The Canadian Dairy Commission said Tuesday it will recommend that the farm gate price for milk be increased effective Sept. 1 by $1.92 per hectolitre.

That increase, which works out to 1.92 cents per litre, “will partially offset increased production costs due to inflation,” the CDC said in a release, noting the costs of cattle feed, energy and fertilizer costs have risen 22, 55 and 45 per cent respectively since last August.

The CDC on Tuesday separately announced an increase to its support price for butter, also effective Sept. 1, boosting that rate from to $10.0206/kg, up from $9.7923.

The new farm gate milk prices are to become official on approval from provincial dairy authorities, which is expected in mid-July, the CDC said.

The Sept. 1 milk price adjustment translates to a 2.5 per cent increase on average for the price for milk used in the manufacture of retail and foodservice dairy products such as milk, cream, yogurt, cheese and butter, the commission added.

The farm gate price for milk is typically raised or lowered just once a year at the CDC to reflect changes in costs of production — a schedule Dairy Farmers of Canada said “creates a gap between the true costs of producing milk today and the next annual adjustment.”

DFC had said June 2 that the current “exceptional circumstances” call for a mid-year adjustment to help bridge that gap. The last such mid-year adjustment was made in 2018, the CDC said.

The CDC said Tuesday it “considered possible impacts of a price increase on consumers and demand” in its decision.

Dairy products “must remain affordable” for Canadians, the commission said, also noting dairy farmer revenue had improved in recent months on last February’s farm gate price increase as well as rising world dairy prices.

Factors such as transportation, distribution and packaging costs elsewhere along the supply chain will also play parts in the “net impact” on consumers, the commission said.

Make allowance

According to the Dairy Processors Association of Canada (DPAC), the CDC’s separate increase in the support price for butter works out to 2.3 per cent, reflecting both the mid-year farm gate milk price increase and an increase in the regulated “make allowance” of butter of 2.5 per cent.

The support price for butter is used by the CDC when buying and selling butter under its domestic seasonality program, which kicks in when regulated Canadian milk production exceeds domestic market requirements, at which point the CDC buys butter from processors at the established support price.

The make allowance, or processor margin, refers to the costs incurred to process milk into butter, including labour, packaging and other inputs.

DPAC said Tuesday it had asked the CDC, during its consultations last week, to consider making an upward adjustment in the make allowance. It cited estimates which suggest processor costs have risen more than 12 per cent since last August, mainly on prices for energy, packaging and materials as well as milk.

As for the farm gate milk price increase, DPAC said it doesn’t traditionally take a position for or against an adjustment the CDC recommends.

However, DPAC said, making a mid-year adjustment “will allow for dairy prices to increase more incrementally, and may mitigate the impact on consumers.”

The CDC said Tuesday that while the consumer price index for dairy has increased by 7.7 per cent over the last five years, it rose 14 per cent for meat, 21 per cent for eggs and 32 per cent for fish over the same period.

Over the last 12 months, it noted, farm gate milk prices in the European Union have risen by about 23 per cent. Class I (fluid milk) and class IV (butter and skim milk powder) prices in the U.S. have risen by 49 per cent and 55 per cent in the same period, compared to 6.6 and 38.3 per cent in Canada. — Glacier FarmMedia Network

CORRECTION, June 21: An earlier version of this article incorrectly stated the per-litre value of the announced milk price increase as 0.192 cents.

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The Expert Working Group on Feed Supplementation, set up by Dairy Farmers of Canada (DFC) and other industry players in February last year to review those claims, said as much Friday as it published its 84-page report reviewing the matter.

Thus, a “key recommendation” of the report is “the need for better and more consistent time series data both when it comes to the evolution of the fatty acid profile of milk and butter, and butter hardness off retail shelves,” the working group wrote.

The 13-member working group, which included reps from the Consumers’ Association of Canada, processors and farmer groups, “cannot conclude that any perceived increase in the hardness of butter be solely attributed to the use of palm-derived feed supplements,” group chair Daniel Lefebvre said Friday in a release.

“There is a variety of factors that influence the fatty acid profile of milk which is only one of the factors that can affect butter consistency. We have also concluded there are gaps in the body of knowledge that should be addressed, and we offered a series of recommendations to better understand issues related to the properties of butter while also ensuring that industry is better equipped to meet consumer expectations.”

