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Restaurants pan proposed dairy price hike

The Canadian Restaurant and Foodservices Association (CRFA) is crying foul over a proposed increase in Canadian dairy prices.

The group said Thursday that Canadian dairy prices are already among the
highest in the world and could rise for the second time in just six
months — a move it claims would make it more difficult for Canadian consumers and
restaurants to “get milk.”

On Feb. 1, the Canadian Dairy Commission (CDC) increased the price of
industrial milk, which is used to make products such as cheese, yogurt and ice

cream, to $72.40/hectolitre for 2008. This level is well above world prices
and, because of Canada’s supply management system, includes a significant
cushion for dairy producers to absorb rising costs.

Dairy Farmers of Canada (DFC) is now calling for an unscheduled price
increase of nearly 5 per cent to take effect Aug. 1, citing rising feed, fuel and
fertilizer costs, CRFA said.

Under the rules of supply management, the industrial milk price should
reflect the cost of milk production to ensure a fair return to efficient
producers. Over the last 13 years, however, prices have risen 54.5 per cent,
while the cost of producing milk has grown by only 1.5 per cent. Over the same period,
Canadian per capita consumption of dairy products has dropped 8.4 per cent, CRFA said.

“The dairy industry is pricing itself out of the grocery cart and off the
restaurant menu,” said Ron Reaman of the CRFA, whose members collectively represent one of the dairy
industry’s biggest customers. “This spiral of rising prices and falling demand
is a recipe for failure.”

    “We want to work with the dairy industry to grow the market for their
products, but first they must close the gap between inflated dairy prices and
the cost of milk production,” Reaman said in a release.

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