Canadian Dairy Commission
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Support prices for skim milk powder will increase on February 1st 2006

OTTAWA , December 15, 2005 – The Canadian Dairy Commission (CDC) announced today that, effective February 1, 2006, the support price for skim milk powder will increase from $5.7282 to $5.8337 per kilogram. The support price for butter will remain unchanged at $6.8695 per kg. Support prices are the prices at which the CDC buys and sells butter and skim milk powder to balance seasonal supply and demand changes on the domestic market.

For dairy producers, the higher support price should translate into an increase of 1.79 ¢ per litre (2.6%) for milk used to make products such as yogurt, cheese, butter and skim milk powder. The actual increase to producers may vary slightly depending on the pricing decisions made by provincial authorities using support prices as a reference.

Last year’s support prices contained an add-on to compensate for the financial impacts of bovine spongiform encephalopathy (BSE). The butter and skim milk powder support prices effective February 1st 2006 will no longer provide such compensation.

“With this announcement, the CDC fulfills the commitment it made in 2002 to ensure that 50% of Canadian dairy producers would receive their cost of production by February 1st 2006" explained CDC Chairman, John Core.

These new support prices reduce the margin received by processors for the skim milk powder purchased by the Canadian Dairy Commission under various programs by 0.85 cents per litre.A recent yield and cost study commissioned by the CDC justifies this decrease.

The market impact of the increase will be influenced by many factors such as manufacturing, transportation, distribution and packaging costs throughout the supply chain.

The Canadian Dairy Commission, a federal Crown corporation created in 1966, is a key facilitator within the Canadian dairy sector. The CDC helps design, implement, and administer policies and programs to address dairy producer and processor needs. It is mandated to provide efficient dairy producers with the opportunity to get a fair return on their labour and investment, and to ensure that Canadian consumers are provided with adequate supplies of quality dairy products.

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For more information, please contact:

Chantal Paul
Communications Services
Canadian Dairy Commission
Ottawa , Ontario, K1A 0Z2                                        

Tel: (613) 792-2040
Email: paulc@agr.gc.ca
Fax: (613) 792-2009

Web site: www.cdc-ccl.gc.ca