Canadian farmgate milk price to rise 2.8 percent next year

OTTAWA · The Canadian Dairy Commission says the farmgate price of milk will increase by 2.8 percent next year. The change translates to an increase of $0.0259 per litre, or just under three cents per litre of milk. The commission also announced an increase to its carrying charges, which partially offset storage program costs. The combined adjustments result in a total increase of 2.8245 percent in the cost of milk used by processors. The new prices are set to take effect on Feb. 1, 2027, following approval by provincial authorities later this year.

The commission said the decision followed its annual review and consultations with stakeholders. This year's consultations included Dairy Farmers of Canada, the Dairy Processors Association of Canada, the Canadian Federation of Independent Grocers, Restaurants Canada and the Retail Council of Canada. The Consumer Association of Canada was not consulted as it ceased activities in 2024. The CDC said it launched a call for a new consumer representative for future consultations in early 2025 but was unable to secure a suitable organization. "While dairy farmers continue to improve efficiency and productivity on their farms, many of the cost pressures they face, including inflation, rising input costs, and broader economic uncertainty, remain beyond their control," said CDC chair Jennifer Hayes in a press release. "At the same time, consumer demand continues to evolve, with growing interest in higher-protein dairy products. In this context, the CDC Board chose a measured and balanced approach that sets the farmgate milk price adjustment at a level comparable to inflation."

The commission uses a National Pricing Formula to help guide its annual decision. This formula calculates the farmgate price using 50 percent of the annual change in the indexed cost of production and 50 percent of the annual change of the Consumer Price Index. This year, the formula indicated a potential increase of 3.5548 percent for 2027. The CDC said its decision to apply a lower increase reflects its objective of ensuring fair returns to producers while supporting a sector that can respond to changing consumer demand.

The commission said the criteria for temporarily suspending the formula were met, prompting the board to consult with stakeholders and conduct a detailed analysis of the economic and industry context. The decision helps producers manage ongoing cost pressures while reflecting current market conditions and supporting the stability of Canada's dairy sector, Hayes said. The final cost of dairy products on store shelves is influenced by many factors beyond the farmgate price. The commission noted that supply chain costs such as labour, transportation, distribution and packaging also play a role. A change in the price paid to farmers does not necessarily translate to an identical change in the price consumers pay, the CDC said. The 2.8 percent farmgate increase follows a 2.3 percent increase implemented for 2026.

With files from Canadian Grocer and PR Newswire Canada