by SUSAN MANN
Dairy Farmers of Ontario disputes processors’ claims that a provincial decision to allow a processor to develop a yogurt plant in Kingston will reduce the amount of milk they can process. The issue is fueling undeserved attacks on the supply management system says DFO’s spokesperson, Bill Mitchell.
The Ontario Dairy Council, which represents processors, hopes the Ontario Agriculture, Food and Rural Affairs Appeal Tribunal will overturn a Dairy Farmers of Ontario decision to supply Agro Farma Canada Inc. with milk and skim milk and the provincial agriculture ministry’s decision to grant the company a permit to build. The permit was granted Dec. 23, 2011.
The milk for Agro Farma’s proposed Chobani Greek yogurt plant “has to come out of the cheese and butter plants,” says Ontario Dairy Council president Tom Kane. He cites a November 2011 yogurt policy that limits the amount of milk allocated to yogurt manufacturers to protect the cheese and butter plants.
The tribunal appeals will be heard June 19 to 22 and June 25, if necessary, at the Best Western Plus Milton Hotel in Milton.
Agro Farma makes the yogurt now in its South Edmeston, New York facility and imports it to Canada for sale in 65 Loblaws, Fortinos, Superstore and Valu-Mart stores in the Greater Toronto Area and Hamilton. The company claims Chobani is the top selling yogurt brand in the United States.
Mitchell, DFO assistant communications director, says he couldn’t reveal how much milk Agro Farma was allocated because information about individual processors is confidential. But the company’s milk request was approved by the board in November 201l and is within the new allocation rules that came into effect in that month.
He calls the notion that there isn’t enough milk to supply existing plants in addition to Agro Farma “nonsense.” The Chobani coming to Canada story has been spun into another attack on Canada’s supply management system in several daily news publications and is “completely ludicrous and unfounded,” he says.
Agro Farma is among a number of food processors wanting to open up Ontario facilities. Others include a Chinese company planning an infant formula plant in Scarborough and Dr. Oetker planning to locate a frozen pizza manufacturing facility in London.
“This is a very exciting time in the Canadian dairy industry,” Mitchell says, noting these companies could shop the world for a plant location but picked Ontario because of its high milk quality, consistent supply and high milk availability.
Agro Farma representatives did not respond to a request for information.
Lynden-area dairy farmer Ben Loewith, chair of Progressive Dairy Operators, acknowledges the situation of the company locating a plant in Ontario is “complicated.” Yet the product is exciting for farmers, he adds, because it requires at least three and perhaps four times as much milk to make a container of the yogurt.
Mitchell downplays the amount needed: “What it uses is a lot more milk plus components.”
In another related matter, processors Danone Inc. and Ultima Foods Ltd. have asked the Federal Court to quash the federal government’s international trade department decision to grant a supplementary import permit to Agro Farma. The application was heard in Montreal April 24 and 25. The permit enables Agro Farma to import Chobani into Ontario.
Ultima Foods Ltd didn’t return requests for an interview. Danone Inc. declined an interview by email because the matter is currently before the court. A decision is expected by the end of June.
The international trade minister may issue supplementary import permits to authorize tariff-free imports in excess of the amount normally allowed into the country. The details of the tariff-free import limits are outlined in the World Trade Organization agreement. Canada’s limit for yogurt is 332 metric tons. Imports exceeding the limit – that do not fall under a supplementary import permit – are subject to an over-quota tariff of 237.5 per cent.
Supplementary permits are generally granted if a company wants to test the market before starting production in Canada or if there’s a shortage, says Dairy Farmers of Canada spokesperson Therese Beaulieu. The Agro Farma permit is for one year.
Al Mussell, senior research associate with the George Morris Centre, says companies involved in these arrangements have an obligation to produce the product in Canada if their test marketing is successful.
Several processors already make Greek brands of yogurt for the Canadian market. “I think it’s only natural that they’re not particularly pleased a new competitor is coming into the market to compete with their product,” Mussell says.
Kane says existing processors aren’t trying shut out Agro Farma. “We welcome competition. We have competition every single day of the week,” he says.
Total current yogurt production in Canada is about 320 million litres annually, which accounts for four per cent of total milk use. BF
– with files from Better Farming staff.