The Class 6 milk will be priced low enough to compete with the rising tide of imports of Milk Protein Isolates (MPIs) that face no tariffs.
The Dairy Farmers of Ontario milk marketing board also hopes the price will be low enough to entice processors to build new drying facilities to produce skim milk powder.
Milk board chairman Ralph Dietrich said many plants are 40 years old, or older. If they break down, the owners are unlikely to undertake expensive repairs.
Ontario’s move is controversial because it differs sharply with Quebec, the other major Canadian milk-producing province.
Quebec’s marketing board leaders are, instead, pressuring the federal government to change regulations so MPIs face tariffs equivalent to other dairy products and want the bureaucratic definition of cheeses to change so it’s no longer possible to use MPIs as ingredients.
The provincial division reveals a fundamental difference in marketing. Ontario seeks to hold markets by reducing prices; Quebec seeks to hold them via political power.
Ontario has yet to convince its processors that its approach will work for them. Leaders of the Ontario Dairy Council have been critical of some aspects of the Class 6 policy and so far no processors have said they will build a new drying facility.
The volume of Ontario milk that needs to be dried is increasing because demand for butter has increased, meaning there is more skim milk left as a byproduct, and because cheese makers are using imported MPIs instead of Ontario skim milk.