A spat over milk containers is souring relations between dairy farmers and manufacturers.
By Brian Platt , Toronto Star
For months, Ontario’s milk bureaucracy has been battling over whether you should be able to buy 3 litres of milk in the grocery store.
On one side are the milk processors, represented by the Ontario Dairy Council, who want to open up the market entirely to 3-litre milk containers.
On the other is the Dairy Farmers of Ontario, which is concerned that 3 litres of milk will prove so popular that the 4-litre option disappears off shelves entirely.
“Our interest is only in ensuring that consumers are protected, and we are of the view that the 4-litre containers are essential, and we want to make sure that they continue with respect to the plastic bags,” said Graham Lloyd, general counsel for the DFO.
The dispute started last December, when Ontario’s farm products marketing board gave Mac’s Convenience Stores permission to sell 3-litre plastic milk jugs — only jugs, not bags — on a one-year pilot program.
The Ontario Dairy Council appealed, arguing that such a limited program would give some processors an unfair head start in the 3-litre field. It favours a general ruling with no restrictions on container type or retailer.
After initial arguments over jurisdictional rights and access to redacted documents, the issue is now heading for the quasi-judicial Agriculture, Food and Rural Affairs Appeal Tribunal.
It all revolves around a directive deep down in Ontario’s Milk Act, in section 8 of Regulation 753: Size of Containers.
The Milk Act sanctions any container smaller than 500 millilitres or larger than 4 litres. A container of 1, 1.5, 2, or 4 litres is perfectly OK.
But a 3-litre container? Forbidden, under section 18: Offences.
“This isn’t a new idea, many processers and some retailers have wanted to do this for a long time” said Christina Lewis, president of the Ontario Dairy Council.
“The farmers will not agree to opening up the market to a 3-litre, because there’s concern that perhaps the sales in 4-litre will move toward a 3-litre instead,” Lewis said. “And the 4-litre is really where most of the sales in fluid milk are.”
Lloyd said the DFO is concerned not only with selling milk in larger quantities, but in keeping the price low on a per-volume basis.
“It’s our mandate to grow markets, and sell more milk, and that’s what we want to do,” he said. “The concern about smaller container sizes is if it represented eliminating larger containers, and eliminating that choice, and having a potential price impact.
“That’s why we want a test market to see what would happen.”
Al Mussell, a researcher at Guelph’s George Morris Centre who specializes in dairy economics, said dairy farmers may be worried about losing the special place 4-litre milk containers have as “loss-leaders” for grocery stores — products that don’t make much profit for retailers, but are priced low to get customers in the door.
“This is the game that’s been played with bottled milk for a very long period of time in Canada,” Mussell said. “If you start messing with that 4-litre category, you start to run the risk that stores reconsider milk as a loss-leader. And if they did something like that, it could make a very big difference to the dairy farmers.”
The Ontario Farm Products Marketing Commission, which approved the Mac’s pilot project, declined requests for comment on this issue. Mac’s Convenience Stores did not return several calls.
A date has not yet been set for the tribunal hearing between the commission and the Ontario Dairy Council.
“It’s a shame that it has to go this way, because we’re certainly not trying to block innovation and that new product size,” said Lewis. “It’s just about a level playing field, that’s our position in principle.”