Got milk(ed)? Dairy, other food suppliers warn of higher prices as ingredient costs skyrocket By: Gabrielle Piché Posted: 7:00 PM CDT Wednesday, Jul. 13, 2022

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This article was published 12/07/2022 (850 days ago), so information in it may no longer be current.

Joseph Chaeban has avoided raising the price of his ice creams and cheeses.

He can’t anymore.

The Canadian Dairy Commission approved a second farm gate milk price increase this year — about two cents per litre, or 2.5 per cent, on Sept. 1.

And on Wednesday, the Bank of Canada raised its benchmark interest rate a full percentage point to 2.5 per cent — the largest jump in more than two decades. Chaeban Ice Cream has loans tied to fluctuating interest rates, Chaeban said.

“(With) everything going up, it’s like, how many punches do I have to take to the face?” he said. “Every dollar matters when you have a business.”

He plans on upping his prices 10 to 20 per cent. He’s not alone.

Lactalis Canada, Arla Foods Canada and Saputo Dairy Products Canada have all released statements notifying buyers their prices will increase to reflect higher milk ingredient costs.

Food prices across the board won’t decrease, according to Sylvain Charlebois, Dalhousie University professor of food distribution and policy.

“We don’t feel good by having these high prices, but you’re at a point where you have no choice,” Chaeban, from Chaeban Ice Cream, said. “You’re going to start running at a loss.”

He noted most products’ costs have increased — packaging, coffee beans, honey — and that he understands the need for a second price jump in the dairy world.

“I know the farmers are struggling,” he said, adding he’s heard from suppliers about the high cost of feed. “They also need support and they need help. If we don’t help them, there’ll be no more milk.”

Canada’s inflation rate may have surpassed 10 per cent in June, according to Charlebois. Statistics Canada is set to unveil its latest Consumer Price Index next week.

“It’s just costing more to produce anything, including food,” Charlebois said. “There’s some supply chain headaches that the industry is dealing with still.”

The United States’s food inflation rate hit 10.4 per cent in June, the U.S. Bureau of Labor Statistics reported. It’s the largest 12-month increase in more than 40 years.

“We may have peaked. It doesn’t mean the prices will be dropping… It just means food prices aren’t increasing as fast as they were before.” – Sylvain Charlebois

A combination of factors — including Russia’s war in Ukraine, labour shortages and supply chain snarls — are elevating prices, Charlebois said.

Still, he expects the inflation rate to drop in the fall.

“We may have peaked,” he said “It doesn’t mean the prices will be dropping… It just means food prices aren’t increasing as fast as they were before.”

Pandemic-era public health restrictions have eased, making day-to-day business more predictable and steadying the food industry, Charlebois said.

The skyrocketing cost of food is a main reason for record-breaking demand at Harvest Manitoba.

Demand has risen 40 per cent year-over-year, according to Vince Barletta, Harvest Manitoba’s CEO.

The organization now serves 14,000 families a month. Last summer, it served around 10,000, Barletta said.

“Food donations are not keeping pace,” he said. “People are going to the lake, they’re on holidays, they’re maybe not thinking about Harvest.”

He’s calling for donations — specifically for dry pasta, dry rice, and canned proteins and soups.

Lisa Stoyko is frustrated by her grocery and gas bills — her salary doesn’t follow the same pace as inflation.

“(It’s) disheartening,” the Walmart on McPhillips shopper said. “Sure, your wage goes up, but the cost of living goes up, so it’s kind of like you’re staying the same… You’re not getting any more ahead.”

Stoyko searches for deals and avoids buying snack foods, like popcorn, that are “not needed,” she said.

Elaine Lobreau, another Walmart shopper, scours for sales.

“If I see butter on sale, I don’t need it, but I’m going to get it because it can freeze,” she said. “Things need to change.”

“(It’s) disheartening. Sure, your wage goes up, but the cost of living goes up, so it’s kind of like you’re staying the same… You’re not getting any more ahead.” – Lisa Stoyko

Food costs rose 9.7 per cent last May, compared to the year prior, according to Statistics Canada’s latest Consumer Price Index.

The cost of commonly used raw materials such as wheat, grains and oilseeds has increased up to 80 per cent over the past year, said Anthony Fuchs, vice-president of communications for Food, Health and Consumer Products of Canada.

The cost for plastic packaging components has increased by more than 40 per cent and paper pulp, a key ingredient in cardboard packaging and boxes, has increased 15 to 50 per cent, he said.

— With files from the Canadian Press

gabrielle.piche@winnipegfreepress.com