The Canadian Dairy Commission set the farmgate milk price increase at 2.8% starting Feb. 1, 2027, below the 3.5548% initially recommended. The integrated cost of production stands at $97.06 per hectolitre.
The Canadian Dairy Commission raised the price of a hectolitre of milk at the farm gate by 2.8% as of Feb. 1, 2027, amid rising fuel and feed costs. The increase came in below the 3.5548% initially recommended by the National Pricing Formula.
The price of milk is also being held in check by the sharp increase in the value of dairy calves — particularly crossbreds — which helped offset the rising cost of other inputs on farms. The farmgate milk price, set each year, determines income for dairy farms across the country and influences consumer prices for dairy products.
The Canadian Dairy Commission follows a defined process to set the price, called the National Pricing Formula. First it calculates a cost of production based on surveys from the previous year — in this case, 2025 — and then compares it with the most recent on-farm costs, corresponding to the three months ended in August 2026. That process yielded an indexed cost of production increase of 4.57%.
The National Pricing Formula then applies the consumer price index in equal measure to the indexed cost of production survey figures. That index rose 2.54% in 2026 versus 2025. Together, both elements resulted in a recommended milk price increase of 3.5548% starting Feb. 1, 2027.
Industry stakeholders — farmers, processors and consumers — can point out that atypical figures that may not hold in 2027 were used in the process. According to the commission, stakeholders argued that the high feed and fuel costs in August would not persist at current levels throughout 2027; in fact, crop prices have declined since August.
The commission then consulted with industry representatives, including Dairy Farmers of Canada, the Dairy Processors Association of Canada, the Canadian Federation of Independent Grocers, Restaurants Canada and the Retail Council of Canada. As a result, the final increase was set at 2.8245%.
A slight increase in storage charges, which the commission uses to manage butter stocks, also influenced the 2.8% increase, driven by higher protein demand. The price increase per litre of milk will be just under three cents.
The 2025 cost of production survey leaves some relevant data for dairy producers. The integrated cost of production stands at $97.06 per hectolitre for 2026. Costs that increased in 2025 versus 2024 include custom work, herbicides, pesticides and fertilizers, labour and depreciation.
Income from cows and calves rose 44% from 2024 to 2025, which also had an impact on dairy farm income and helped keep the cost of production in check as other input costs rose. Provincial authorities must approve the farmgate milk price increase before the end of 2026 for it to become official.
