Restaurant industry opposes 'special increase' in dairy prices



    TORONTO, July 3 /CNW/ - Canadian dairy prices are already among the
highest in the world, but they could rise for the second time in just six
months - a move that would make it more difficult for Canadian consumers and
restaurants to "get milk."
    On Feb. 1, the Canadian Dairy Commission (CDC) increased the price of
industrial milk, which is used to make products such as cheese, yogurt and ice
cream, to $72.40/hectolitre for 2008. This level is well above world prices
and, because of Canada's supply management system, includes a significant
cushion for dairy producers to absorb rising costs.
    Dairy Farmers of Canada (DFC) is now calling for an unscheduled price
increase of nearly 5% to take effect Aug. 1, citing rising feed, fuel and
fertilizer costs.
    Under the rules of supply management, the industrial milk price should
reflect the cost of milk production to ensure a fair return to efficient
producers. Over the last 13 years, however, prices have skyrocketed 54.5%,
while the cost of producing milk has grown by only 1.5%. Over the same period,
Canadian per capita consumption of dairy products has dropped 8.4%.
    "The dairy industry is pricing itself out of the grocery cart and off the
restaurant menu," says Ron Reaman of the Canadian Restaurant and Foodservices
Association (CRFA), whose members collectively represent one of the dairy
industry's biggest customers. "This spiral of rising prices and falling demand
is a recipe for failure."
    "We want to work with the dairy industry to grow the market for their
products, but first they must close the gap between inflated dairy prices and
the cost of milk production," says Reaman.

    
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    CHANGE IN INDUSTRIAL MILK PRICE AND COST OF MILK PRODUCTION
    -----------------------------------------------------------
    (1994 - 2007)
    -------------

    INDUSTRIAL MILK PRICE    +54.5%
    CONSUMER PRICE INDEX     +30.2%
    COST OF PRODUCTION        +1.5%

    COST-PRICE GAP:             53%

    Sources: Canadian Dairy Commission and CRFA

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For further information:

For further information: Ron Reaman, CRFA Vice President, Federal, (416)
649-4242; Jill Holroyd, CRFA Vice President, Research and Communications,
(416) 649-4217


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