Consumption trends in Canada's dairy sector

Statistics Canada recently released its dairy statistics for the first 3 quarters of 2014, suggesting that while fluid milk purchases have softened, there are some very positive dairy consumption trends in Canada, especially for cream and butter.  

The data revealed that through September, consumer purchases of milk and cream were 0.3% lower than the same time last year, mostly because of lower demand for milk. Yet, milk and cream sales are still 0.3% higher than the 5-year average due to strong demand for cream as consumer purchases of cream have increased 4.8% per year on average over the past 5 years.

An interesting market segment in the dairy industry is butter. Total use of butter through September 2014 is 5.5% higher as compared to the same time last year and 1.7% higher than the 5-year average. The growth in butter consumption combined with low inventories has triggered a 3% increase in the production quota of Eastern provinces, effective December 1st, in order for industrial milk production to meet market needs.

Dairy farm cash receipts continue to increase – they’re 3.1% higher through the first three quarters as compared to the same time period in 2013. Farm cash receipts have increased 2.1% on average year-over-year for the past 5 years, in line with the Bank of Canada’s target for inflation.

It’s refreshing to witness how domestic consumer demand for milk products like butter and cream remains relatively strong in Canada while the industry efficiently meets the changing needs of the marketplace. Domestic market growth is the ideal response to potential future pressures resulting from the CETA trade agreement. This growth will also help producers prepare for future changes in market conditions.

Craig Klemmer

Senior Ag Economist