B.C. Milk Marketing Board Accommodation Levy Policy Supervisory Review

The $0.30/hectolitre accommodation levy is imposed on deliveries of milk or cream received for processing and processed in B.C. The Accommodation Levy Policy is described in the B.C. Milk Marketing Board’s (Milk Board) Consolidated Order under Section 5 of Schedule 6.

On May 29, 2008, the B.C. Farm Industry Review Board (BCFIRB) initiated a supervisory review of the Milk Board’s accommodation levy policy. This review stemmed from an appeal made by Saputo Inc. in early 2008 for the repeal of Section 5 of Schedule 6 of the Milk Board’s Consolidated Order and the reimbursement of accommodation levies paid pursuant to this section. BCFIRB dismissed the appeal on the basis that the "decision" under appeal – a letter written by counsel for the Milk Board – did not in fact constitute an “order, decision or determination” of the Milk Board, and therefore did not create a right of appeal. Also, according to the Rules of Practice and Procedure for Appeals under the Natural Products Marketing (B.C.) Act, Saputo Inc. was outside of the 30-day time period for filing an appeal with BCFIRB. While the appeal was dismissed, BCFIRB recognized that there are underlying fundamental policy issues surrounding the accommodation levy that could appropriately be addressed through a supervisory review.

BCFIRB’s Supervisory Review

As a first step in its supervisory review, BCFIRB asked the Milk Board, as the first instance regulator of the milk industry, to provide “a considered report” on matters respecting the accommodation levy, including the advantages and disadvantages of adopting the course of action proposed by Saputo Inc. in its original appeal.  BCFIRB encouraged the Milk Board to consult fully to ensure its views are informed by the input of all industry stakeholders.

On January 16, 2009 the Milk Board filed its report with BCFIRB, including copies of submissions made to the Milk Board by industry stakeholders during their submission process. Further submissions were subsequently received from both Saputo Inc. and the Milk Board, leaving the issue unresolved.

On July 16, 2009, BCFIRB wrote to the Milk Board and Saputo Inc. indicating that it would hold a supervisory hearing as the next step in the supervisory review. The issue to be examined at the hearing was identified as follows:

Does the Accommodation Levy in its current form accord with sound marketing policy?

BCFIRB invited and confirmed applications for intervener status at the hearing from the B.C. Milk Producers Association and the B.C. Dairy Council.  BCFIRB also received and confirmed an application for observer status from Vitalus Nutrition Inc.

A prehearing conference of the parties was held on August 31, 2009. On September 8, 2009 BCFIRB sent a letter to the parties clarifying the issues on which the panel would benefit from hearing oral testimony, as follows:

  1. The history of the accommodation levy since approximately 2001 when the Milk Board became first receiver of milk following Saputo’s acquisition of Agri-foods.
  2. The legal (statutory, contractual or otherwise) responsibilities associated with the Milk Board becoming first receiver of milk and Saputo entering the PLR agreement.
  3. The nature and extent of any misunderstanding or misapprehension by Saputo (and/or other processors) that the Accommodation Levy paid by processors is funding the PLR.
  4. A comparison of the B.C. model for managing surplus within quota milk produced on a daily basis with corresponding models in other regions (Western Milk Pool and P5) or provinces.
  5. The comparative disadvantage/advantage for dairy processors resulting from payment of the accommodation levy.

The supervisory hearing was held March 8 to 11, 2010 in Victoria, and BCFIRB released its supervisory review decision on May 4, 2010.

Decision

May 4, 2010 - BCFIRB supervisory review decision on the B.C. Milk Marketing Board Accommodation Levy Policy (PDF)