DFC, for its part, said in a release Friday it “supports the conclusion of the report” and will fund further research to “address the remaining questions” the report lays out.

All that said, DFC’s recommendation to dairy farmers last February — that they “consider alternatives to palm supplements” in their cattle rations, pending the review’s outcome — still stands.

“In light of remaining unanswered questions, DFC’s recommendation that dairy farmers consider alternatives to palm byproducts supplements in feed rations remains,” a DFC spokesperson said via email late Friday.

Similarly, a request last February from les Producteurs de lait du Quebec (PLQ) — asking that Quebec producers stop using such products in their rations, and that food processors adjust their recipes accordingly — still stands, a PLQ spokesperson said separately Saturday.

The working group’s assignment came in the wake of what DFC last February described as “recent anecdotal reports regarding the hardness of butter.”

Specifically, complaints were appearing on social media from Canadian consumers alleging their recently-purchased butter wasn’t softening to a spreadable consistency at room temperature.

At that time, the working group said in its report, “consumer organizations in Canada received contacts from individuals expressing concerns about this issue; particularly as it related to the use of butter in baking. However, given other issues that were occurring at the time due to the pandemic, these contacts were not widespread.”

Butter samples

The working group, chaired by Lefebvre, the chief operations officer for Lactanet, said Friday it met seven times from March to December 2021 and “sought presentations and reports from several outside experts.”

On top of its literature review, the group also commissioned two “data collection efforts.” One was to assess, compile and analyze data on “the fatty acid composition of raw milk from across Canada.” The other involved collecting 40 samples of retail butter from across Canada and analyzing those samples’ fatty acid profile and “physical properties.”

The working group, in its report, noted there are about 400 different fatty acids in milk, so “when people first heard the term ‘palmitic acid,’ most people had limited background available to understand what it means in the broader scientific context.”

Palmitic acid, the group said, is “the predominant fatty acid in milk, regardless of what cows eat” and “is also the most common saturated fatty acid in nature. Cows produce palmitic acid naturally, along with hundreds of other fatty acids in their milk.”

While livestock feed ingredients also contain such fatty acids, the group said, “feeding cows palm-derived feed supplements is not the main factor contributing to palmitic acid in milk.”

Rather, the group said, most of the palmitic acid in milk comes from the cow’s consumption of “traditional” feed ingredients such as hay, silage, grass and cereal grains and the cow synthesizing it naturally in the udder.

Fatty acid composition of milk, the group said, is also influenced by “a variety of other factors” including — but not limited to — the season, stage of lactation and diet, which in turn is “influenced by geographic region.”

The group’s literature review showed cream handling, temperature of storage and churning are “key factors that may affect the rheological properties of final products” — that is, the melting points of butter or its firmness and perceived “spreadability.”

The group’s consultations with processors found “while there has been a significant shift in demand from the restaurant and hospitality industry to the retail sector” due to the COVID-19 pandemic, there nevertheless has been “no significant change in manufacturing processes and practices over the past year and a half.”

It’s true that palmitic acid concentration in butter is “positively correlated” with the percentage of solid fat in butter and its firmness at room temperature, the working group said, but its survey of retail butter samples found “many other” milk fatty acids are also tied, for better or worse, to the solid fat content and firmness in butter.

Further, the group said, “while the content of palmitic acid in retail butter varies across the country, this variation could not be attributed to one single factor such as feeding cows supplements that contain palmitic acid.”

The group also emphasized any feed-related increases in palmitic acid content in butter would be “modest and extremely unlikely to have human health implications.”

‘Knowledge gaps’

Ultimately, in its report’s summary, the group “observed there is no data to confirm that there has been a change in the consistency of butter over time.”

That same lack of data means it’s “not possible to test for a causal relationship, and therefore draw conclusions” on any link between use of palm byproduct supplements on Canadian dairy farms and the consistency of butter in recent years, the group said.

The working group’s report “sheds light into the knowledge gaps related to the consistency of butter and animal feed supplements containing palm byproducts,” DFC president Pierre Lampron said Friday in that group’s release.

Lefebvre, Lampron said, has been asked to “continue to work with the industry experts in an advisory capacity to help support the design of such future research.”

