A dairy spat that could cost us jobs

First it's milk, then they say it’s yogourt

A dairy spat that could cost us jobsAccording to the label, a daily serving of DanActive—a popular new drink from the makers of Activia yogourt—helps to “strengthen your body’s defences.” If that’s true, you may want to consider chugging a few bottles before finishing the rest of this article. Some readers may be sickened by the facts.

At a time when markets are melting and major manufacturers are begging Ottawa for handouts, Danone, one of the country’s leading dairy companies, has a plan that would create dozens of jobs and inject millions of dollars into the sagging economy. The problem? Bureaucrats at the Canada Border Services Agency. Instead of rolling out the red carpet, the CBSA is locked in a costly court battle that boils down to one baffling question: is DanActive a beverage or a yogourt? (Or, as the judge phrased it: “To drink or to eat, that is the question.”)

Both sides were getting along so well back in 2006. DanActive had just hit grocery store shelves in the U.S., and executives were anxious to test the Canadian market. Their plan: import the product from Ohio, sell it north of the border for four years, and if people like it, construct a new DanActive factory in Boucherville, Que. Local dairy farmers were understandably thrilled, and Danone even went so far as to share its plan with the CBSA, just to make sure the imports would not trigger any hefty tariffs. In a written ruling, the agency declared DanActive a “beverage containing milk”—a duty-free designation under NAFTA.

But for reasons that remain a mystery (Danone alleges that a competitor voiced its displeasure) the CBSA reversed its decision late last year, branding DanActive a “liquid yogourt” and slapping future imports with a whopping 237.5 per cent duty. Company lawyers are now fighting to have the original ruling restored, but if they lose, Danone says it will have no choice but to stop shipping bottles to Canada—and reconsider its expansion plans. “We’re in the middle of an economic crisis, and we’re bringing jobs into Canada,” says Brenda Swick, a lawyer for Danone. “It is nonsensical to me.”