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Costs call for higher milk prices now: DFC

Rising costs for fuel and other ag inputs make an immediate increase in the price paid for milk at the farm gate urgent for dairy farms to stay solvent, the Dairy Farmers of Canada warned Monday.

The DFC recently asked the Canadian Dairy Commission for an immediate increase of 3.5 cents per litre for milk sold from farms.

“Our data for October 2007 to August 2008 shows that fuel prices will
have increased by more than 40 per cent, feed will have risen almost 20 per cent and
fertilizer and herbicides costs will have climbed 46 per cent,” said Jacques Laforge, president of the DFC.

“These are drastic
increases for any business,” said Laforge, a dairy farmer and crop producer from Grand Falls, N.B. “Many farmers across Canada need this increase to
stay solvent.”

There is a “long lag” between the
formula used by the dairy commission to calculate the costs of producing milk on
farms and their ability to reflect the costs of the current situation by way of a price increase, the DFC said Monday. “By the time the formula catches up, the increased costs will have gone up even more.”

“We think that under the current circumstances, the commission should
immediately act to offset these cost increases,” Laforge said. “An interim increase would
alleviate cost pressures facing farmers sooner and avoid a drastic increase in
the winter, which could disrupt the ongoing stability of our markets.”

The Canadian Restaurant and Foodservices Association last week panned the dairy farmers’ proposal for an unscheduled increase. The CRFA used a combination of its own figures and Canadian Dairy Commission figures to claim industrial milk prices have risen 54.5 per cent in the last 13 years. During that time, the CRFA said, the cost of producing milk has risen just 1.5 per cent due to improved production.

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