A new federal proposal would substantially increase dairy farmer revenues while adding more than $70 million to processor costs and likely raising the consumer price of cheese.
The Canadian Food Inspection Agency’s cheese composition standard regulations follow a promise by agriculture minister Chuck Strahl to the Dairy Farmers of Canada’s winter convention that he would act on a long-standing DFC demand that compositional standards be created to limit the ability of cheese makers to use less expensive raw milk substitutes.
The 16 pages of proposed regulations were published in the Canada Gazette June 16 and there is a 75 day comment period. They would take effect a year after approval.
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The processors and cheese product users will have plenty to say.
“We really need to talk to CFIA about how they arrived at their figures,” said Dairy Processors’ Association of Canada president Don Jarvis.
“We will do our due diligence. I think they have avoided illustrating the real impact.”
From his New Brunswick farm, DFC president Jacques Laforge said his group will ask for some clarifications, but it generally is happy with the regulatory proposals.
“It looks pretty good to us,” he said.
“The real winner will be consumers who will know exactly what’s in the cheese. It’s not that it will return more money to farmers but that cheese consistency will be maintained that is most important here.”
However, the CFIA said there is no doubt the regulations would mean more money to producers through increased milk sales.
“The proposed changes to the cheese compositional standards would be expected to have a positive impact on milk producers in terms of a revenue increase of approximately $187,074,459 per year,” said economic analysis included to support the proposed regulation.
On the flip side, it estimated increased purchases of more expensive raw milk would add $72,212,194 to cheese maker costs.
CFIA said the processors have predicted lost sales worth $165 million because of resistance to higher costs by food manufacturers, retailers and consumers. It does not explain the disparity in the numbers.
Jarvis said that is part of the problem.
“We have asked to see their detailed economic analysis because we don’t know where those numbers come from,” he said.
The processors association has estimated the cost to the economy of more than $1 billion.
Jarvis said the agency analysis skips over or does not deal with many issues critics have been raising.
The CFIA analysis said not all specialty cheese now imported would meet the proposed compositional standards, but “the proposed amendments would have minimal impacts on the volume and value of imported cheeses.”
However, critics have said restrictions on imports could create World Trade Organization challenges. As well, European Union officials were in Ottawa recently to express concerns about a loss of market access.
The CFIA analysis said that while some consumer prices could rise, consumers will benefit from “greater product uniformity.” Critics insist the price increases will further dampen demand for cheese.
While use of more raw milk rather than milk protein products will create more waste whey that critics say will become a costly disposal issue for processors, the CFIA analysis saw it as an opportunity because of strong world demand for products made from whey.
“It is expected that cheese processors would be able to take advantage of the opportunity to sell or process the extra whey available and increase their whey product marketing profitably,” said the analysis.
Jarvis, whose corporate members believe the regulations are largely a way for the government to cater to dairy farmers and preserve a manufacturing market for their milk, said the proposed regulations are unprecedented.
“In no other country are there regulated ratios (milk to milk products) for the manufacture of cheese,” he said.
“This is uncharted water that we really will be asking some tough questions about.”
