May 31, 2022

The Cost of Production (COP) is the cost to produce one hectolitre of milk at the farm level. The COP is used in the calculation of the National Pricing Formula. The processor cost index is an estimate of processors’ costs.

Cost of Production

All COP indexes registered an increase since the beginning of 2022 (Dairy Ration, Fuel & Oil, Fertilizer & Herbicides, Hired Labour, etc.). 

The indexes that registered the highest increase since 2022,compared to 2021, are Fertilizer & Herbicides, Fuel & Oil, and Dairy Ration by 33.9%, 32.5%, and 16% respectively. These increases are explained by the effects of COVID-19 and the recent war situation, which disrupted trade and production of oil related products.

Want greater insight into how the Canadian Dairy Commission calculates Cost of Production? Check out our exclusive videos for an in-depth explanation.

Processors Cost Index

The change in cost in the processing industry is evaluated at 9.38% for the 3-month period ending March 2022 compared to 2021. All the industrial product price indexes (IPPI) are increasing since the beginning of 2022. The highest increase is registered by the energy and petroleum products index (32.59%). The packaging materials index also shows a non-negligible increase at 6.69%.

More information about these indexes is available on the DPAC Data Dashboard.

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