Ottawa has won a clear legal victory against Canada’s largest cheese makers over standards that limit the companies’ ability to use milk protein products instead of milk in their products.
Federal Court judge Luc Martineau dismissed a lawsuit by Saputo Inc., Kraft Canada Inc. and Parmalat Canada Inc. that alleged agriculture minister Gerry Ritz exceeded constitutional powers when he imposed cheese compositional standards last December.
He ordered the companies to pay the costs of the court battle.
When the regulations took effect in December 2008, the companies, supported by a coalition of business and health interests, immediately attacked the rules as a government attempt to get more money to dairy farmers by forcing cheese makers to buy more milk. They argued that the result will be more expensive cheese with higher fat content.
The companies took the government to court.
Judge Martineau was not impressed by their arguments.
“As a key factual claim in this instance, the applicants invite the court to conclude that the essential or dominant purpose of the new regulations was to transfer an economic benefit to dairy producers at the expense of dairy processors,” he wrote in the judgment. “I have found the material elements upon which the applicants heavily relied unpersuasive in the circumstances.”
Instead he agreed with the government argument that the standard requirements for the amount of cheese protein that must come from milk was set “so that cheese available to consumers has a consistent composition and characteristics. Food standards provide a system through which consumer interests are protected and consumer expectations of food are met.”
However, the government did concede that dairy farmers would benefit.
It estimated cheese makers would pay $71.4 million more per year in ingredient costs and dairy producer revenues would increase by more than $185 million.
Processors said that underestimated the cost. Dairy Farmers of Canada insisted there would be no financial benefit to farmers since the new rules reflect what was happening when the rules took effect.
Still, DFC was thrilled with the judgment.
“We are happy that the government won and that the court has affirmed the government has the right to set compositional standards,” said DFC communications director Therese Beaulieu in an Oct. 16 interview.”
Supporters of the regulations say it will limit the ability of cheese makers to substitute cheaper imported milk protein products for Canadian milk.
The regulations set the minimum protein content that must come from Canadian milk at between 63 percent for Mozzarella to 100 percent for aged Cheddar.
The companies have until early November to appeal.
