On December 17, 2020, the BC Milk Marketing Board has approved a 2.02% price increase on Classes 1-4 (excluding 4A,4M) with the support of the Milk Industry Advisory Committee. This increase results in an expected increase of $136,159,843 to producers on Classes 1,2,3 and 4 as per the CDC direction and the Western Milk Pool Coordinating Committee review and approval on December 3, 2020. The revenue change will be applied on butterfat components at 44% and solids non-fat components at 56%.
Due to significant changes in the national system in 2020, the review time for pricing was extended resulting in a delay to formally announce BCs approval of pricing changes in the new year. Draft prices were made available to all processors through secured access on November 13, 2020 and final prices were made available on December 21, 2020.
February 2021 Pricing Consultation
The results of the National Pricing Formula (50% COP + 50% CPI) resulted in a net 0.25% increase to producer revenues for February 1, 2021. The COP resulted in -0.65% (indexed to August 2020) and the CPI resulted in +1.15% (indexed to August 2020).
The results of the cost of production (COP) analysis for the year 2019, indexed to August 2020, show a gap that exceeds 3.5% when compared to the estimated producer revenues for the upcoming pricing year. This result met a criterion for exceptional circumstances. On October 14, 2020, the CDC received a request from Dairy Farmers of Canada (DFC) to trigger the exceptional circumstances consultation mechanism for the February 1, 2021 price adjustment.
On DFC’s request, the CDC Board agreed to begin the exceptional circumstances pricing consultation process. The CDC held stakeholder consultations on October 20th and 22nd, 2020.
CDC Pricing Consultation Results
On November 1, 2020, the Canadian Dairy Commission (CDC) announced that there will be a national price increase of 2.02% for milk utilized in Classes 1,2,3 and 4 (excluding Class 4A, 4M) effective February 1, 2021.
The CDC increased its current support prices for butter on February 1, 2021 from $8.6034 per kg to $8.7149 per Kg. The support price for butter is used by the CDC when buying and selling butter under its Domestic Seasonality Program. This program balances seasonal changes in demand on the domestic market.
The CDC recognized an increase of 2% to the processer margin for butter. The processor margin for butter will increase by $0.0166/kg to $0.8461/kg of butter.
Pricing February 1, 2022
Following previous exceptional circumstances practice, on February 1, 2022, the national pricing formula will be applied as follows:
- The formula will measure the total change from February 1, 2019 (2018 COP indexed to August 2019 = $81.29/hl , and 12 month CPI ending August 2019 = 135.075) to February 1, 2022 (using 2020 COP indexed to August 2021 and 12 month ending CPI indexed to August 2021).
- An amount of $136,159,843 will be deducted from the overall expected change in revenue as determined by the National Pricing Formula for February 1, 2022. This deduction will occur in recognition of having applied exceptional circumstances on February 1, 2021 instead of the National Pricing Formula.
If you have any questions regarding pricing, please contact Zahra Abdalla-Shamji at email@example.com