Setting the Record Straight on Canadian Dairy Prices

Canadians are right to be concerned about rising grocery costs: in Canada and elsewhere, inflation is top of mind. Farmers and their families feel that pressure too. So why do some single out supply management in grocery affordability debates? It’s time to take a closer look at dairy prices. 

How is the price farmers get for milk determined?  

The price of milk at the farm level is regulated by the Canadian Dairy Commission (CDC), a federal regulatory agency. It is based on a national pricing formula which takes into account national inflation, farmers’ costs of production and other variables. Depending on these variables, it can decrease or increase. This price remains stable for a year.

In 2026, that price increased by 2.32%, but it decreased by 0.0237% in 2025. Few industries’ prices are so transparent and stable. 

What if dairy farmers’ costs go up during the year?  

Like all farmers and business owners, dairy farmers often face increasing input costs —fuel, feed, labour, transportation, to name a few. 

Even if farm input costs vary during the year (e.g., rising diesel prices, increases in fertilizer costs), the price dairy farmers are paid for milk stays the same until the CDC conducts its next review and farm gate prices changes are implemented.  

Do dairy farmers set the retail price of dairy products? 

Dairy farmers do not set the retail price of milk. And like most grocery products, milk goes from the farm through various stages in a supply chain before reaching consumers.

• Farms produce the milk.  

• The milk is transported from the farm to a processor. 

• Processors pasteurize and package the milk or turn it into products such as cheese, yogurt and butter.  

• These products are transported in refrigerated trucks to various stores. 

• Retailers and restaurants sell the products to consumers. 

At every stage, costs are added as value is created and pricing decisions are made. That’s why when the farm price set by CDC decreased in 2025, retail prices didn’t automatically go down. 

Are dairy prices rising faster than other food prices? 

The inflation on retail dairy prices has been in line with or lower than overall food inflation in recent years, according to Statistics Canada data. In 2025, food inflation rose 3.2% year over year, compared to a 2.1% increase for dairy. 

In summer 2026, dairy helped bring down food price inflation according to Statistics Canada. Dairy prices increased just 0.7% year over year, compared with the grocery food inflation rate of 3.1% in July, making dairy (specifically yogurt and cheese) the largest contributor to the slowdown in grocery price growth.¹

How do Canadian dairy prices compare to those in the U.S.? 

Canadian dairy retail prices are also competitive with those in the U.S. Data available from Statistics Canada and its U.S. counterpart the Bureau of Labour Statistics show, in 2025, average retail yogurt prices in Canada averaged $2.09 per kilogram less than in the U.S. Over the same period, Canadian average retail cheese and butter prices were also lower by $4.26 and $2.03 per kilogram respectively. ²  

Canadian retail milk prices were approximately $0.19/litre higher than in the U.S. – but were lower than in many other developed countries, according to data from the International Dairy Federation.³ 

Many countries provide direct production subsidies to farmers, meaning consumers in those countries pay for their dairy at the grocery store and again through taxes. Dairy farmers in Canada do not benefit from any direct production subsidies.  

Supply management and the value of food sovereignty

Every hard-earned dollar that Canadians spend matters. As dairy farmers, we are confident in the high-quality food we bring to the table and in the value that our industry brings to Canada’s food system. 

Our work and the supply management system in which we operate help feed Canadian families, while strengthening rural communities, our national economy, and Canada’s food sovereignty.