Commentary
By Sylvain Charlebois

Milk and cream are important foodstuffs in our diet.

Cheese, yogurt and butter are cherished by many, and average households spend between 10-15 percent of their food budget on them.

Our love for dairy products will be put to the test since most are going to cost much more.

Last fall, the Canadian Dairy Commission recommended an increase of at least 8.4 percent on the price of milk paid to producers. For butter, the increase will exceed 12 percent. This is the largest increase announced by the commission in more than 50 years, almost double the previous record.

Under our supply management system, the Crown agency must identify more than 200 dairy producers annually to determine the real costs of production on the farm. Once the data is collected, it is averaged and used to determine a fair and equitable income for dairy producers. A simple process, but it is marred with anomalies and secrets.

Few people know exactly where the figures come from, let alone know what the commission does. Even many dairy farmers have no idea how it works.

Owned by all Canadians, it is managed by two or three people affiliated with the dairy industry and employs more than 80 people. Its very public mandate gives it the power to influence food affordability in Canada, at least for dairy products.

The commission obviously has a duty of transparency, which it fails to fulfill since commissioners make decisions without necessarily presenting its process clearly and in detail to the public. The commission and the Dairy Farmers of Canada are one and the same, and they shouldn’t be.

Last fall, other than an amazingly brief statement on rising production costs, the commission did not share any details that would justify such an increase. It never does.

Survey model isn't perfect

Many suspect the sample design is skewed to favour farmers. For example, since the census is not mandatory, the sampling may include less-efficient farms, pushing cost estimates higher. It’s impossible to know.

Moreover, the commission did not share the news widely about the increase. The media had to make the hike known to the public. It simply posted a 300-word notice on its website, which no one consults. The phone number it displays has been out of service for months.

Commissioners hide behind contracts that ensure the anonymity of dairy producers. It's a silly argument since it is always possible to disclose figures and hide the identity of participants in a survey, but the commission refuses to share its primary data.

Unlike other food products, due to the state-sanctioned public quota milk is nothing less than a public good. So, unlike other commodities and food products, the level of accountability to the public must be upheld.

In processing, this increase will force some companies to raise prices. Before the holiday season, Lactalis, a big firm in the dairy sector, announced it was raising prices by 15 percent to customers, namely food retailers where we buy dairy products.

We’ve heard some are refusing to pay more to remain competitive. Consequently, two things can happen.

Some processors may simply stop selling some dairy products. If this happens, expect more unreported milk dumping in rural communities that the Dairy Farmers of Canada will never want the public to know about. Or, processors will simply start unlawfully importing dairy proteins from the U.S., where industrial milk is three times cheaper.

Both scenarios will lead to more dairy farms disappearing.

Meanwhile, a CUSMA tribunal recently ruled that Canada is unfairly blocking the entry of certain dairy products destined for the Canadian market. Apparently, import quotas offered by Ottawa were granted to companies that have a link with Canadian dairy.

These organizations are obviously not motivated to import products. Prices and market shares for their own could drop. In other words, Canada got caught cheating on the Americans.

Meanwhile, Canadian taxpayers are giving almost $2 billion (almost $200,000 per farm) in compensation to dairy farmers for lost market share due to more foreign products coming into Canada, but barely anything is coming in. What a racket.

In the meantime, Ottawa’s hypocrisy regarding dairy is costing all Canadians as consumers and taxpayers. The lack of transparency and openness to better serve the public is becoming more painfully obvious by the day.

Canadians are just resolved to keep on paying more for our white gold at the store while subsidizing dairy farmers without really knowing why.

Sylvain Charlebois is professor in food distribution and policy, and senior director of the AgriFood Analytics Lab at Dalhousie University.