The Animal Nutrition Association of Canada, which represents feed processors, and the Dairy Processors Association of Canada said Friday they will both keep working with DFC and the industry to continue research into the matter. — Glacier FarmMedia Network

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Dairy Farmers of Canada on Thursday asked its farmer members to “consider alternatives to palm supplements” pending the outcome of a review of “issues that have been raised by consumers.”

The review comes in the wake of what DFC on Feb. 11 described as “recent anecdotal reports regarding the hardness of butter.”

Among those, Dr. Sylvain Charlebois — director of the Agri-Food Analytics Lab at Halifax’s Dalhousie University and a columnist appearing in GFM publications — has taken to social media recently with a stack of consumers’ complaints alleging recently-purchased butter isn’t softening to a spreadable consistency at room temperature.

DFC on Feb. 11 said it was “aware” of those anecdotes and sector officials would work with experts to assess them further, but added it was “unclear whether these refer to imported or domestic butter.”

Furthermore, DFC said at that time, “there has been no recent data to show that the consistency of butter has changed, and we are not aware of any significant changes in dairy production or processing.”

Granted, “many different factors” can affect butter’s taste, texture and melting point of butter in subtle ways — factors including dairy cattle rations.

‘Not new’

Lactanet chief operations officer Daniel Lefebvre, in DFC’s release Feb. 11, said palmitic acid — the naturally dominant type of saturated fat in butter — normally fluctuates within “an expected range” on seasonal and regional variations in dairy cow diets.

That fluctuation, he said, “can influence the properties of the milk fat, which can affect the temperature at which butter will melt,” but he said “routine analyses of the fatty acid profile in milk do not indicate any increase in the proportion of palmitic acid in the past year beyond what would normally be expected.”

However, DFC on Feb. 19 announced it would set up a working group of “stakeholders and experts to assess current literature (and) gaps in data, and look into issues that have been raised by consumers.”

The organization’s move came as the discussion of palmitic acid content turned toward dairy farmers’ use of feed supplements with palm byproducts.

Palm products, DFC said, are sometimes added to rations in limited amounts to increase energy density in cow diets if needed. Dairy farmers in the U.S., U.K., New Zealand and Australia also use such products to “help provide energy to cows, and no undesirable effects have been identified arising from its use in cows’ feed rations.

DFC emphasized the use of palm fat in dairy feed “is not new and is a safe ingredient” approved by the Canadian Food Inspection Agency.

Palmitic acid, DFC said Feb. 19, is a naturally occurring part of the fat of many plants and animals in various levels and is “different from palm fat.”

When supplements of palm fats are fed to dairy cows in Canada, DFC said, the typical amount is small and the increase in the palmitic fatty acid profile of dairy fat linked to the feeding practice is “less than three per cent.”

‘You have questions’

By Thursday, however, DFC said its farmers “have listened attentively to the concerns expressed by consumers in recent weeks over the use of animal feed supplements containing palm byproducts” — and it asked farmers to consider alternatives pending the outcome of its review.

“It is essential that decisions be made on a factual basis and that science guide our sector, hence the creation of a working group of experts,” DFC said Thursday. It reiterated that “all milk produced in Canada is as safe as always to consume and is subject to Canada’s robust health and safety standards.”

Alberta Milk concurred, in a separate statement to consumers Thursday, saying that while supplements with palm byproducts are “used globally and (are) CFIA-certified… you have questions about how it may affect your butter.

“The most important thing to our farmers, and farmers across Canada, is ensuring that we meet or exceed your expectations.”

Les Producteurs de lait du Quebec (PLQ) went half a step further in a separate release Wednesday, calling on Quebec producers to stop using such products in their rations, and asking that food processors adjust their recipes accordingly.

The Quebec organization also demanded that governments and processors impose reciprocal standards on all imported dairy goods and ingredients.

That said, PLQ added it would closely follow any recommendations from the DFC working group on the matter and “adjust accordingly.”

Beyond the butter complaints, PLQ also acknowledged some consumers have separate concerns over the environmental impact of palm production.

PLQ emphasized that the ingredient used in dairy cow rations isn’t pure palm oil, but rather a byproduct — but it also called on the food processing sector to pay attention to the wide use of palm oil in foods. — Glacier FarmMedia Network

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The CDC on Monday announced the farm gate price of milk will increase by $1.46 per hectolitre (100 litres) effective Feb. 1, 2021, pending approval by provincial dairy authorities early next month.

