Canada to increase farm gate milk price 2.2% in 2023

The consumer price index for dairy increased by 12% over the last 5 years
calendar icon 4 November 2022
clock icon 2 minute read

In October 2022, the Canadian Dairy Commission (CDC) conducted the annual review of Canadian farm gate milk prices. As a result of the review and consultations with stakeholders, the CDC intends to implement the following change on February 1, 2023.

The farm gate milk price will increase by 2.2% which translates to $0.0174(less than 2 cents per litre). This increase is the result of the National Pricing Formula, a pricing mechanism that was determined by the industry. It takes into account dairy farmers' costs of production as well as the consumer price index. As indicated last June, the increase of the price of milk at the farm level that took place on September 1st, 2022 was subtracted from the result of the pricing formula.

In the last year, producers faced increases in feed costs, fertilizer costs, fuel costs, and interest rates. Disruptions to supply chains continue to put upward pressure on input costs. However, investment and productivity gains at the farm offset some of these increases.

The cost of milk used to make dairy products such as milk, cream, yogurt, cheese and butter for the retail and restaurant sectors will increase by an average of 2.2%. The net impact on consumers will also be influenced by factors such as transportation, distribution and packaging costs throughout the supply chain. The price paid to farmers is only part of the price paid by consumers.

In the last year, the average annual consumer price index for dairy products increased at a comparable rate (6.0%) to all food products (6.3%). In the last five years, the average annual consumer price index for dairy increased by 12%. This compares to 21% for meat, 27% for eggs, and 15% for fish.

The new farm milk prices will become official once they are approved by provincial authorities later in 2022.

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