2008 Industrial Milk Price is a Drop of Good News in a Bucket of Challenges

11/12/07 The Canadian Dairy Commission's decision to increase industrial milk prices by 1% in 2008 is a step in the right direction to bring the exorbitant cost of Canadian dairy products down to earth for consumers and restaurateurs.

The CDC announced last Friday the 2008 price of industrial milk, used to make products such as cheese, yogurt, butter and ice cream.

The Canadian Restaurant and Foodservices Association (CRFA) met with the CDC in November to argue for a price freeze on industrial milk, the price of which has skyrocketed by 54% since 1994, or nearly double the rate of inflation. Over the same period, the cost of milk production has risen by just 1.5%, due to increased productivity.

"With unjustifiable price hikes over the last many years, dairy products have priced themselves off the menu. Restaurateurs want to grow the market for Canadian dairy products, but it can't be done when these products are among the most expensive in the world," says Ron Reaman, CRFA Vice President, Federal.

While the 1% price increase in 2008 is a drop of good news, there are ongoing challenges and questions for restaurateurs and consumers when it comes to Canada's dairy industry:

-   The price of industrial milk is the traditional benchmark from which provincial milk marketing boards set the price for fluid milk and cream. But last year some provincial boards came up with a new equation that led to much higher prices for consumers. Will the same thing happen again this year?
-   Dairy producers are pushing for changes to the compositional standards for cheese that would significantly alter cheese production in Canada. The result will be higher prices and less selection for consumers, including fewer low-fat dairy products available on the market.
-   Pizzerias continue to compete on an uneven playing field with frozen pizza manufacturers when it comes to the price of their main ingredient, mozzarella cheese. Fresh pizza makers are forced to pay prices up to 30% higher than the special price offered to their competitors, frozen pizza makers.
    
"The CDC has made a responsible pricing decision for 2008, but we have a long way to go before we can turn the tide of declining dairy consumption in Canada," says Reaman.