“This year, because of various factors such as the COVID-19 pandemic, the usual pricing formula was not applied,” the commission said in a release.

“The rise in producers’ revenues will partially offset losses incurred due to the COVID-19 pandemic and market trends which have caused revenues to remain below the cost of production.”

That increase is expected to translate to a two per cent increase in the price for milk used to make dairy products for the retail sector and the restaurant industry, the CDC said.

The CDC rendered its decision on the price adjustment of milk based on its own consultations, as it’s allowed to do “under certain conditions” for a given year in which an industry stakeholder asks that the formula not be applied.

The CDC said Monday it won’t change its butter storage fees, which it charges for its storage of a “certain quantity” of butter to guarantee adequate supplies throughout the year and prevent shortages.

That said, the commission added that it recognizes a two per cent increase in butter processing costs, which apply to the butter manufacturers sell to the CDC “in the context of its storage programs.”

To reflect that increase, the CDC said Monday, its support price for butter used in its storage programs will increase effective Feb. 1, to $8.7149 per kilogram from the current $8.5524, itself down 5.1 cents from the adjustment made Feb. 1 this year.

The support price is the price at which the CDC buys and sells butter through its domestic seasonality program, to balance seasonal changes in demand in Canada’s supply-managed domestic market. Provincial marketing boards also use that price as a reference point in pricing industrial milk.

How these adjustments ultimately affect retail prices will depend on “many factors,” the CDC said, such as manufacturing, transportation, distribution and packaging costs.

However, the commission said, “it should be noted that the consumer price index for dairy products has risen by only two per cent since 2015, whereas the index for food in general has risen by 10 per cent.” — Glacier FarmMedia Network

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The commission announced Friday it would maintain the per-kilogram support prices it sets for butter and skim milk powder at $8.0062 and $4.5302 respectively as of Feb. 1.

The support prices for butter and skim milk powder are the prices at which the commission buys and sells those products through its domestic seasonality programs, to balance seasonal changes in demand in Canada’s domestic market.

Provincial marketing boards also use those prices as reference points in pricing industrial milk. The prices producers get for fluid milk are worked out in a separate process.

The support prices have gone unchanged since Sept. 1, 2016, when both were increased in what the commission said would amount to a 2.76 per cent increase in dairy farmers’ overall revenue from industrial milk sales.

That increase had followed a 2.2 per cent hike on Feb. 1, 2016; a decrease of about 1.8 per cent effective March 1, 2015, by way of a boost in the skim milk powder support price alone; and increases of 1.5 per cent in 2011 and 2012, 0.9 per cent in 2013 and one per cent in 2014.

“Despite a small reduction in the cost of producing milk in Canada, we feel that for the sake of the industry’s stability, it is best to leave the support prices of butter and skim milk powder where they currently stand,” CDC chairman Alistair Johnston said in a release Friday.

The margin received by processors for butter purchased by the CDC under the domestic seasonality program will remain unchanged.

Carrying charges, collected by the CDC to pay for the storage of normal butter stocks, also go unchanged, the commission said Friday. — AGCanada.com Network

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The P5 dairy farm boards, representing Quebec, Ontario, New Brunswick, Prince Edward Island and Nova Scotia, announced the quota increase Friday.

The one per cent increase in producer saleable quota is effective Nov. 1.

One incentive day per month — the ability to sell one additional day worth of milk, based on a dairy farm’s current quota — was issued for each month from November until March.

The quota is not cumulative, meaning that there is only one day for each month.

The industry has set a goal of 35,000 tonnes of butter in stock, which has not yet been met.

Organic farmers also got a significant boost in milk-producing potential, but they will have to wait for a while for it to kick in.

Organic dairy farmers will have three incentive days per month from April 2018 to March 2019. The incentive days will not be cumulative.

— John Greig is a field editor for Glacier FarmMedia based at Ailsa Craig, Ont. Follow him at @jgreig on Twitter.

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It will also be implemented quickly, on July 1.

The five provinces — Prince Edward Island, New Brunswick, Nova Scotia, Quebec and Ontario — create quota policy collectively, referred to as P5.

According to Kristin Benke, economist with Dairy Farmers of Ontario, between August 2016 and July 2017, there has been an increase of 12 per cent in quota issued by the P5, including one per cent in August, one per cent in September, three per cent in November, two per cent in December and now five per cent in July.

