Milk price holds the course

The Canadian Dairy Commission is leaving farmgate milk prices essentially unchanged in 2025, following its annual review of production costs and consumer prices.

The price of fluid milk leaving will decline by 0.02% on February 1, thanks to declines in input costs that marginally outpaced increases in consumer prices. This will mean a marginal decrease in the BC blend price, which has increased sharply over the past two years as fluid milk consumption has increased.

CDC reviews cost of production data annually for more than 200 farms across Canada, including 22 in BC. The data feeds into a national cost of production, weighted by province (BC’s share is 9%), working out this year to a national average of $90.36 per hectolitre (hl).

On the plus side, that’s below the current net blend price BC producers receive of $101.33 per hectolitre.

But no one wants to see a decline.

“We were expecting this,” BC Milk board member Kevin Mammel told producers at their fall producer meeting in Abbotsford, October 28, a few days before the official announcement on November 1. “Your COP has gone down; it has also gone down in other parts of the country.”

The most significant drop came in the price of purchased feed, which fell $2.85 per hectolitre. This more than offset increases in labour, taxes and interest charges.

While the blend price typically rises due to the Consumer Price Index, the decline in feed costs was greater than consumer inflation.

“This is an extreme year; costs have come way off form $93.09 to $90.36 this year. We would have needed a big CPI increase to see a positive increase in the blend price,” Mammel said, referencing costs from two years ago.

Sharply higher consumption of fluid milk is emerging as a good news story for producers and will help offset the impact of the national pricing announcement.

The net blend price in BC has increased about 11% to $91.30 since 2022, according to figures Mammel presented.

“When you put more milk into Class 1A, in fluid, you create more revenue per litre, and that puts your blend price up,” he explained.

The rise in fluid milk consumption is unusual, but speakers at the October 28 meeting noted that price hikes compare favourably to those seen for other proteins.

Shifting market conditions will be discussed at the upcoming BC Dairy Industry Conference in Vancouver on November 27-28.