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Programs > Innovation

Domestic Dairy Product Innovation Program

Background

The Canadian Milk Supply Management Committee (CMSMC) first approved the Domestic Dairy Product Innovation Program (DDPIP) in February 1989. This program is subject to renewal every five years.

In July 2004, the CMSMC renewed its commitment to the Program and approved its continuation for an additional five-year period from July 31, 2005 to July 31, 2010. The maximum length of time that a processor can receive milk under this program is five years.

Purpose

The DDPIP was designed to grant flexibility to the National Milk Marketing Plan by providing a mechanism whereby those who wish to produce new and innovative dairy products (as defined in the CDC Act) can access the milk they need outside of existing provincial plant supply allocations. By encouraging such new development, the overall demand for milk is expected to increase. It is important to note that butter is not an eligible dairy product for the program.

Milk volume provided under the program is set at 2% of Market Share Quota (MSQ) and is in addition to the provincial shares of the national MSQ which is set at a level aimed at meeting Canada's market demands for manufactured dairy products. The DDPIP is not intended to affect any existing provincial plant supply allocation systems for milk or existing product markets.

DDPIP Milk Allocations

For each approved project under the DDPIP, a specific quantity of milk is authorized for a limited period of five years starting from the first month of milk delivery. At the end of that five-year period, or earlier if the project is abandoned, the special milk allocation is terminated and regular provincial plant supply allocation procedures apply. Projects for which milk is not utilized for a period of two (2) years will be considered abandoned and will lose the special milk allocation associated with the project. Successful DDPIP participants pay the prevailing applicable provincial price for the milk or milk components that are used under the Program.

At the termination of an approved allocation, applicants should review, with their provincial milk marketing board or agency, how milk will be supplied for products developed under this program.

DDPIP Eligibility Criteria

An application must meet all the following criteria in order to be eligible for consideration under the DDPIP:

1. The product must be wholly or partially made with milk. It can not contain any imported dairy ingredient.
    
2. The product must introduce to the Canadian marketplace one or a combination of significantly new or innovative factors not currently available in Canada, unless the Selection Committee considers the application acceptable based on exceptional factors.
   
3. Through its introduction, the probable results must lead to an increase in the net demand for Canadian milk or a decrease in the net demand for imported dairy products (not subject to a predetermined annual quota) over what would have occurred without the introduction of the product. Unless the Selection Committee decides that a report is not necessary from the companies requesting only a small and limited amount of milk, the increase in milk demand will have to be confirmed in a report from an independent concept test firm.
   
4. The applicant must already be a licensed processor or have submitted a licensing application to the provincial authorities before a project can be approved. In any event, no milk will be delivered until the license is issued to the company.

The sole fact that a proposed product is either made with organic, omega or raw milk, a product destined to certain ethnic groups (e.g. kosher), or different packaging alone does not qualify for the innovation program if one or more of the above four criteria are not met.

Applications to the DDPIP must include information on:

• the anticipated sales volume of the proposed product;
  
• the composition of the proposed product, including for example, its butterfat and milk solids non-fat components as well as other ingredients to be used;
  
• the estimated market distribution of the proposed product and the amount of milk required annually for up to five (5) years;
  
• a detailed marketing plan indicating, among other things, the distribution network and the targeted market;
  
• the availability of similar products elsewhere in Canada; and
  
• any new or innovative factors being introduced to the Canadian marketplace by the development of the proposed product.

The Application Process

A separate application form must be completed for each product submitted for consideration under the Domestic Dairy Product Innovation Program. Applications are reviewed every quarter. The deadlines to receive the applications at October 31st, Janary 31st, April 30th, and July 31st. Applications received during each 3 month period will be reviewed by the Selection Committee within the following 2 months.

All applications must be sent to:

Laval Létourneau
Chief, Commercial Operations
Finance and operations
Canadian Dairy Commission
Central Experimental Farm, Bldg. 55
960 Carling Avenue

Telephone: (613) 792-2010
Fax: (613) 792-2009
E-mail: lletourn@agr.gc.ca

The Selection Process

All applications made under the Program are carefully reviewed by a Selection Committee composed of one representative from each of the following organizations: Canadian Dairy Commission, Dairy Farmers of Canada, Ontario Dairy Council, Quebec Dairy Council and Western Milk Pool.

The provincial milk marketing board or agency in the province where the special milk allocation for the proposal will be made is consulted to ensure that milk supplies will be made available should the application be approved. The CDC also provides an administrative secretariat function for the Selection Committee.

The selection process involves three stages:

1. The Selection Committee, with the assistance of its secretariat, reviews the application, seeks any necessary clarification or additional information and makes a preliminary evaluation on the merit of the project.
   
2. If the project receives preliminary support, the designated representative of the appropriate provincial milk marketing board or agency is consulted to ensure that milk will be available and to solicit their support for the project under consideration.
   
3. The Selection Committee reviews all information, a final decision is made and the applicant is notified. If approved, a formal legal contract is drawn up respecting the project. The contract describes the terms of the approved project and specifies the agreed special milk allocation. The contract is signed by the provincial board or agency responsible for supplying the milk, the successful applicant and the CDC.

The length of review time is dependant on the need for clarification or further information. The onus is on applicants to be as informative as possible to enable the DDPIP Selection Committee to make fair and timely assessments of applications.

Appeal Procedure

Any rejected application may be appealed to the Commissioners of the CDC or may be modified and re-submitted for consideration by the Selection Committee. An applicant wishing to appeal a decision of the Slection Committee shall notify the Chief, Commercial Operations, Finance and Operations of the CDC in writing. An appeal may involve a hearing before the Commissioners, if the applicant so desires, and it can be appropriately arranged.

The appeal procedure will only consider the information provided to the Selection Committee, and the applicant will not be permitted to introduce new information to the appeal. The appeal must utilize the eligibility criteria that has been approved by the Canadian Milk Supply Management Committee and is listed in this document.

Upon completion of the appeal, the Commissioners will provide the Selection Committee a written report of their decision and their reasons for the decision, if that decision reverses the Selection Committee''s original recommendation.

Confidentiality

All applications are held in the strictest confidence and are known only to the Selection Committee and its Secretariat. The names of the successful applicants always remain confidential within the Selection Committee, the CDC and the involved provincial board.

Accountability

Each provincial milk marketing board or agency provides the CDC with reports on the volumes of milk delivered under approved DDPIP projects. The CDC periodically provides the CMSMC with a report of the volumes of milk being used by each province under the program. Other information is provided to the CMSMC upon request when evaluating the program.

DM88575 rev. Nov. 06

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