Land O' Lakes Fresh Buttery Taste Spread: It looks like butter, tastes like butter and spreads like butter. It might even be better for you.
It's also happens to be illegal in Ontario and Quebec thanks to longstanding rules aimed at protecting the dairy industry.
But in a landmark internal trade ruling Monday, a federally appointed panel determined that Ontario's ban violates the 1995 Agreement on Internal Trade - a deal that committed the provinces to dismantle barriers between them.
The case could open up an untapped market worth as much as $225-million a year, according to Alberta, which filed the case with the backing of the three other Western provinces. Along with Land O' Lakes-type products, Ontario and Quebec prohibit the sale of a wide range of spreads and drinks made by mixing a bit of butter or milk into vegetable oil- or soy-based products.
Even more importantly, the decision opens the door a small crack to unwinding the country's system of supply-management that has for decades shielded dairy, egg and poultry producers from foreign competition.
After years of facing international pressure to open up its farm market, the Canadian system is now facing growing strain from within.
"It's a significant decision because it can potentially start to dismantle supply-management domestically," said John Weekes, a former top Canadian trade negotiator and now an adviser at law firm Bennett Jones in Ottawa. "We're finally starting to see things that will force us to revamp how we manage these issues."
At issue in this latest case are products such as margarine-like spreads, made by blending canola oil with a little butter. They tend to be cheaper, free of trans fats and low in saturated fat. But both provinces prohibit spreads and drinks that contain anything less than 50-per-cent dairy, a rule that puts them under the control of the strict dairy quota system.
The system results in significantly higher dairy prices, and less consumer choice. "Why are we denying products that are healthy just to protect the dairy industry?" wondered Sean McPhee, president of the Vegetable Oil Industry of Canada.
The decision means "the cows are finally coming home," Mr. McPhee said.
The big winners of the decision are consumers, he said. "Consumers in Ontario now stand to benefit from new healthful products," he added.
Alberta's victory was long in coming. Eager to open markets for its canola producers, the province first filed a trade complaint nearly a decade ago. And it won the case in 2004, only to see Ontario repeal the offending regulation and replace it with another, forcing Alberta to launch an entirely new case.
"It has been a long fight, but one that was worth fighting," said Iris Evans, Alberta's Minister of International and Intergovernmental Relations. "For too long Ontario has maintained these restrictions that are contrary to its domestic trade obligations."
Internal trade barriers in Canada create costly friction among the provinces. A recent back-of-the-envelope calculation by the Macdonald-Laurier Institute puts the tally of internal trade barriers at 0.5 per cent of GDP, or $8-billion a year. Getting rid of them would put nearly $1,000 into the pockets of a family of four.
Alberta's next target for the dairy-products battle could be Quebec, which has similar restrictions. Mike Deising, a spokesman for Ms. Evans, said the province will wait to see if Ontario decides to comply. But he said Alberta would expect Quebec to comply as well.
Under the rules of the Internal Trade Agreement, Ontario must now repeal the prohibition by Feb. 1 2011, or face fines of up to $5-million.
Sarah Petrevan, spokesperson for the Ontario Minister of Agriculture, Food and Rural Affairs, said the province would study the ruling and "consult with the affected producer groups" before deciding what to do.
Asked if Ontario might simply pay the fine and keep the restrictions in place, she said the province was looking at its options.
"As our province's second-largest industry, we have supported, and will continue to support our province's agricultural industries, and we remain committed to supporting our supply-managed commodities," she said.