by SUSAN MANN
The Canadian raw milk price and the milk supply U.S.-based Greek yogurt maker Chobani was allocated by Dairy Farmers of Ontario are not factors in the company’s decision to postpone a national launch of its product in Canada, says a company official.
Chobani chief communications officer Nicki Briggs said by email the company is unable to move forward with national launch plans “due to circumstances outside” of Chobani’s control and “the product is current unavailable at stores” in Canada. But Chobani remains “committed to the Canadian market and giving Canadian consumers the choice they deserve in the yogurt aisle.”
Chobani was to break ground on construction of the plant in November 2012 in Kingston but plans for that plant have been postponed. Peter Gould, Dairy Farmers of Ontario CEO and general manager, told delegates at the Dairy Farmers of Ontario annual meeting Jan. 9, in Toronto, the organization’s board approved a request from Chobani for milk and skim milk for the plant on Nov. 30, 2011.
He said that although Chobani officials didn’t tell DFO why the construction isn’t proceeding, the postponement wasn’t because of the milk supply. Chobani has now confirmed this. Asked if either problems securing the milk it needs to make its yogurt or the price of raw milk in Canada were hampering the company’s efforts to establish a Canadian plant, Briggs said milk supply and milk price are not factors.
So what is holding up construction of Chobani’s proposed plant here? Briggs said: “As I’m sure you are aware, a national launch and production facility require many logistics and details, which Chobani continues to work through. I can tell you that milk supply is not a factor for Chobani.”
The company has been making its yogurt for the Canadian market in New York State and importing it to 65 stores across the Greater Toronto Area for the past year by means of a supplementary import permit from the Canadian Department of Foreign Affairs and International Trade, which enables the company to side step the 237.5 per cent duty normally applied to yogurt imports. Chobani’s permit expires next month.
Briggs said Chobani’s import permits “have yet to be extended.”
The company told customers on its Chobani Canada website that “over the past year, we’ve worked diligently to bring our cups to adorning fans. Unfortunately circumstances beyond our control have moved us off store shelves.”
Caitlin Workman, spokesperson for the Canadian Department of Foreign Affairs and International Trade, said by email information about individual companies investments and imports are confidential and she can’t discuss Chobani’s permits.
The Canadian government supports investment and innovation within the framework of the supply management system through temporary import permits, according to Canadian foreign affairs department background information.
If an investor is considering making a substantial investment in Canada that would create jobs for Canadians, the government allows them to test their products on the Canadian market first. The temporary import permits are given on the condition the investor will set up manufacturing in Canada and use Canadian inputs.
The details vary on a case-by-case basis but the permits are usually issued in two stages. First there is an initial permit of up to three months to give the investor time to test their product within a specific region or market in Canada.
If the test is successful, the investor is given up to one year to continue supplying that market while they construct their Canadian manufacturing facility. But authorization for this phase is based on the company meeting certain timelines and milestones.
Meanwhile in other news related to Chobani, the change Dairy Farmers of Ontario made to how it supplies milk to yogurt manufacturers in Ontario that became effective Nov. 1, 2011 had nothing to do with Chobani’s request for milk for its proposed Canadian plant, said communications director and general counsel Graham Lloyd.
Asked to respond to a comment posted on this website that the P5 (made up of five eastern Canadian provinces Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island) introduced ‘yogurt plant quota’ “just days before Nov. 30, 2011. Prior to that you could get all the milk that’s needed for yogurt,” Lloyd said there’s “no such thing as a P5 plant supply quota for yogurt.”
Lloyd said DFO changed its policy to put plant supply quota on existing yogurt manufacturers with a 20 per cent growth built into the plant supply quota. “The impact was in Ontario. Existing yogurt manufacturers were given a plant supply quota that they could use and grow 20 per cent every two years.”
Why did DFO introduce the new policy? Lloyd said “we felt it would be the best means of protecting the entire milk market in Ontario.”
The introduction of the policy was “completely independent of Chobani. It was not related to Chobani,” he said.
The decision to change the policy was made in conjunction with discussions with the Ontario Dairy Council and “had been in the works for months and months,” before Chobani requested milk, Lloyd noted, adding the board made the decision in September 2011 to change the policy. In addition, “plant supply allocation is completely a provincial matter.”
Lloyd said before the policy was changed milk for yogurt was supplied ‘on demand’ in Ontario. BF