Dairy commission drops prices as concerns rise about EU trade deal
Optimism that price reduction will help grow demand for dairy products
Canadians could be paying less for cheese and yogurt in a couple of months after the Canadian Dairy Commission announced it is reducing the price of skim milk powder beginning in March.
The timing of the dairy commission's decision to lower its price comes as a potential trade agreement with Europe is being discussed. That agreement could allow as much as 17,000 tonnes of cheese to come into Canada, none of it produced with Canadian milk.
The CDC sets limits on the total amount of milk products that can be produced, and issues "support prices" at which it would be willing to buy different dairy prices. That's designed to ensure supply and keep consumer prices reasonable.
The dairy commission is dropping the support price on skim milk by about 16 cents.
"We are optimistic that this price reduction will help grow the demand for dairy products," Randy Williamson, CDC chairman said in a statement.
Good news for consumers
An association representing restaurants across Canada said the price drop could translate into cheaper prices for consumers.
"This decrease helps us stop our industry's declining use of dairy, and promote growth instead. It's a win for everyone," said Donna Dooher, interim president and CEO of Restaurants Canada.
But consumers won't see the benefits right away — if, at all.
"Even if processors do get benefits, they may not pass on savings to consumers," said Sylvain Charlebois, a food policy and distribution specialist at the University of Guelph.
Canadian dairy farmers are quite concerned about the EU trade agreement at the moment, said Charlebois, who is currently researching the Canadian-EU Trade Agreement (CETA) in Austria.
"CETA may actually create a breach within supply management and that's probably why the CDC is a little bit concerned and wants to show supply management as it stands right now is a flexible mechanism," Charlebois said.