Hallowe’en saw the Canadian Dairy Commission treat milk producers to news of a 2.3% price increase on February 1, 2026.
The increase is determined by the National Pricing Formula, which is based half on the variation in the indexed cost of production and half on the consumer price index (CPI). Dairy prices per the CPI increased 2.7% over the past year, versus 2.5% for food products as a whole.
However, the retail price of dairy products is not regulated, only what producers receive, meaning CPI figures are typically higher.
The net impact of these increases on the final cost of dairy products is unknown since prices are also influenced by incremental factors further along the supply chain such as labour, transportation, distribution and packaging costs,” the announcement explains. “A change in price paid to farmers for their milk does not necessarily translate to a similar consumer price change.”
The announcement said the increase “supports dairy producers in managing rising input costs while maintaining affordability and stability for Canadian consumers.”
But the commission sent mixed signals on which inputs were driving production costs higher.
A preliminary announcement on October 6 noted “interest rates and purchased feed costs have decreased” since 2024, consistent with discussions during producer meetings earlier this year.
While these should have been mitigating forces, dairy commission chair Jennifer Hayes said producers continued to face high input costs from, among things, feed.
“While Canada’s inflation rate remained within the target range throughout 2024, producers continued to face upward pressure on costs,” commission chair Jennifer Hayes says. “The cost of animal feed and labour contributed to sustained cost pressures.”
However, the upward pressure wasn’t sufficient for producers to invoke the “exceptional circumstances” mechanism.
In 2022, significant upward pressure on input costs resulted in two price increases being announced, while last fall saw a marginal decrease announced.
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