According to a statement from Dairy Farmers of Ontario and the P5, the increase is needed as there still isn’t enough milk produced to fill the market for butter.

“This decision is intended to ensure P5 milk production continues to fill all current demand, as butter stocks have not surpassed their updated target level of 35,000 tonnes.

“Demand for dairy products continues to be strong while P5 processing capacity has increased since the beginning of April but continues to be closely monitored.”

As butter demand has increased, there’s been an increasing amount of skim milk left, after the butter fat has been removed to make butter and other products.

Without adequate processing for that skim milk, it has become a waste product, sold to feed markets or disposed of.

Increasing investment in processing should take care of some of that excess skim milk powder with the creation of protein isolates.

A new class of milk in Ontario was implemented last spring, called Class 6. It lowered the price of milk to be used to make milk protein isolates in order to compete with imported American milk protein isolate products.

The rest of the country has since followed suit in creating similar pricing, called Class 7, but it is still under discussion.

— John Greig is a field editor for Glacier FarmMedia based at Ailsa Craig, Ont. Follow him at @jgreig on Twitter.

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Michigan-based butter producer Butterball Farms has agreed to sell Stirling Creamery, based at Stirling, Ont., north of Belleville, to Gay Lea effective Nov. 1.

Financial terms of the deal weren’t disclosed, though Gay Lea said it will maintain “full operations” at the Stirling plant and “preserve all relationships” with Stirling’s customers, suppliers and employees.

Stirling Creamery, which was set up by the West family in 1925, today has about 25 employees, mainly in Stirling, with some Toronto-area sales staff.

Stirling makes natural and flavoured butters, including Churn 84 European-style butters, whey butter, the Stirling Premium Balls brand and various types of medallions and spreads for foodservice uses.

In Canada, the company’s products are sold in Ontario, Quebec, British Columbia and Alberta.

Gay Lea said its deal for Stirling will add its butter collections to the Gay Lea product mix, “further increase our production capacity, and support our co-operative’s core principle concern for investment in rural communities.”

The deal also allows Gay Lea “added flexibility to meet customer needs in the current high-demand market for butter,” the co-op said in a release Tuesday.

Gay Lea’s acquisitions in recent years have included Black River Cheese, Hewitt’s Dairy, Salerno Dairy, Ivanhoe Cheese and a stake in goat’s milk processor Mariposa Dairy.

“With this acquisition, we continue the tradition of supporting family farms in Ontario while further strengthening Gay Lea Foods’ presence in the Canadian dairy industry,” Gay Lea chair Steve Dolson said in Tuesday’s release.

Butterball Farms, which bought Stirling Creamery in 2006, has operated since 1951 and also began producing Butterball brand turkeys in 1954.

The company kept the Butterball brand for its butter business when founder Leo Peters sold off the turkey brand and patents in the late 1960s. — AGCanada.com Network

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Mississauga-based dairy co-operative Gay Lea Foods and ingredient processor Vitalus Nutrition of Abbotsford, B.C. on Monday announced a joint venture to be based at an unnamed “existing food manufacturing facility” in Winnipeg.

The joint venture, the companies said, calls for “significant upgrades to modernize” the plant, which in turn will call for “increased drying capacity in Western Canada, and new butter production to respond to market demands.”

The companies didn’t say Monday when they expect to have their operation up and running. A company representative wouldn’t say who now occupies the plant, which is in the Fort Garry area in the city’s southwest. Financial terms of the joint venture also weren’t disclosed.

The new venture marks a westward expansion for Gay Lea, an Ontario producer co-op with production plants and distribution sites in both Ontario and Quebec.

Dairy Farmers of Manitoba, the organization in charge of dairy supply management in the province, will arrange the raw milk for the new plant, the companies said.

Manitoba dairy farmers, they added, will also now get “the opportunity to join Gay Lea Foods as member owners.” The co-op in January this year also expanded its membership to include Ontario dairy goat producers.

DFM chair David Wiens said in a release Monday that the new venture “will help ensure the continued sustainability of the Canadian dairy industry today and for future generations.”

Gay Lea CEO Michael Barrett said the co-op “is excited by the opportunities that the joint venture brings to both the co-operative and Canadian dairy, through increased processing capacity for ingredients and butter while extending our open membership to farmers in Manitoba.”

