On a snowy day in late November I had the opportunity to travel to Ottawa and speak to the Canadian Dairy Commission on behalf of all independent pizzeria owners about the high cost of dairy cheeses. I was invited by Ron Reaman, vice-president, federal, of the Canadian Restaurant and Food Association, to make a case for the average independent pizzeria owner. I joined approximately 20 other people from larger pizza and restaurant chains, as well as a few suppliers. Together we represented about 75 per cent of the buying power for all dairy in Canada. In the face of a proposed 7.3 per cent increase, our delegation made an impassioned and aggressive pitch for price relief, demanding a 4 per cent rollback in the price of industrial milk for 2009. This was the first year independents had a voice at this meeting, and I had high hopes that my brief presentation might make an impact on the commissioners.
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| Recent figures from the CDC show that the cost to produce industrial milk fell by 2.3 per cent in 2007, but the price went up by 1.06 per cent last February and by another 2 per cent in September, reports the CRFA.
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On a snowy day in late November I had the opportunity to travel to Ottawa and speak to the Canadian Dairy Commission on behalf of all independent pizzeria owners about the high cost of dairy cheeses. I was invited by Ron Reaman, vice-president, federal, of the Canadian Restaurant and Food Association, to make a case for the average independent pizzeria owner. I joined approximately 20 other people from larger pizza and restaurant chains, as well as a few suppliers. Together we represented about 75 per cent of the buying power for all dairy in Canada. In the face of a proposed 7.3 per cent increase, our delegation made an impassioned and aggressive pitch for price relief, demanding a 4 per cent rollback in the price of industrial milk for 2009. This was the first year independents had a voice at this meeting, and I had high hopes that my brief presentation might make an impact on the commissioners.
As independents, we are the front lines of the industry. We are typically the first to feel the rising input costs. The general consensus around the table was that dairy cheese is the one item that never fluctuates and only increases. One delegate pointed out that the emergency rate increase this past September was approved by the CDC because of the record high fuel costs. He then noted that since this emergency increase was approved, fuel costs have come down to rates equal to the summer of 2007. He demanded an emergency price relief on dairy to reflect this significant change in the economy.
Each of the delegates spoke about the shift in their companies over this past year, from using 100 per cent dairy cheeses and dairy products to sourcing non-dairy substitutions and even creating entirely new menu items without any dairy whatsoever. Many delegates came with hard data about the actual tonnage of dairy cheese they eliminated from their menus. We all agreed this was backwards. Fresh pizzerias make up the majority of dairy purchases in Canada. If anything, shouldn’t we work together with the dairy industry to increase, not decrease, consumption?
When it was my turn to speak I began talking about how average Canadians have made pizza a staple of their diet. Take a poll in any office or even a busy coffee shop and ask when the last time they ate pizza was. The answers, on average, will be between seven and 21 days. Pizza is one of those meals that every Canadian family has on a traditional day. For many it’s Friday after the long work week; for others it’s while watching their favourite sports teams.
I went on to say: “The dairy farmers have all but abandoned the pizzeria owners. The CDC has turned their backs and a deaf ear on us. We have heard the message ‘not my problem’ and ‘you’re not part of our mandate’ loud and clear. Independent pizzeria owners across this country have thrown up their hands in defeat and, especially this year, have actively looked for substitutions to 100 per cent dairy cheeses.
Perhaps you didn’t think the independent pizzeria owners would unite and boycott the dairy industry, and it’s true, we have not banned together. However, independent and chain pizzerias, even restaurants, have been moving away from using 100 per cent dairy cheeses. If nothing else, the presentations at this meeting should confirm this fact. They have reduced their purchases of all dairy and therefore the average Canadian consumer’s consumption of dairy has declined. And other costs have increased due to actual shortages. Earlier this year we saw the cost for our bags of flour quadruple in a matter of weeks and we saw other costs increase due to rising fuel costs, although those costs have come down since production has increased. Other commodities have had fluctuating prices to reflect the gas prices. The cheese and dairy stands alone in their ever increasing costs. Do not think that pizzeria owners do not notice it’s the only item on their inventory list that only increases in price. It’s time to repair the damaged relationship between the dairy industry and the independent and franchise pizzeria owner. It’s time to help them grow their business while also helping to grow consumption of 100 per cent dairy cheeses. You may not think that it’s as serious as it is. You may be tempted to think that pizzeria and restaurant owners will always need the dairy industry and therefore you can continue to do what you’ve always done. I’d advise extreme caution with that perception. It is quite likely that you have already seen a decline in sales in the past four years and without reversing course you will continue to see declining sales, regardless of increased profits. A shrinking market will eventually dry up. Just look at GM and their dependence on gas guzzling SUVs for the majority of their profits. Their ignorance of ever increasing gas prices left them with a fleet of vehicles no one wants to purchase, regardless of the recent rock-bottom discounts.”
I continued by saying average Canadian consumers will very likely continue their tradition of eating pizza on Friday nights and while watching sports on TV in 2009. The question is whether average Canadians will enjoy 100 per cent dairy cheese on those pizzas or be faced with a palatable substitute remains in the hands of the CDC. I asked that they seriously consider this question, because whatever they decide will largely determine what Canadian consumers will find on their pizzas in 2009 and beyond.
Reaman wrapped up the meeting with a video of nine independent operators in four major markets – Calgary, Toronto, Montreal and Halifax – who shared their unique perspectives on what the high cost of dairy has meant to their businesses. Now, writing this after such a persuasive call to action, I have been informed of the CDC’s decision of a 1 per cent increase effective Feb. 1. On one hand you could call it a victory; a small increase in the face of the proposed 7.3 per cent increase. I have to wonder what would have been if we hadn’t attended the meeting to lobby for relief from high dairy prices? On the other hand it’s still a ridiculously high price reserved solely for the fresh pizza market. The favouritism shown to frozen pizza manufacturers at the expense of the fresh pizza makers has gone too far for far too long.
This experience taught me the importance of membership in the CRFA. As independents, we already have too much on our plates and the CRFA is an organization that will lobby on behalf of all of us. We need to support and strengthen it via membership. I encourage each of you to join. For my part, I am grateful for being chosen to represent independents at this table and to be given the opportunity for independent pizzeria owners to be heard. Even though this increase is relatively small compared to the increases we’ve seen in previous years, I stand by my prediction for 2009: More and more of you will source dairy alternatives and even eliminate some dairy items from your menus. That is perhaps the most unfortunate result for the fresh pizza makers, the dairy farmers and for the average Canadian consumer.
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