The plight of an Ottawa ice cream parlor that saw its fledgling wholesale operation abruptly close last week is reigniting debate over the province’s dairy rules and whether they unfairly freeze small businesses.
Owner Marlene Haley was working at Merry Dairy last week when an official from the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) approached her and informed her that she would have to stop wholesale immediately or face $1,000 fines. per day.
Within 24 hours, hundreds of pints scattered across the city were collected and returned, leaving customers’ shelves empty just before a long weekend.
“It just seems absurd,” Haley said. “She is punishing the small producer in some way.”
The Ontario Milk Act allows ice cream manufacturers to sell their product directly to consumers, but prohibits them from selling wholesale to other businesses unless they have a dairy plant license. It’s part of a system called supply management that was created to protect Canadian farmers, but some critics say it has stifled innovation and lined the pockets of a select few.
Dairy farmer Peter Ruiter bristles at that description.
“I’m terribly upset,” said the owner of Blackrapids Farm in Nepean, Ontario.
“A lot of people get caught up in those regulations. People want safe food and those are the regulations we live by.”
The Merry Dairy isn’t the first local store to break the rules.
Pascale’s All Natural Ice Cream has been making small-batch ice cream in Ottawa for more than a decade and found itself in an equally difficult situation. Since then it has focused on vegan options.
When Merry Dairy took to Twitter with a thread explaining what had happened to their wholesale offerings, Pascale tweeted commiseratingly: “Same story, 3 years later! Things must change.”
In a statement to CBC, an OMAFRA spokesperson said the requirement to have a license under the Milk Act is about ensuring that companies distributing dairy products meet the province’s “high food safety standards”.
The ministry is in contact with Merry Dairy and has offered support for it to become a licensed dairy plant, which would allow the store to resume wholesale business, the statement added.
Haley said she’s looking into what it would take to become a licensed plant, but suspects the century-old building the store calls home won’t offer enough space to meet the requirements.
The Toronto store spent $250K
Kaya Ogruce, owner of Toronto-based Death in Venice Gelato, faced a similar situation a few years ago.
Just as his business was taking off, he discovered that it would have to be a licensed wholesale plant. But unlike many small producers, Ogruce decided to go for it.
It was a “mountain” of work, he said, adding that despite designing his own plans and doing much of the work himself, it cost about $250,000 to build a plant.
It now undergoes inspections about four times a year and keeps meticulous records of its ice cream orders.
Canada’s dairy regime could not be more punitive for small businesses in terms of the interests it serves and how it protects those interests. Tonight, it was us. Who knows who is next and why.
“As a business owner who went to the trouble of getting this permit, technically, you should be on the side of getting the permits,” he said, explaining that would mean his investment was worth it.
“But while I was getting this permit, I definitely realized that… the dairy board, basically, I think, is run by the big players and no one wants to give away a piece of their business.” [to] stores like us.
Ruiter, the dairy farmer, disagrees with that description, saying he also has to wrestle with layers of bureaucratic rules, noting that it was the province, not the dairy board, that shut down the wholesale Major of Merry Dairy.
“As a dairy producer, we want artisans to make products because that is another sale for us,” he added.
Wholesale trade grew during COVID-19
Merry Dairy had two wholesale customers before the COVID-19 pandemic began, but as the shutdown dragged on and other stores began looking for local produce to go, it saw that number rise to 15, according to Haley.
While other sectors, like alcoholic beverage rules, changed to help companies stay flexible and afloat, dairy rules remained the same.
For Merry Dairy, adding wholesale allowed the store to stay open and employ staff year-round, Haley said, estimating that it distributed 300 to 400 pints each week.
But the dairy rules seem designed for large-scale producers and need to be updated with exceptions to allow for smaller local shops, he said.
While Haley understands why a large company that ships popsicles every day would need strict rules to track its product in the event of a recall, that’s not a problem for the Ottawa store, which knows each of its customers personally. .
“We have nutritional labels that are about to come out,” he said. “We keep track of all our batches, we know where they go and what we have sold to each of our customers each week.”
Now those stores will likely find someone else to supply their ice cream, likely a major producer, Haley added.
“I don’t think we’re a threat,” Haley said. “I think there is room for smaller companies to be in the market and share the milk and ice cream market.”
Professor says dairy rules crush businessmen
Professor Sylvain Charlebois, director of Dalhousie University’s agri-food analysis laboratory, said he believes supply management has merit, but the dairy industry in particular has left little room for innovation.
He used the example of eggs, which are also under supply management, but noted that some places allow backyard chickens, allowing households to harvest their own.
The dairy industry doesn’t want competition, and even a case like Merry Dairy’s could “open a can of worms,” according to the professor, adding that he believes the dairy industry and government are too connected.
“Right now, companies like Merry Dairy are victims of abuses sanctioned by the Ontario government and also by the federal government.”
Mayor Jim Watson shared the news of Merry Dairy’s closure on Twitter and called on Premier Doug Ford to help the small business find a compromise that would allow them to continue to wholesale.
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