Canada Dairy Price Freeze Announced for 2010- USDA FAS

Canada Dairy Price Freeze Announced for 2010- USDA FAS

Earlier this month the Canadian Dairy Commission (CDC) announced that support prices for skim milk powder and butter will remain constant at C$6.1783 per kilogram and C$7.1024 per kilogram, respectively. Support prices are the prices at which the CDC buys and sells butter and skim milk powder to balance seasonal supply and demand changes on the domestic market. Support prices are also used as references by provincial boards to price milk sold to processors who manufacture dairy products such as butter, skim milk powder, cheese, yogurt and ice cream. The CDC argued that despite the economic downturn, the demand for dairy products remained stable during the 2008-2009 dairy year. As reported in previous TWICA’s, the high price of dairy products in Canada has become onerous for consumers and intermediate producers and has hurt Canadian dairy producers’ ability to compete globally. The Canadian Restaurant and Foodservices Association (CRFA) appeared before the commission arguing for a reduction in the price of industrial milk, noting that dairy prices need to be rolled back by 16.5% to bring them in line with the consumer price index. CRFA further contends that even though dairy production costs have declined by nearly 2% this year, the price of industrial milk has skyrocketed by 60%. In Canada, the restaurant industry is a major dairy customer, buying nearly C$2.5 billion in dairy products annually.