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.
