The national position that was taken on the price of milk reflects a desire to keep the balance: the balance between the necessity of covering our production costs, which face pressure from higher interest rates, and our desire to keep milk an accessible, staple food for the public. As an organization, we have to listen. In fact, our role is twofold: We act as a union, but are also responsible for marketing milk.
Dairy producers are closely connected to the public and consumers. This can be seen in our milk donation program for food banks and our efforts to meet social expectations, but also in our support for product development and innovation in dairy products that consumers love. According to Statistics Canada, in 2021, 14% of household grocery budgets went to dairy products and eggs. This shows that our products are a staple food appreciated by consumers, but also that we are fortunate to have an important role in feeding the population. Furthermore, the Hunger Count tells us that one out of every 10 Quebecers went to food banks last year. This is a worrying statistic. The government is responsible for providing the public with a social safety net.
This balanced position was taken in consideration of the huge pressure from interest rates. Therefore, the decision to postpone the increase should not be construed as a cancellation of the formula we use. As you know, interest rates have exploded since 2022, which has put more pressure on our farms every month. In addition to this pressure, inflation is also taking a toll on our operating costs.
In the interest of reconciling these two situations – consumers’ weaker buying power and dairy farms’ financial health – a decision had to be made that forewent the usual approach. In our earnest attempt to protect our income, we may have sent the message that we are cut off from consumers’ reality. Yet, given the financial challenges on farms, turning down an increase would quite simply not have been an acceptable option. Postponing the increase by a few months is a better compromise. Our message to consumers, governments and the industry is clear: We are part of the fight against food inflation that is affecting too many people, including some of our loved ones.
Nevertheless, producers are entitled to expect their income to rise, which will be the case on May 1, 2024. After all, we have opted for a formula that factors in production costs and inflation in the price that is set. We hope that the later effective date of the increase will result in higher revenue for producers once the inflationary trend, especially in the food industry, has finally faded.
Ultimately, we cannot forget that in addition to inflation, dairy and agricultural producers face a number of other types of pressures and we are within our rights to expect government support. Some of these pressures include adapting to a new code of practice, staying resilient against climate change, bearing heavy regulatory and administrative burdens, and simply protecting our farmlands and territory. Our governments will need to be visionary and coordinate their decisions so that our sector is able to meet these challenges.
For our part, we will keep innovating and making bold efforts to overcome them. The CDC’s announcement shows that we are ready to do our part, but not without the required increase in our revenue.
Daniel Gobeil, Chairman