The Quebec government is on the ropes again in its ongoing battle with margarine makers, but prairie canola growers are being cautious about whether their industry can deliver the knockout punch.
That’s because Quebec has proven in the past its ability to stay on its feet even when it appears to have lost its legs.
“It’s good news, but we’ll see what happens,” said Canadian Canola Growers Association vice-president Brian Tischler about a recent internal trade secretariat ruling that ordered Quebec to stop discriminating against margarine.
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Quebec regulations prevent vegetable oil-based margarine makers from making their product the same colour as butter. Margarine marketers says this reduces their sales by $19 million per year.
On July 23, the internal trade secretariat informed the Quebec and Alberta governments that Quebec’s margarine colour regulations broke the Agreement on Internal Trade, which Quebec has signed. Alberta was the complainant.
It said Quebec must allow butter-coloured margarine to be sold as of Sept. 1. But canola producers and the vegetable oil industry are wondering what will happen if Quebec refuses to comply.
In the past, Quebec has acknowledged that its margarine colour rules contravene the agreement, but the province’s powerful dairy lobby has always managed to stop the rules from being repealed.
Legislation introduced in the Quebec legislature in January 1997 was never passed, and the dispute has simmered ever since.
“It may be a ruling for us, but what they’ve shown in the past is they’ll just ignore it,” said Tischler, a farmer near Mannville, Alta.
“That’s the biggest frustration: you can win the court case, but will they come up with another reason (to continue the marketplace discrimination against margarine).”
Vegetable oil industry spokesperson Sean McPhee thinks there is a good chance that Quebec will follow the ruling this time and change its regulations.
“Premier (Jean) Charest has been a champion of the Council of the Federation,” said McPhee.
“He’s got a political stake in this business of internal trade.”
Charest and Ontario premier Dalton McGuinty have campaigned to expand trade among Canada’s provinces, so ending this dispute over margarine might be a price Charest would be willing to pay, McPhee said.
If Quebec doesn’t change its rules, vegetable oil producers are ready to ask for retaliatory trade actions against Quebec products, he added.
Ontario also used to have rules banning butter-coloured margarine, causing it to be either white or a bright yellow-orange. The province ended its policy in December 1994.
McPhee said making margarine look unlike butter has had a big impact on its market share in Quebec.
Margarine makes up about 68 percent of the spreadable fat product market across Canada as a whole, but has only 58 percent of the Quebec market.
McPhee said vegetable oil processors believe the difference is based on colour.
“That 10 percentage point difference accounts to a $19 million annual loss to the entire margarine supply chain, from the margarine maker, the intermediate processor like Archer Daniels Midland, those who crush and refine like Cargill, and to the canola grower and the soybean grower,” said McPhee.
“It trickles right back to the western grower.”
Tischler said he is glad the Alberta government pushed this issue by making a formal complaint, because farmers and the vegetable oil industry weren’t being heard.
“Without them this would have been impossible,” said Tischler. “The real progress happened when the government of Alberta got involved.”
The Quebec government is studying the ruling but has not yet said what it plans to do in response.
