The Canadian Dairy Commission is increasing the prices it offers for surplus butter and skim milk powder on Feb. 1, enabling marketing boards to charge one per cent more for milk used by processors.
Provinces separately price fluid milk for sales in supermarkets and other retail outlets.
The Canadian Restaurant and Foodservices Association says the price hike will cost them $26 million a year and complained that the marketing boards continue to price milk and dairy products out of reach.
The support price for butter will increase to $7.4046 from $7.3379 per kilogram; the support price for skim milk powder will increase to $6.4754/kg, from $6.417.
The marketing boards are able to charge relatively high prices for milk because there are high tariffs holding out competing products from other countries.
Companies are always looking for ways around the high Canadian prices and the Pizza Pizza chain out of Toronto found one – importing packages called pizza kits that contained separate inside packaging for cheese and other ingredients.
Canada Border Services Agency, which administers tariffs, ruled these packages could enter Canada without paying any tariff. Dairy farmers’ marketing boards challenged that ruling and persuaded the federal government to change a regulation so the cheese in those pizza kits now faces a 254 per cent tariff.
The U.S. government has filed an objection, complaining that it was not properly notified about the impending change.
In a letter to Ottawa, Islam Siddiqui, the lead negotiator on agriculture issues for the U.S. government, asked Canada to delay implementing the regulation until Americans can be properly consulted and the tariff ruling can be justified.
Siddiqui is stepping down soon.
Lawyer James McIlroy, who has handled many challenges to the supply management establishment, says this change in tariff regulations threatens to harm Canada’s overall reputation for fair trade negotiating and administration.