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Hike in milk prices irks food producers and restaurants

Hike in milk prices irks food producers and restaurants

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A loaf of cheddar bread sells for $6.25 at the Cake & Loaf Bakery in Hamilton. But co-owner Josie Rudderham wonders if customers will still buy it if she ups the price another 25 cents.

Whether to raise prices or not is one of the decisions facing business owners like Ms. Rudderham after the Canadian Dairy Commission announced it was raising the price of industrial milk, which is used to make cheese, yogurt, ice cream and butter, by 2.76 per cent on June 15.

The increase takes effect on Sept. 1, and it’s the second price increase this year. The CDC increased industrial milk prices by 2.2 per cent in February.

“I wasn’t expecting another price increase this year,” Ms. Rudderham says. “It’s pretty significant for us. It means we have to make some tough choices.” 

Those tough choices include potentially raising prices for the breads, cakes, pastries and candies Ms. Rudderham and business partner Nicole Miller sell at their bakery, and holding off on providing wage increases for their 22 full– and part-time employees.

For small businesses in the food industry that use lots of dairy products, this nearly five-per-cent increase is a big deal. Ms. Rudderham says her bakery uses 120 to 140 pounds of butter and 40 to 50 pounds of cheese per week. She notes that 10 to 12 per cent of her revenue is spent on dairy products annually.

“We have to pass that price increase on to the consumer,” Ms. Rudderham says. “But we don’t want to price people out of being able to shop at the Cake & Loaf.”

The CDC is a Crown corporation that implements national policies for milk production. It said in a July 15 press release that it raised prices for industrial milk to offset a “significant reduction in producer revenues in the last year” brought on by a decrease in world prices and partly due to larger sales of surplus milk protein in low-priced markets. read more at theglobeandmail.com