Appeal court upholds milk minimums in cheesemaking

Canada’s Federal Court of Appeal has rejected a legal volley from cheesemaking giants Kraft Canada and Saputo against federal regulators’ compositional standards for cheese.

The Canadian Food Inspection Agency, in a release Friday, claimed the win for official Ottawa as per a ruling handed down last week by Justice Robert Mainville, who dismissed Kraft and Saputo’s joint appeal and awarded costs to the government.

“We are pleased that the Federal Court of Appeal has upheld the authority of the federal government to set compositional standards,” federal Agriculture Minister Gerry Ritz said in CFIA’s release. “Canadians expect cheese to be made of real milk and this decision will ensure it is.”

As of Monday neither Kraft nor Saputo have yet made any official statement on last week’s ruling.

The cheesemakers’ appeal last month sought to overturn nationwide compositional standards for cheese that came into effect in mid-December 2008 and apply to cheese marketed in import, export or interprovincial trade.

The regulations require cheese imported into Canada or made in Canada and marketed in international or interprovincial trade to meet a minimum casein ratio and whey ratio.

Specifically, cheeses have to have a certain percentage of casein content derived from liquid milks and not from other milk products such as whey cream or milk powder. They also must have a whey-protein-to-casein ratio no greater than the ratio of whey-protein-to-casein ratio of milk itself.

The federal amendments were first published in December 2007 to give cheesemakers time to adapt before the new rules took effect late the following year.

The appeal court heard the case in Ottawa last month, after the companies’ appearance in Federal Court in October 2009 where their claims were also dismissed with costs awarded to the government.

“Absurd proposition”

A coalition of Kraft, Saputo and (at the time) Parmalat Canada had long argued that the new rules would increase their costs and raise the price of cheese to consumers, in what they said would at first be a $185 million annual boon to dairy producers from higher milk sales.

As Mainville explained in the appeal court’s Feb. 28 ruling, Saputo and Kraft contend that “the essential or dominant purpose of the impugned regulations is to effect an economic transfer in favour of dairy producers to the detriment of dairy processors” and that the regulations were thus adopted for an “improper economic purpose.”

But the appeal court didn’t buy the argument the cheesemakers put forward when their appeal was heard Feb. 9 in Ottawa.

“Product standards almost always invariably incidentally affect how the concerned product will be produced, yet this does not mean that the standard is directed to production rather than to trade and commerce,” Mainville wrote.

“To decide otherwise would result in the absurd proposition that no federal compositional standards could be adopted for food products marketed for import, export or interprovincial trade since almost all such standards incidentally affect the production of food products.”

Mainville also disagreed with the two food companies’ claim that the cheese regulations overstepped the bounds of the federal Food and Drugs Act, ruling that the Act “also involves a prescription of standards, including labelling and packaging as well as control of manufacture.”

Besides, he wrote, the two companies “would still need to contend with the terms of the Dairy Products Regulations” which the government also amended to set up the new standards as per the federal Agricultural Products Act.

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