The plight of an Ottawa ice cream shop that saw its fledgling wholesale operation abruptly shut down last week is reigniting debate around the province’s dairy rules and whether they unfairly freeze out small businesses.
Owner Marlene Haley was working at Merry Dairy last week when an officer from the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) came by and informed her she would have to stop selling wholesale immediately or face fines of $1,000 per day.
Within 24 hours, hundreds of pints distributed at locations across the city were collected and returned, leaving clients’ shelves bare right before a long weekend.
“It just seems absurd,” said Haley. “It’s punishing the small producer in a way.”
Ontario’s Milk Act allows ice cream makers to sell their product directly to consumers, but bars them from selling wholesale to other businesses unless they have a dairy plant licence. It’s part of a system called supply management that was set up 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 get awfully upset,” said the owner of Blackrapids Farm in Nepean, Ont.
“Lots 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 shop to run afoul of the rules.
Pascale’s All Natural Ice Cream has been making small-batch ice cream in Ottawa for over a decade and found itself in a similarly sticky situation. He has since focused on vegan options.
When Merry Dairy took to Twitter with a thread explaining what had happened to its wholesale offerings, Pascale’s tweeted in commiseration: “Same story, 3 years later!!! Things need to change.”
In a statement to CBC, an OMAFRA spokesperson said the requirement to have a license under the Milk Act is about ensuring businesses that distribute milk products meet the province’s “high food safety standards.”
The ministry is in contact with Merry Dairy and offered support in order for it to become a licensed dairy plant, which would allow the shop 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 shop calls home won’t offer enough space to meet requirements.
Toronto shop spent $250K
Kaya Ogruce, owner of Toronto-based Death in Venice Gelato, was confronted by a similar situation a few years ago.
Just as his business was taking off, he found out he’d need to be a licensed plant to sell wholesale. But unlike a lot of small producers, Ogruce decided to go for it.
It was a “mountain” of work, he said, adding despite designing his own plans and doing much of the work himself, building a plant cost roughly $250,000.
Now he undergoes inspections about four times a year and keeps meticulous records of his gelato orders.
Canada’s dairy regime couldn’t be more punitive to 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 that went through the trouble of getting this permit, technically, I should be on the side of getting the permits,” he said, explaining that would mean his investment was worth it.
“But as I was getting this permit, I definitely noticed that … the dairy board, basically, I think, is governed by the big players and nobody wants to give a portion of their business [to] shops like us.”
Ruiter, the dairy farmer, disagrees with that description, saying he has to struggle with layers of rules of bureaucracy too and pointing out it was the province, not the dairy board, that shut Merry Dairy’s wholesale down.
“As a dairy producer, we want artisan people making products because that’s another sale for us,” he added.
Wholesale grew during COVID-19
Merry Dairy had two wholesale customers before the COVID-19 pandemic began, but as the lockdown stretched on and other stores began looking for local products to carry, it saw that number grow to 15, according to Haley.
While other sectors such as liquor rules changed to help businesses stay flexible and afloat, dairy rules stayed the same.
For Merry Dairy, adding wholesale allowed the shop to stay open and employ staff year-round, said Haley, estimating it distributed 300-400 pints each week.
But the dairy rules seem designed for large-scale producers and should be updated with exceptions to allow for smaller, local shops, she said.
While Haley understands why a big company shipping out skids of ice cream every day would need strict rules to track its product in case of a recall, that’s not a problem for the Ottawa shop, which knows each of its clients personally.
“We have nutritional labels that are about to come out,” she said. “We trace all of our batches, we know where they’re going and what we’ve sold to each of our customers each week.”
Now those stores will likely find someone else to supply their ice cream, probably a major producer, Haley added.
“I don’t think we are a threat,” said Haley. “I think there’s room for smaller companies to be in the market and to share the milk and the ice cream market.”
Professor says dairy rules squash entrepreneurs
Teacher. Sylvain Charlebois, director of the agri-food analytics lab at Dalhousie University, said he believes there is merit to supply management, 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 pointed out backyard chickens are permitted in some places, allowing households to harvest their own.
The dairy industry doesn’t want any competition, and even one case like Merry Dairy could “open up a can of worms,” according to the professor, adding he believes the dairy industry and government are too closely connected.
“Right now, companies like Merry Dairy are victims of abuse sanctioned by the Ontario government and the federal government as well.”
Mayor Jim Watson shared news of the Merry Dairy shutdown on Twitter, calling on Premier Doug Ford to help out the small business and find a compromise that would allow them to keep selling wholesale.