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Pricing based on production costs

Last Updated: August 1, 2012

All the P5 provinces support the national Cost of Production (COP) formula as the basic reference for establishing milk prices for both fluid and industrial milk. Industrial milk refers to milk used in the production of dairy products such as butter, cheese, and yogurt.

The national COP formula is based on a uniform collection of data from provincial costing studies. The COP figures from each province are weighted according to all milk shares to arrive at the national COP.

In Ontario, the Ontario Dairy Farm Accounting Project (ODFAP) is used as the source of data. ODFAP, which collects farm data from the actual farm records of a representative sample of about 100 Ontario dairy farms, is a joint project of DFO, the Ontario Ministry of Agriculture and Food, the Canadian Dairy Commission and the University of Guelph.

The Canadian Dairy Commission (CDC) uses the national COP formula as a guide in establishing support prices for butter and skim milk powder. Support prices are used as references by provincial milk organizations and agencies for pricing of milk to processors.

 

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