Pizza cheese kits keep on coming
Thursday, April 18, 2013
by SUSAN MANN
A dairy farmers’ organization has taken another step this month to convince federal authorities to apply a tariff to American mozzarella cheese in pizza kit imports used by restaurants. But it could be some time before the matter is resolved, and meanwhile the kits are still coming into Canada.
The organization is BalanceCo Canada, a non-profit corporation that is a federally registered lobbyist and has Canada’s 10 provincial milk marketing boards as its members. It has launched a request for an advance ruling from the Canadian International Trade Tribunal regarding the tariff line for the pizza kits.
It argues the pizza kits, made up of 80 per cent mozzarella and 20 per cent pepperoni, are actually two separate goods and the cheese should be classified as dairy. That classification would make the cheese in them subject to a 245.5 per cent tariff.
The Canada Border Services Agency classifies them as a food preparation. That means the cheese in the kits can enter Canada duty free.
But before the tribunal can get to the heart of the matter, it has to decide whether BalanceCo Canada has the standing to request such an appeal. The tribunal tackled that question, raised by J Cheese Inc., an intervener in the hearing, April 9 in Ottawa. A decision has not yet been released.
BalanceCo co-counsel Chris Cochlin of the law firm Cassidy, Levy, Kent of Ottawa and Washington D.C., asserts the organization should have status because, for the purposes of tariff classification the BalanceCo can be considered an “importing entity.”
“That's the standing that allows you to get an advance ruling," he says.
If permission to request the advance ruling is granted, Cochlin says typically it takes the tribunal a month to a year after a hearing to issue a decision. In this case, the timeline isn’t known because the question of BalanceCo’s standing must be addressed first.
Gillian Burnett, assistant secretary of the tribunal, says there aren’t legally defined timeframes the tribunal must follow in issuing its appeal decisions. But “we have an internally imposed deadline that we try to meet for issuance of appeal decisions,” she says – 120 days from the date of the hearing.
It’s quite rare for there to be a separate hearing on one of the party’s jurisdiction, she adds.
Border controls such as tariffs to keep imports at reasonable levels form a key pillar of Canada’s supply management system. Matching farmers’ production with demand and fair prices for farmers are the system’s other main components.
Garth Whyte, president and CEO of the Canadian Restaurant and Foodservices Association, says the association is not participating in the tribunal hearing but they’re not surprised restaurants import the kits. He points out frozen pizza makers get a significant break on cheese prices through a special class.
“For years, we’ve been saying it’s really unfair and wrong that frozen pizza makers can have a 30 per cent price advantage over fresh pizza makers using the same mozzarella cheese,” he says.
In January, the Canadian Milk Supply Management Committee took first steps towards leveling the playing field by approving the creation of a new lower price milk class for shredded and diced mozzarella cheese for restaurant operators to use on fresh pizzas.
Whyte says they’re hoping the technical details, such as the milk price and how audits will be done, are nailed down soon so they can start working towards implementing the new class this year.
He says he’s not sure that once the new lower priced class is in place it will halt the flow of pizza kits into Canada. The purpose of the new class is to sell more mozzarella and “I think it will.”
He says he doesn’t know the exact price of the pizza kits but the cheese costs are more in line with what frozen pizza makers pay for their cheese.
As for how many restaurants are using the kits, Whyte says “very few.”
Maja Graham, spokesperson for the Canada Border Services Agency, says by email the agency maintains that it had the authority to classify the pizza kits as a food preparation.
“The issue of why the CBSA came to this determination is the matter currently in litigation before the tribunal, therefore it would be inappropriate to provide further comments,” she says.
In an interview last October, Dairy Farmers of Canada spokesperson Therese Beaulieu said they don’t know when the kits started coming into Canada, but they first noticed them in fall 2011. DFC estimates nearly six to 11 per cent of the country’s total fresh pizza cheese market comes from the pizza kits. The total fresh pizza cheese market is estimated to be about 35,000 tonnes annually. BF