Open Letter - Restaurant industry calls for new approach to dairy pricing

TORONTO, Nov. 20, 2012 /CNW/ -

Randy Williamson
Chairman

Jacques Laforge
Chief Executive Officer

Gilles Martin
Commissioner

Canadian Dairy Commission
Building 55, NCC Driveway
Central Experimental Farm
960 Carling Avenue
Ottawa, Ontario K1A 0Z2

Dear CDC Commissioners:

Canada's restaurant industry purchases $2.5 billion a year in Canadian dairy products.  As one of your largest customers, we want to do more to promote and grow the market for Canada's high-quality dairy products.  Unjustifiably high prices, however, are having the opposite effect.  This should be of concern to all of us along the supply chain, from farm to fork.

Two main issues must be addressed:

  1. Bring dairy prices to a more competitive level, while ensuring a fair return to producers;
  2. Introduce a distinct class of cheese pricing for the restaurant industry, as has been done for other sectors.

Dairy producers are now more efficient than they were in the past, yet these efficiencies are not being passed on to consumers.  Over the past several years, dairy price increases have vastly outpaced the cost of production, making Canadian dairy prices far higher than other industrialized countries.  This year the cost of production fell by 0.17%, which further justifies lowering dairy prices for Canadian consumers.

Given the high cost of dairy, it should come as no surprise that Canadians have reduced their dairy consumption and are cross-border shopping to avoid Canada's sky-high prices. Dairy products are also losing ground on restaurant menus as business owners seek out more reasonably priced products to promote to their customers.  In the past five years, overall restaurant orders have increased by 6%, but pizza orders have decreased by a stark 12%.

The restaurant industry wants to help reverse these disturbing trends.  We want to be a part of a growing dairy industry.  We can sell more dairy.  Restaurants are trendsetters.  Let us help put dairy back on the menu.

To grow demand for Canadian dairy products in the short term, the restaurant industry needs competitively priced product.   A step in this direction would be to introduce a new class of cheese, as exists for frozen pizza manufacturers.   Lower priced cheese for restaurants will level an uneven playing field that forces fresh pizza makers to pay 30% more for mozzarella cheese than frozen pizza manufacturers.

I want to personally thank you for meeting with us in Ottawa.  The CRFA appreciates the fact that the Canadian Dairy Commission is willing to have a dialogue on issues that matter to us all.

Respectfully,

Garth Whyte
President and CEO

SOURCE: Canadian Restaurant and Foodservices Association

For further information:

Prasanthi Vasanthakumar, 1-800-387-5649, ext. 4254 or pvasanthakumar@crfa.ca.