Vitalus president Philip Vanderpol said the venture will “increase much-needed drying capacity while further developing the dairy ingredients industry, adding growth and new market opportunities for Canadian dairy.”

The B.C. company comes to the table with a proprietary enzymatic process to convert milk byproducts to galacto-oligosacharides — “high-value” carbohydrates used as additives in infant formula and other foods.

Vitalus, whose product lines also include milk protein concentrate (MPC), whey proteins, pasteurized cream and whipping cream, last month picked up a $10 million federal AgriInnovation loan, via the Growing Forward 2 ag policy funding framework, to commercialize a new prebiotic made from milk permeate.

Milk permeate — the lactose byproduct left after milk goes through the filtration process to make MPCs — is otherwise used to help standardize skim milk powder. Prebiotics are non-digestible carbohydrates that act as food for probiotics, the “good” microorganisms that support healthy digestion and help protect the body from harmful bacteria.

Vitalus’ prebiotic can be used in infant formula and other dairy products and beverages, as well as in fruit drinks and fruit preparations, to “enhance their nutritional characteristics,” the federal government said Sept. 9.

The government on Oct. 8 also announced a $3.5 million loan for Vitalus from the Western Innovation (WINN) Initiative, a separate fund to help small- and medium-sized companies move ideas to market. — AGCanada.com Network

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The Canadian Dairy Commission on Friday announced an unusual second increase this year in the support prices it sets for butter ($8.0062 per kilogram, up from $7.7815 currently) and skim milk powder ($4.5302 per kilogram, up from $4.4176).

The adjustments are expected to push up dairy producers’ revenue for the industrial milk they supply to make products such as yogurt, cheese, ice cream, butter and skim milk powder.

The butter support price was previously boosted effective Feb. 1, more than offsetting a substantial cut in the skim milk powder support price at that time.

The increases, according to commission chairman Alistair Johnston, are meant to offset a “significant reduction in producer revenues in the last year.”

That reduction, the commission said, was due in part to increased sales of surplus milk protein into low-priced markets, during a period of decreases in world milk prices.

However, Johnston added, the lower revenue for producers is partly offset by “a declining cost of production, which allowed us to limit the price adjustment.”

The 2.76 per cent boost in expected revenues follows the 2.2 per cent hike that took effect Feb. 1, a decrease of about 1.8 per cent announced in January last year, and increases of 1.5 per cent in 2011 and 2012, 0.9 per cent in 2013 and one per cent in 2014.

The support prices for skim milk powder and butter are the prices at which the commission buys and sells those products through its domestic seasonality programs, to balance seasonal changes in demand in Canada’s domestic market.

Provincial marketing boards also use those prices as reference points in pricing industrial milk. The prices producers get for fluid milk are worked out in a separate process.

The margin received by processors for butter and skim milk powder the commission buys under the seasonality programs remains unchanged, as will the carrying charges the commission collects to pay for storage of normal butter stocks, the commission said Friday.

Restaurants Canada, a longtime critic of Canada’s supply management system and dairy pricing frameworks, warned in a separate release Friday the new support price hikes will cost its members through higher prices for cheese, yogurt, ice cream and butter.

“Cheese is being priced off the menu and another price increase is only going to further drive down demand,” said Pierre Cadieux, the industry group’s vice-president.

“We understand concerns around producer margins, but we need solutions that will increase volumes rather than always increasing prices,” he said. “Today’s announcement is yet another indicator that the current system is not working for producers or end users.”

Canada’s total milk production for the 12 months up to the end of May this year rose 4.46 per cent from the year-earlier period, the dairy commission said in its latest market bulletin last week.

Industrial milk production during that time rose 7.13 per cent, while fluid milk production was down 0.35 per cent, the commission said.

“Production is expected to lessen in the coming months due to the summer heat, but should resume its upward trend once the fall months roll around,” the commission wrote.

Citing data from retail market tracking firms, the commission noted a 3.5 per cent increase in retail cheese sales by kilogram over the 12 months ending May 28 compared to the year-earlier period.

Cream, ice cream and yogurt retail sales rose 4.2, 2.7 and 3.2 per cent respectively during that time, while butter sales rose just 0.5 per cent. — AGCanada.com Network

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