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Production costs have risen for farmers producing milk from their cows, which has resulted in a shortage of milk, but a still constant supply.

A government sponsored agency currently controls the prices for dairy products in Canada. This was implemented because the government wanted to regulate the prices paid to dairy farmers and the amount of milk they could produce, in order to protect the farmers. However, problems have begun to arise because of these price controls, mostly due to the fact that the market price is much higher than it should be (which hurts consumers) and it is costing billions of dollars each year.

In this situation, The government has had milk price controls in place for over 70 years because during the time of the great depression, the government wanted to ensure that farmers stayed in business, while working class families were able to access milk at affordable prices. The actual issue that this article discusses is that of the still existent price controls, as they do not still have the same purpose as they used to.

This article discusses the rising problem in New Zealand, of rising prices on dairy products. We can see a distinction in this article between milk, on one hand, and on the other, butter and cheese. Milk in relatively inelastic, because it is a necessity for a healthy diet (especially for growing children), however milk and cheese are relatively elastic, because they are not as vital for a good diet, and their demand will likely drop a lot more than the demand for milk.

For this week, I decided to find an article that is very close to most of us, because we all, at one point or another, eat meat, as well as drink milk. When we consume these products we probably don't realize what harmful chemicals go into these products and how they can negatively affect us. This article talks about the antibiotics and hormones that are injected into livestock to increase the rate of growth as well as in cows, the increased production of milk, and how these chemicals can negatively effect us.

Who likes cheese? In Canada we do, and it's not helpful that our dairy prices are so much higher than other countries. This article analyzes our situation compared to other countries, particularly the United States. It also brings up the idea of other countries imposing subsidies to pay out farmers to help the problem (ie. US farmers get 31 cents per litre of milk). As well, Canadian farmers get a quota to how much product they can produce, so that really restricts competition in this industry.

"The study looked at 'demand elasticities' in Australia for 15 food categories and is the most comprehensive ever done in the field. The degree to which a product's demand or supply reacts to a change in price is known as its 'elasticity'" This article highlights that out of 15 food groups studied, milk, bread, fresh fruit and fresh vegetables all have an inelastic demand. This is the opposite as to what i personally would have predicted, because with varying prices and what i assumed was a varying demand for fruits and vegetables, i thought that this could be an elastic demand. Some of the products with an elastic PED are All meat types, rice, margarine and preserved vegetables. This is interesting as it seems as though consumers would rather pay more to have food that can spoil, compared to food which can be stored or freezed.