Kraft counts cost of fighting controversial Canadian cheese regulations
The news ends a legal battle dating back to October 2009, which latterly saw the Federal Court of Appeal (FCA) reject Kraft Canada’s appeal for judicial review (JR) of the 2007 regulations (introduced the following year) this February.
Last Thursday, the SCC refused to hear an appeal from Kraft and smaller company Saputo against the FCA decision and the federal rules, which require firms to use more full-fat milk and lower levels of ingredients typically labeled as ‘milk solids’.
According to the earlier FCA decision in February, the co-applicants accused the Canadian authorities, of trying (in the court’s words), “to effect an economic transfer in favour of dairy producers to the detriment of dairy processors”.
The applicants claimed this was due to a requirement that cheese producers use more liquid milk to produce cheese, which they argued would have a substantial impact on milk supply costs for dairy processors.
‘Improper economic purpose’ alleged
Kraft and Saputo argued before the FCA that the regulations had little to do with trade, but were instead adopted for an improper economic purpose that meant the federal government had exceeded its authority.
It had done so by increasing demand for liquid milk to the detriment of whey cream and milk powder, under the terms of the regulation, the applicants argued.
Both companies claimed that the new rules would increase their costs and raise end prices for consumers, as well as jeopardising the future of Canadian cheese-making.
The FCA of appeal rejected these arguments, and last Thursday the SCC refused to hear the firms' further appeal. A Kraft spokeswoman told DairyReporter.com: “We are disappointed by the decision. That said we respect the Supreme Court’s ruling.”
Asked about the company’s liability for legal costs attached to the appeal rejection, she added: “The costs will be modest and fixed, and are standard in Supreme Court civil matters like this.”
The ‘Regulations Amending the Food and Drug Regulations and the Dairy Product Regulations’ were announced in 2007 within the context of the Food and Drugs Act and Agricultural Products Act.
They prescribe that cheese imported into or produced in Canada, or marketed within or without the country’s borders, must adhere to certain standards.
Product quality fears
Namely, that cheeses must contain a certain percentage of casein derived from liquid milks, and not from other milk products such as whey cream or milk powder (the so-called ‘casein ratios).
For instance, a pizza mozzarella cheese must have a minimum casein content of 63 per cent derived from liquid milk products, increasing to 83 per cent for cheddar and brick, 95 per cent for blue or camembert and 100 per cent for ‘aged’ cheddar.
Producers must also ensure that whey protein to casein ratio of specific cheese varieties does not exceed the whey protein to casein ratio of milk (the ‘whey ratio’).
A Regulatory Impact Analysis Statement (RIAS) for the 2007 law said that “higher yields and economic savings” were possible for producers using higher levels of other milk solids, but it added that variety cheese names risked losing typical organoleptic, chemical and physical properties as a consequence.
Although Kraft and Saputo denied this potential effect, Mainville, J.A in the FCA agreed with the original applications judge (backed by expert testimony) that technological advances, involving increased use of milk derivatives, did adversely affect product taste, texture and consistency.
A link to the full February judgment is available here, as well as the relevant 2007 regulatory changes.
