Friday, November 20, 2002
Halifax Chronicle Herald, Moncton Times Transcript

Why we don’t got milk

By Brian Lee Crowley

Here’s a bit of Canadian history that reminds us what an eccentric country we are and a modern version of the same story that shows how much farther we still have to go to escape our parochialism and naval-gazing.

The historical tidbit is this. In 1949 when Newfoundland (and, to satisfy the Labrador nationalists out there, Labrador) joined Confederation, margarine was banned in Canada. Why, you ask? Because margarine presented a threat to the health of the public, of course.

Or at least that was the official line. In reality the powerful dairy lobby had bamboozled politicians into forcing Canadians to eat butter by outlawing margarine – a supposedly noxious substance.

But in 1949 Newfoundland didn’t have a dairy industry, and had long had only margarine to put on its toast. So as part of the Confederation negotiations it was agreed that the margarine ban would not extend to our newest province. So margarine constituted a clear and present danger to the health of all Canadians — except Newfoundlanders, who scoffed it down in apparently robust health.

This hypocrisy was part of the crack in the façade that eventually brought the margarine ban crashing down, although its maintains a vestigial existence in Quebec’s ludicrous insistence that margarine has to be an unattractive and unpalatable colour, so that no poor consumer could ever be misled into eating margarine instead of butter.

Now here’s the modern version. New Brunswick was recently hauled before a dispute settlement panel under our Byzantine agreement on interprovincial trade. The New Brunswick Farm Products Commission had refused to license a Nova Scotia company, Farmers Dairy, to market its milk products in New Brunswick. Farmers, quite rightly, thought this violated New Brunswick’s commitments under the Agreement on Internal Trade, that tries to establish the apparently revolutionary principle that Canadians should be able to do business anywhere in our fair country without being discriminated against by governments.

When Farmers launched their challenge to the New Brunswick rules, did New Brunswick look sheepish and say ruefully, “OK boys, you’ve got me there. I’ll fix the problem.” Not on your life. They fought tooth and nail to protect their domestic dairy industry from any insidious competition from outsiders. Incredibly, “consumer protection” was their rallying cry!

It was the unhealthy margarine scam all over again.

Happily, the dispute panel wasn’t buying. They decisively rejected every one of New Brunswick’s arguments, and Farmers was awarded over $30,000 in costs. The panel also ordered New Brunswick to fix the problem.

But while Canadians everywhere are now endowed by their governments with the power to decide if they want to endanger themselves by eating margarine (or cholesterol-laden butter, if it comes to that), New Brunswickers still cannot buy milk from Farmers Dairy, and it’s not clear that they’ll be able to any time soon.

In a transparent delaying tactic, the government now claims that they lack the legal power to force their commission to issue Farmers a licence. They promise to amend the legislation, but give no deadline for doing so.

This is just as unconvincing as the original defence of the province’s indefensible policy. When PEI faced exactly similar circumstances a few years ago, they were able to issue a licence to Farmers without any regulatory or legislative change.

And why does the government need to “force” the farm products commission to do anything? Is the commission deaf and blind? The commission’s policy has been found to violate the spirit and the letter of the internal trade agreement and the government has accepted this in writing. They have said, also in writing, that they will, some day, change the legislation to rule this out in future. The commission should do the intelligent thing and reverse its own mistaken and unjustified policy. If they don’t, the province has the regulatory power to force them to do so, and can do it more quickly than legislating.

Farmers has followed the rules, and won an impressive and unqualified victory that also serves the interest of New Brunswick consumers by increasing the supply of milk to their marketplace. This is also a great decision for the region, in that it increases the chances that there will be at least one Maritime player in the growing consolidation of the dairy industry across the country. New Brunswick and PEI today; tomorrow, Quebec and Ontario.

And what’s wrong with that? Baxter’s, a major New Brunswick dairy company, is now part of a national dairy group headquartered in Montreal. If we want to be a player on the production and processing end, and not be mere passive consumers, we have to remove the barriers to regional companies growing up.

New Brunswick has said that they’ll do the right thing by Farmers, and by consumers and the industry. But their argument that they can’t do anything until some vague future moment is putting that victory in doubt. Shame.

Brian Lee Crowley is president of the Atlantic Institute for Market Studies, E-mail: