Local dairy farmers welcome rising price of milk as production costs soar

A recommended increase to the price dairy farmers receive for their product comes as a relief to eastern Ontario farmers who have dealt with rising production costs.

Price increase likely to affect how much consumers pay for dairy products

Ottawa dairy farmer Peter Ruiter says the price of feed has 'skyrocketed' this year, putting pressure on his bottom line. (Hallie Cotnam/CBC)

A recommended increase to the price dairy farmers receive for their product comes as a relief to eastern Ontario farmers who have dealt with rising production costs.

Last week the Canadian Dairy Commission recommended an 8.4-per-cent increase in farm gate milk prices, which works out to an extra six cents per litre.

The Crown corporation made the recommendations based on rising costs of feed, energy, and fertilizer, but local farmers say feed costs have hit them the hardest.

Peter Ruiter, who owns Blackrapids Farm in Ottawa, says he has never seen feed prices, specifically grains, rise as fast as they have in the past year.

"It squeezes my whole farm," Ruiter said. "You squeeze back, try to reformulate your rations, but I'm only trying to do the best for my cows, so I'm trying to feed them right."

Dairy farmers say the price of soy beans and other grains have made it more expensive to feed their cows. (Nati Harnik/Associated Press)

'Playing catch-up'

Trevor Cunning of StarHill Farms in Vankleek Hill, Ont., says he estimates the price of his feed has gone up 20 to 25 per cent in the last year.

"It's reflective of the market, grain prices are good right now so the feed companies ... obviously have to charge more. That's just part of business," Cunning said.

For Ruiter, the rising costs meant he had to cut back on some other expenses such as vacation time and equipment, but said he still ran into the red for a few months this past year.

"We didn't forecast the price of grains to go skyrocketing," he said. "So this past year we've been playing catch-up."

Ruiter said the price hike will help return his farm to profitability, but Cunning said it will likely only be enough to offset his rising costs.

"I don't know if we'll be making any more money than we were before, but I think it will help us pay our expenses," Cunning said.

The price hike is likely to affect how much consumers pay for dairy products at the grocery store. (Jonathan Hayward/The Canadian Press)

Milk, butter, cheese, yogurt set to be more expensive

It's unclear how much of the increase will be passed along to consumers.

Milk prices vary across the country, and some grocers use milk as a "loss leader" to attract customers, according to Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University.

Overall, he told the Canadian Press the retail price of milk in grocery stores could increase as much as 10 per cent while prices for dairy products like butter, cheese and yogurt could soar as much as 15 per cent.

"This is definitely a record-setting increase," Charlebois said, adding the farm gate price hike of 8.4 per cent is nearly double the previous record of 4.52 per cent set in 2017.

Ruiter said he feels bad for consumers having to potentially eat the price hike, but said without it he wouldn't be able to last.

"I love the job but it's a little bit too much investment to be a hobby," he said.

The price hike is expected to be approved by provincial authorities next month and take effect Feb. 1.

With files from Denis Babin and the Canadian Press