Canadian Dairy Commission
Symbol of the Government of Canada

Increase to Support Prices for Butter and Skim Milk Powder Effective February 1st, 2003

OTTAWA, December 13, 2002 – The Canadian Dairy Commission (CDC) announced today that, effective February 1, 2003, the support price for skim milk powder will increase from $4.9858 to $5.1966 per kilogram, and for butter, from $5.9011 to $6.1061 per kilogram.

The higher support prices are expected to provide dairy producers with an increase of $2.36 per hectolitre, or 3.9 percent.

Last January, the CDC committed to cover the cost of production of 50% of Canadian producers by 2006. "Today’s decision is an initial step in fulfilling this commitment. In addition, it recognizes rising farm management costs, as well as higher feed costs which mainly resulted from adverse growing conditions." explained CDC Chairman, John Core.

The assumed processor margin will also increase by 3.9 percent, or $0.33 per hectolitre. A recent study commissioned by the CDC justifies this increase. The assumed processor margin represents the estimated costs of processing one hectolitre of milk into butter and skim milk powder.

Carrying charges, associated with the cost of storage programs used to balance seasonal fluctuations in milk production, will remain at $0.08 per hectolitre.

Support prices are the prices at which the CDC buys butter and skim milk powder to balance seasonal supply and demand changes on the domestic market. Support prices are also used as references by provincial marketing boards to price milk sold to processors who manufacture dairy products such as butter, skim milk powder, cheese, yogurt and ice cream.

The market impact of the total increase will be influenced by many factors such as the implementation of the increase in the provinces, as well 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 determine, initiate and administer policies and programs to address dairy producer and processor needs. It must provide efficient dairy producers with the opportunity to get a fair return on their labour and investment, and ensure that Canadian consumers are provided with adequate supplies of quality dairy products.

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For more information, please contact:

Chantal Paul
Communication Services
Canadian Dairy Commission
Ottawa, Ontario, K1A 0Z2
Tel: (613) 792-2040

John Core
Chairman
Canadian Dairy Commission
Ottawa, Ontario, K1A 0Z2
Tel: (613) 792-2061

Fax: (613) 792-2009
Web site: www.cdc-ccl.gc.ca

Email: cdc-ccl@agr.gc.ca