. As a result, farm prices went downwards and became more volatile. Meanwhile retail prices for milk, cheese and other dairy products kept increasing at different rates. In Australia, deregulation also created more price volatility at the farm level while retail prices increased.
Farmgate and Retail Price Indices, Australia (1990=100)
Deregulation and volatility do not benefit consumers and fail farmers. Canadian dairy farmers are quite aware of the difficult situations their fellow dairy farmers in other countries are facing. It reinforces our belief that supply management remains the best system in the world. Farmers are actively working to meet and anticipate the needs of the evolving marketplace in Canada. DFC sees supply management as a key to maintaining the prosperity and viability of the Canadian dairy industry and expects the government to live up to their commitment to continue to defend supply management, so Canada’s dairy industry stays strong.
Further ReadingYou can view the full report by clicking here.