Canadian Farm Milk Price Changes to Reflect Growing Protein Demand
•February 12, 2026
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Why It Matters
The new pricing aligns farmer compensation with market‑driven protein demand, reshaping profitability across Canada’s supply‑managed dairy sector.
Key Takeaways
- •Protein demand up 32% for cottage cheese, 7% yogurt
- •Western Milk Pool shifts to 25% protein payment
- •P5 adds $3/kg protein premium in tier two
- •Farmers must adjust butterfat‑protein ratios to stay profitable
- •High‑management farms may see reduced earnings under new rates
Pulse Analysis
The Canadian dairy landscape is being reshaped by a consumer‑driven protein boom. NielsenIQ data shows cottage cheese and yogurt sales accelerating faster than traditional butter products, prompting supply‑management boards to rethink how milk components are valued. By decoupling payments from butterfat alone, the industry aims to capture higher margins from high‑protein dairy, a trend echoed in North American and European markets where protein‑rich ingredients command premium prices.
In practice, the Western Milk Pool and the eastern P5 region are taking divergent paths. The West’s new 70‑25‑5 split reduces butterfat’s share and rewards protein, while the P5’s tiered model adds a $3 per kilogram protein uplift in its second tier, incentivising a solids‑non‑fat to butterfat ratio above 2.2. These adjustments force producers to revisit herd genetics, feed formulations, and quota management, as the old butterfat‑centric strategy no longer guarantees top earnings.
For dairy operators, the shift presents both risk and opportunity. Analytics firms like Cattleytics demonstrate that average‑performing farms may capture more profit under the protein‑focused regime, whereas farms optimized for butterfat peaks could see earnings dip. Leveraging real‑time milk composition data, adjusting breeding programs, and aligning feed rations with protein targets will be critical. As the Vitalus expansion in British Columbia ramps up high‑protein processing capacity, farms that adapt quickly will likely secure a competitive edge in the evolving Canadian dairy market.
Canadian farm milk price changes to reflect growing protein demand
Glacier FarmMedia – Dairy farmer organizations across the country are changing how producers will be paid for milk to help meet the burgeoning demand for protein.
Products such as cottage cheese grew by 32 per cent and yogurt by seven per cent in 2025, according to NielsenIQ, as consumers sought more protein-options.
Why it Matters: Pricing changes require precise management on dairy farms to maximize profit.
The change in protein demand means the producer-run organizations that manage the pricing and flow of milk in Canada’s supply management system are having to move from a butterfat-rich payment system to one with more emphasis on protein.
Dairy farmers buy quota based on kilograms of butterfat produced per day, so if they produce less butterfat, they will have to ship more litres of milk per day to fill their quota. However, if they produce more protein, they could end up with higher pay.
Canadian butter stocks have been rising over the past year, also resulting in the need to realign the ratio between butterfat and other milk solids, including protein.
The Canadian Dairy Commission reports in its November report that total butter stocks were 35,216 tonnes, which is 4,789 tonnes higher than in November 2024.
The P5, which includes the five eastern Canadian provinces except for Newfoundland and Labrador, and the Western Milk Pool, which includes the provinces west of Ontario, are taking different approaches.
Jeremy Wiebe, a dairy farmer in Chilliwack, B.C., and chair of the Western Milk Pool, says the increase in protein demand is also being seen in the western provinces, and that demand will be enhanced when a processing plant that Vitalus is expanding in British Columbia starts taking more milk. It’s focusing on high-protein dairy products.
In the P5, “the high protein products, fluid milk, yogurt, for sure, and cheese, have seen incredible growth,” says Kristin Benke, chief business and supply chain officer with Dairy Farmers of Ontario.
“We’ve seen that sort of increase in demand from the market side, which is outpacing the increase in demand for butterfat at this point.”
When protein demand increases quickly and butterfat demand growth doesn’t match that of protein, market changes are needed at the farm.
The Western Milk Pool approach
In 2017, the milk pool changed the pricing ratio to farmers being paid 85 per cent on butterfat, 10 per cent on protein and five per cent on other solids in the milk.
“In 2017, we were actually short cream,” Wiebe said.
“Now it’s nine years later, and we have this huge demand for protein starting.”
Wiebe says the Western Milk Pool isn’t yet short of protein, but the Vitalus expansion in Abbotsford, B.C., and global trends point to more demand.
As of April 1, farmers in the West will be paid at 70 per cent for butterfat, 25 per cent for protein and five per cent for other solids.
The western milk boards have been discussing the change since their fall meetings, so farmers will have had time to manage the change, he says.
Wiebe says that the changes made by the Western Milk Pool could be the first step in changes emphasizing less fat and more protein, and farmers have been told about that reality, too.
The P5 approach
Benke also says that the pricing changes that are taking place in the P5 could be the first step, with others to come.
Farmers in the P5 get paid on two tiers, with payments in tier two generally being the most profitable, as producers are incentivized to deliver milk that meets market demands.
More value, $3 per kg more, is being put on protein in the second tier, encouraging farmers to produce a solids-non-fat to butterfat ratio that’s more than two. That also means that the price paid for tier one protein will decrease by $0.18 per kg.
Farmers who hit a ratio of 2.2 will be paid the highest for their milk, although on-farm factors will determine if that’s the most profitable.
Benke says the policy change on pricing brings what farmers are paid for milk back to what it was in 2023. Butterfat production has risen since then, as farmers responded to that pricing change.
She says this pricing change aims to move butterfat production down to where it was around 2023 and 2024.
The new P5 pricing is in place as of Jan. 1, 2026.
What does this mean on farms?
Shari van de Pol, CEO of Cattlytics, a dairy software, data and analytics company, helped model scenarios for farmers in the Western Milk Pool, as part of a panel discussion at the recent Sask Milk conference.
Shari van de Pol is a founding member of Cattleytics. Photo: John Greig
A top production and management herd was modelled, and then a herd closer to average was also modelled for how the 2026 pricing changes to milk would affect those herds.
The top-managed farm usually made significantly more profit than the average herd, says van de Pol.
But when they looked at the pricing change, the lower production farm made more money from the pricing change and the high-management farm made less money.
Why would that be?
Van de Pol says the high-management farm had changed its genetics and feeding to meet the optimum payments under the previous pricing system for milk. Farmers were paid 85 per cent on butterfat, 10 per cent on protein and five per cent on other solids in the milk. The new pricing, which comes into effect April 1, 2026, will pay 70 per cent on butterfat, 25 per cent on protein and five per cent on other solids in the milk.
“They had these great peaks of really rich milk and they were getting paid a premium on those peaks. They’re now going to be paid for those peaks a little bit less.”
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