Canadian Dairy Commission / Commission canadienne du lait

Supply Management

Harmonized Milk Classification System

Most provincial marketing boards and agencies purchase milk from producers and sell it to processors for the manufacture of dairy products. The milk produced in Canada is sold to processors through a Harmonized Milk Classification System for the manufacture of products according to the following classes.

Class	Products
1(a)	Milk and milk beverages, partly skimmed or skimmed, whether or not treated for lactose intolerance, whether flavored or not, with or without vitamins or minerals added, for Retail and Food service egg nog cordials cultured milk concentrated milk to be reconstituted as fluid milk
1(b)	All types of cream with a butterfat content not less than 5% for Retail and Food Service
1(b)ii	Fresh cream with a butterfat content of 32 % and higher used to make fresh baked goods which are not eligible for a Class 5 permit. Any utilization of this class would require a Class 1(b)ii permit.
1(c)	New 1(a) and 1(b) fluid products for Retail and Food Service as approved by the provincial authorities during an introductory period.
1(d)	1(a) and 1(b) fluid products marketed outside the ten signatory provinces but within the Canadian boundaries (e.g. Yukon, NWT, Nunavut and cruise ships)

Class	Products
2	All types of ice cream, ice cream mix, yogurt, kefir, whether frozen or not All types of sour cream All types of milk shake mixes1 Other frozen dairy products The following products: fudge, puddings, soup mixes, caffeinate and Indian sweets

1. Milk shakes for retail sales are currently classified as a Class 1 product in the WMP and classified as Class 2 in the P5.

Class	Products
3(a)	All cheeses other than those identified in Class 3(b) All types of cheese curds other than stirred
3(b)	All types of cheddar cheese Stirred curd Cream cheese Creamy cheese bases (cheese mixes) Cheddar and cheddar-type cheeses sold fresh (see definition 2)

2. Definition of cheddar-type cheese: a cheese of descriptive nomenclature will be recognized as a cheddar-type cheese for the purposes of classification if it is a firm or semi-soft, unripened, unwashed curd cheese, with a minimum milk fat content of 25% and a maximum moisture content of 45 %.

Class	Products
4(a)	All types of butter and butteroil All types of powder Concentrated milk as an ingredient in the food industry3 All other products not elsewhere stated
4(a)14	Milk components for the manufacture of rennet casein (dry or curd, Milk Protein Concentrate (dry or liquid) or Skim Milk (dry or liquid) to be used in the manufacture of non-standardized final products in the processed cheese category or in weight/muscle gain formulations, meal replacement products, medical and sports recovery drinks and infant food formulations destined for retail sale.
4(b)	Concentrated milk for retail sale whether sweetened or not
4(c)	New industrial products as approved by provincial authorities for an introductory period.
4(d)	Inventories and losses5
4(m)	Milk components for marginal markets as established from time to time by the CMSMC

3. In the WMP, concentrated milk is used to make other dairy products. In P5, such usage is classified on end-use.

4. Pricing and Administration

i. Provincial boards or agencies will set the butterfat price for Class 4(a)1 at the 4(a) price and will set the price for protein and other solids for Class 4(a)1 at the price established by the CMSMC on a semi-annual basis (August 1 and February 1).

ii. CDC will receive the milk utilisation declaration from the provincial boards and agencies on a monthly basis for pooling of revenue purposes. Provinces agree that the revenues from Class 4(a)1 will be pooled at the P10 level.

iii. Audit of Class 4(a)1 will be performed by the usual organizations responsible for performing that task in the provinces. In the case of interprovincial movement of product, the CDC will coordinate the audit and supporting information with provincial auditors. The processor receiving the raw milk used to make rennet casein (dry or curd) or MPC under Class 4(a)1 will be responsible for providing documentation which supports the claim that the components were utilized in the manufacture of non-standardized final products in the processed cheese category. Participating provinces will undertake to implement the proper audit procedures to ensure compliance within this class.

iv. Class 4(a)1 will be renewed upon successful review and approval of the CMSMC by February 1, 2008.

5. Losses: Explained losses (dumps, fluid returns, dead vats, etc.) Unexplained losses: Up to 2% for processing (West only).

Class	Products
5(a)*	Cheese used as ingredients for further processing for the domestic and export markets.
5(b)*	All other dairy products used as ingredients for further processing for the domestic and export markets
5(c)*	Dairy products used as ingredients for the confectionery sector destined for domestic and export markets
5(d)	Planned exports and other exports approved by the CMSMC, the total of which shall not exceed Canada's WTO commitments

*Under Class 5(a), (b) and (c) (Special Milk Class Permit Program), industrial milk is classified and made available for use in dairy products and products containing dairy ingredients at prices which vary according to end use. The volume of dairy components accessed under this class is monitored through permits issued by the Canadian Dairy Commission.

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