Danone has confirmed that it is taking legal action to strike down a one-year Canadian import permit allowing US Greek yogurt sensation Chobani to pay greatly reduced duty of just five per cent on products imported into the country, citing the need for "fair competition".
The Federal permit allows Chobani owner Agro-Farma to import the Greek yogurt brand (number one in the US with a market share of around 50%) into Canada from the US at a lower than usual duty rate (240%) for a period of 12 months, prior to the planned completion its first processing facility in the country.
Until now Chobani has not been readily available for sale in Canada – despite some cross-border cachet – though director of communications Nicki Briggs confirmed to our sister site FoodNavigator-USA.com in mid-March that the brand had been test marketing products in Greater Toronto area since late last year,
The 240% tariff – levied on yogurt producers who don’t use Canadian milk or process it in the country – is ostensibly designed to product the Canadian market from cheaper US imports – and Chobani rivals Danone (Oikos brand) and Ultima Foods (Yoplait, Asana) are crying foul at the firm’s exemption from it.
Competition should ‘play fair’
Danone spokeswoman Anne-Julie Maltais confirmed to DairyReporter.com yesterday that affadavits had been served regarding the import permit, with a Federal hearing scheduled for late April.
Maltais said: “I cannot comment any further as the case is before the court, but I’d like to add one thing. The issue is one of fair competition within the existing supply management system.
“If we have to play by the rules of supply management, then our competition should too.”
Danone argues that allowing quota-free and duty-free imports of Chobani will harm the Canadian supply management system’s “delicate balance” , and cause multi-million dollar damage to its rival Greek yogurt brand Oikos.
Meanwhile, Ultima Foods (Yoplait, Asana) has also served a Federal affidavit arguing that, under Federal criteria, such permits should only be granted to ‘new or unique’ products, and that Chobani was neither.
Fresh blow for Chobani
In a fresh blow to Chobani, influential trade body the Ontatio Dairy Council (ODC) is also challenging the firm’s permission to build a new multi-million dollar facility in Ontario province, granted on December 23 by the Ontario Ministry of Agriculture Food and Rural Affairs.
ODC president Tom Kane told DairyReporter.com yesterday that the Agriculture, Food and Rural Affairs Appeal Tribunal was setting rules for the hearing, and establishing dates for it, "probably" in mid to late June.
Asked why the ODC was challenging Chobani's build, he said: “Canada utilises a supply management system, so the amount or volume of milk is limited. Any milk that goes to that company will have to come out of the plants that are currently in existence, manufacturing cheese and butter according to our quota system.
“So we’re just exercising our legal right of appeal under our provincial laws.”
Kane denied the suggestion that the ODC was opposing Chobani’s new plant build due to its membership base comprising other powerful dairy processors whose interests might ran counter to Chobani’s: members include Unilever Ice Cream, Kraft Canada, Saputo Dairy Products Canada
He said:“It doesn’t run counter to it at all. In fact, we would very much like to have Agro Farmer as a member of the Ontario or Canadian dairy industry.
“But milk is milk and our quota system is rather rigid and does not allow us to have new entrants into the industry without damaging or impacting negatively the rest of the industry.”
Neither Ultima Foods nor Agro-Farma responded to our requests for comment as we went to press.