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Adjustment to the Support Price for Butter on September 1, 2018
OTTAWA, July 20, 2018
The butter support price will increase as of September 1, 2018. It will be raised from $8.0062 per kg to $8.3901 per kg.
The cost of production of milk rose by 5.1% in Canada in the last year. This increase in costs is mostly due to higher prices for fuel and feed. Higher interest rates also increased the cost of production.
On July 11, 2018, the Canadian Dairy Commission held consultations with industry stakeholders relative to a potential adjustment of the butter support price. The CDC then decided to adjust the butter support price to compensate the rise in cost of production.
The CDC expects this support price adjustment to increase overall producer revenue by approximately 4.1%. The cost of raw milk for the processors who make dairy products will increase by the same percentage.
The impact of this adjustment at the retail level will be influenced by many factors such as manufacturing, transportation, distribution, and packaging costs throughout the supply chain. It is also important to note that the consumer price index for dairy products decreased by 2.5% since 2013 although the price index for food increased by 9.0% on average.
The margin received by processors for butter purchased by the CDC under the Domestic Seasonality Programs will remain the same. Carrying charges collected by the CDC to pay for the storage of normal butter stocks will also remain unchanged.
There will not be a price adjustment in February 2019.
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