Milk prices are based on a formula that includes the cost of farming, disposable income and consumer prices. CBC

The New Brunswick Farm Products Commission is defending its decision to hike milk prices for the second time in a year and the way it regulates its prices.

The commission raised the price of milk by about four cents per litre on Aug. 1, after a similar increase of five cents per litre on Feb. 1.

In the latest increase in milk prices, the farm products commission allowed the cost of milk for school children to be increased for the first time in seven years.

Dan Draper, an official with the commission, said the supply management system stabilizes milk prices for farmers and he said that helps them stay in business.

While the system may translate into higher prices, Draper said it offers consumers a clear choice.

"Do New Brunswickers, or Canadians, want to be fed by New Brunswickers or Canadians, or do they want to rely on their food source from other countries?" Draper said.

The province's supply management system pools milk from New Brunswick farms with those in four other provinces.

The commission bases its prices on a formula that combines consumer prices, disposable income, and farming costs. The recent increase was blamed on the higher prices of fuel, fertilizer and feed.

Draper said the system is designed to give farmers and processors stable prices.

"The predictability in price probably costs us a bit. Then it comes down to, you can make the argument that if we let the milk in from Maine, that might wipe out the dairy producers in New Brunswick," he said.

Cross-border shopping

The milk price regulation system has not stopped New Brunswickers from being lured into the United States to save money.

Many New Brunswickers who live near the U.S. border, cross over to Maine to buy cheaper milk.

Draper said U.S. suppliers offer discounts near the border to attract Canadians to their stores. However, he said the New Brunswick system prefers to enforce a common price across the province.

"It is a bit cheaper, probably, right along the border with Canada, but that doesn't give you the whole picture," Draper said.

The option of cheaper milk does tempt people, such as Ian McLean.

McLean's mini-fridge at his Mactaquac campsite is stocked with four-litre jugs of milk.

His family goes through four, four-litre jugs in a week. McLean said he finds himself tempted by cheaper American milk, which is roughly 20 minutes from his home near Hartland.

"If we were to buy all our milk over there, we'd be looking at $16 a week in savings, which is about $64 a month," he said.