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Milk, butter and yogurt prices for Canadians will likely skyrocket in the new year.Jesse Johnston/The Canadian Press

Sylvain Charlebois is a professor of food distribution and policy and the director of the Agri-Food Analytics Lab at Dalhousie University

The Canadian Dairy Commission announced last week that dairy farmers will get an unprecedented 8.4 per cent more for their milk, and more than 12 per cent for butter, starting in February. It is the highest increase since the commission was created in 1967. Provincial boards will need to approve these increases but that will likely not be a problem. For consumers, this is certainly not great news. Milk, butter and yogurt prices will likely skyrocket in the new year.

Canadian milk was already the most expensive in the world, has been for many years. The Canadian Dairy Commission, or CDC, is the centrepiece of our supply management system for dairy. In Canada, we produce what we need, and dairy farmers get a fair price for their work. Sounds reasonable.

Canadian Dairy Commission recommends large increase in farm gate milk prices

Only a privileged few can produce milk in Canada, making milk itself almost a public good. Most people are willing to pay extra for good Canadian milk and dairy products. Even without supply management and our quota system, milk prices would likely still be high, perhaps even higher, but it is sensible to believe Canadians still want domestic quality.

But in recent months, Canadians have seen that quality may not always be there. “Buttergate,” which shone light on the practice of feeding cows with palmite, a palm oil derivative coming from other parts of the world, affecting our butter’s hardness, made many Canadians scratch their heads. Why would we import an ingredient from abroad to produce butterfat when the Blue Cow brand is all about local, thus compromising quality?

The Dairy Farmers of Canada banned the practice in the spring and created a working group to investigate the matter. So far, the group has not released a single report about its progress and new quality assurance practices the industry is pursuing at retail. There’s not one hint of transparency to reassure Canadians.

With this latest increase, raising farm gate prices for milk so farmers can make a decent living is not really the issue. What’s problematic is the way the CDC does it.

The Crown corporation, owned by all Canadians, is controlled by three people, all with dairy connections. Processors, retailers and, most importantly, consumers are not even represented on the board. To be clear, the 72 people working for the CDC in Ottawa are working for the Canadian public, not dairy farmers. We set dairy prices, not farmers themselves as supply management is a regime owned by all Canadians.

However, 91 per cent of the Canadian public doesn’t even know the CDC exists or how the commission operates, even though its decisions affect the lives of most Canadians. Again, the CDC has not shown any interest in being transparent and forthcoming with information. The CDC’s press release about the record-breaking price hikes, posted on late Friday afternoon, was never shared by the Crown corporation, but by citizens on social media.

The other concern many observers have are methods used to calculate these increases. The CDC will post a very simple seven-page report in a few weeks explaining how it calculated the increase. Not only is raw data not provided, but we have no idea if data used in the pricing formula are verified by competent authorities.

From what we know, all the data are self-reported by a group of randomly selected dairy farmers, so reports state. The sophistication of these reports is worthy of the work of a young university student at best. All reports are worded the same, every year, with a few exceptions. Numbers do change, but that would be the extent of it.

Higher milk prices won’t be good news for consumers, but it won’t be good for the dairy industry either. With this decision, we’re expecting more illegal milk from the United States to enter the Canadian market, as was the case a few years ago with diafiltered milk. Goat milk and other alternatives on the market will become more financially attractive as prices for milk and dairy products continue to rise. But dairy farmers won’t care. Most will cash out and exit the industry while others continue to do well under a regime that guarantees them revenue.

Great for them, but we’re on pace to lose half of our dairy farms in Canada by 2030. We could have fewer than 5,000 farms within the next decade. If that’s what Canadians want, fine. But if we want to really help our dairy industry, a good starting point would be to reform the CDC and address its questionable governance and opaque processes.

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