The price of wholesale milk will increase by 8.4% and the price of butter by 12.4%
According to the owner of Lock City Dairies, the increase in the cost of milk and butter that will soon arrive in the dairy aisle is a result of the rising costs facing farmers.
The Canadian Dairy Commission (CDC) is the body that oversees the dairy industry’s supply management system in Canada. He recommends an increase in farm gate prices for milk to six cents a liter.
This 8.4% jump in the wholesale milk price is almost double the 4.52% jump in 2017, which was the previous record increase.
In addition to the increase in wholesale milk prices, there will be a 12.4 percent increase in the wholesale price of butter.
These increases are expected to take effect early in the new year and will most likely be passed on to consumers when they shop from retail sources like supermarkets and restaurants.
The CDC said in a recent press release that these increases will partially offset the increase in production costs due to the COVID-19 pandemic.
Higher prices for milk and butter reflect increased costs to farmers and will be long overdue, said Vic Fremlin, owner of Lock City Dairies.
“Over the past couple of years we’ve had a number of expenses that have really exploded, as they have for many businesses across the country,” Fremlin said.
The price of just about anything associated with farming has gone up, Fremlin said, from food to fuel and the cost of equipment.
“This year, due to the dramatic price increases, they had no choice, farmers cannot stay in business. Said Fremlin. “When inflation hits these big deals, it’s very devastating if they don’t have some sort of mechanism to make sure we’re, if not profitable, at least able to pay our bills.”
Lock City Dairies produces dairy products from cows on Fremlin’s own farmland, as well as other farmers in the area.
“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 be fed. Farmers just want to cover their costs, ”Fremlin said.
The increase is expected to affect large producers, as well as small farms like Lock City Dairies. Fremlin said he hopes consumers continue to buy his milk because that money stays in the community through the company’s support for charities like the United Way and Sault Ste. Marie Soup Kitchen Community Center, among others.
“We live in a great community and we just need to keep working in it,” Fremlin said of the company’s community support initiatives.
The planned increase is based on a formula used to break down the amount paid to farmers by the costs they incur, Fremlin said.
“Every farmer in Canada is going to get that eight percent, they have to pay them,” he said.
Fremlin said the CDC often approved an entrance fee increase, but at least recalled once it was lowered.
“They were showing we’re making more money than we need and we’re down 2%,” Fremlin said. “If the prices go down, they’ll take it too. “