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Skim milk powder, butter supports to rise Feb. 1

Canadian dairy farmers can expect about a 1.5 per cent increase in per-hectolitre revenue from industrial milk starting Feb. 1.

The Canadian Dairy Commission on Friday rolled out the increases for support prices for butter and skim milk powder to take effect Feb. 1, 2011.

“The current situation is that farm revenues are lagging behind cost increases, especially since there was no rise in support prices last year,” CDC chairman Randy Williamson, a former president of processor Saputo’s dairy products division, said in Friday’s release.

Support prices are those at which the CDC buys and sells butter and skim milk powder to balance seasonal demand changes on the domestic market.

The skim milk powder support price will rise 1.5 per cent to $6.2721 per kilogram, up from $6.1783. The margin processors get for skim milk powder bought by the CDC will rise 12 cents per hectolitre to take into account rising processing costs.

The support price for butter, meanwhile, will rise about 1.3 per cent, from $7.1024 to $7.1922 per kg, and will also include a reduction of one cent per hectolitre in the carrying charges the CDC collects to pay for storage of normal butter stocks.

For dairy producers, this translates to a revenue increase of $1.12 per hectolitre for industrial milk, which is used to make products such as yogurt, cheese, butter and skim milk powder.

However, fluid milk and cream prices paid to dairy farmers are penciled out separately by individual provinces’ dairy authorities, so the overall increase paid to producers may vary depending on those authorities’ decisions.

“Falls short”

Canada’s national dairy farmers’ group on Friday blasted the CDC’s announcement as too little and quite late.

“This falls short of covering increasing costs to produce milk on dairy farms,” Dairy Farmers of Canada president Jacques Laforge, a New Brunswick dairyman, said in a separate release.

“Dairy farmers have not seen an increase for industrial milk at the farm in the last two years. During that period, costs for farm input items like fuel were up 23 per cent. Feed costs on dairy farms increased by seven per cent in the last year alone.”

Furthermore, he said, “this price change won’t be implemented until February 2011, adding a further lag in our ability to recover cost increases.”

The impact of the support price increase at the retail level, meanwhile, is expected to be influenced by many factors, the CDC said, such as manufacturing, transportation, distribution and packaging costs throughout the supply chain.

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