Popular comfort foods such as pizza and ice cream may become more expensive for consumers after Canada’s dairy supply management body raised the price of milk this month.
At restaurants, cheese usually makes up around 60 per cent of the cost of a pizza, said Olivier Bourbeau of Restaurants Canada. Pricier dairy will push that to 65 per cent, he added. Meanwhile, the ice cream industry is facing cost increases of around 13 per cent, said Ashley Chapman, vice-president of Canadian ice cream maker Chapman’s, who described the impact of the changes as “brutal.”
Consumers, in turn, might face higher price tags and menu prices or smaller products and portion sizes, as restaurateurs, food manufacturers and retailers offload some of the extra costs, according to Simon Somogyi, a professor at the school of hospitality, food and tourism management at the University of Guelph.
The dairy-cost increases come after the Canadian Dairy Commission – the Crown corporation at the centre of Canada’s dairy supply management system – raised the reference price that Canadian farmers receive for their milk on Feb. 1 to help offset soaring producer costs linked to the COVID-19 pandemic.
The changes would raise the cost of milk used in dairy products for retailers and restaurants by an average of 8.4 per cent, the CDC said in October. For butter, the cost increase would amount to 12.4 per cent, it added. Normally, such price changes amount to increases of between 1.2 per cent and 2 per cent, Mr. Bourbeau said.
Canada’s Food Price Report, an annual gauge of food price trends, anticipates dairy prices for consumers will rise between 6 per cent and 8 per cent in 2022 – higher than an overall expected increase in food prices of between 5 per cent and 7 per cent. The latest edition of the study, which was published in December, takes into account the impact of the Feb. 1 price increases for milk producers.
For butter, some estimates show prices for consumers rising by 30 cents per pound once the cost increases have fully worked their way through, Dr. Somogyi added.
However, it’s still too early to tell how exactly those climbing dairy costs will hit consumers’ budgets, he said. That’s because the increases are still percolating through the country’s food supply chains, he added. Statistics Canada won’t report inflation data for February until mid-March.
“It may be the case for fluid milk that consumers may not see a major increase,” Dr. Somogyi said.
Retailers are often willing to sell milk at a loss because it’s typically a product that attracts consumers to the store, he said. The calculus is that if shoppers step in for a milk run, they’ll also likely pick up something else along the way.
Mr. Chapman said his company is hoping to ride out the latest bout of cost inflation without further adjusting prices after it previously announced a price increase for retailers in the fall – just before receiving the news of the CDC price changes. Whether consumers will see any price increases this year depends on retailers’ marketing strategies, he added.
The impact on pizza prices is also uncertain, Dr. Somogyi said. While pizzerias will be especially hard hit, competition in that market may mean many restaurants will likely try to swallow as much of the cost increase as possible, he added.
Among restaurants, independent coffee shops – for whom milk is the second-largest food cost after coffee – will also struggle with skyrocketing dairy prices, Mr. Bourbeau said.
When it comes to consumers, price increases will likely spur some to cut back on milk in favour of dairy-free alternatives, Dr. Somogyi said.
A Toronto-based online search on Loblaws.ca showed the lower-cost varieties of almond milk selling for 21 cents per 100 millilitres, compared to most brands of 2-per-cent milk priced at 24 cents per 100 millilitres or more.
Canadians hoping to trim back on dairy should make sure they’re still getting a sufficient intake of calcium, protein and vitamin D, registered dietitian Cara Rosenbloom said.
“Dairy itself is not essential in a diet. But there are nutrients in dairy-based foods that are essential,” she said.
Meat and eggs, as well as tofu, beans and lentils and nuts all have protein, Ms. Rosenbloom said. A vitamin D supplement can ensure Canadians get their fix of the sunshine vitamin even if they don’t consume dairy, she added.
For calcium, people can turn to plant-based milk alternatives such as almond, soy or rice milk, according to Ms. Rosenbloom.
Still, for families with children under 12 who want to shift away from dairy, she recommended relying on guidance from a dietitian with a focus on pediatrics to craft a food regime that ensures the kids are still getting the nutrients they need.
The Globe and Mail, February 13, 2022