CRFA chair pushing for supply management changes

TORONTO—The new chairman of the Canadian Restaurant and Foodservices Association is a lifelong Montrealer who has developed an extreme distaste for Canada’s dairy supply management system while running multi-unit restaurant operations that buy dairy products.

Michael Aronovici, president of Interaction Restaurants Group Inc. of Montreal, was elected to a one-year term at the CRFA’s annual meeting in Toronto last month.

A chartered accountant, he became involved in foodservice when he met his current partners while working in mergers and acquisitions, and they invited him to join Interaction. He started with the company as vice-president, investment and development, and was named president in 1997.

Interaction is the exclusive licensee for Starbucks cafés in Quebec and Atlantic Canada. The company also acquired the development rights for Pizza Hut on Montreal’s north shore in 1990 and expanded the business to 45 units before selling it in 2001.

Interaction also operated the Salisbury House restaurant chain in Winnipeg from 1990 to 2001, and the Cultures franchised restaurant chain in Ontario and Quebec from 1992 to 1999.

Since joining the CRFA board in 1997, Aronovici has served as first vice-chairman, chairman of the government affairs and finance committees, and treasurer.

Last month, in his first speech as chairman, Aronovici stated, “Our industry is saddled with some bad public policy—liquor boards and the discriminatory application of the GST being some of them—but when it comes to legislation that smells like stinky Stilton, nothing is even close to dairy supply management.”

He explained that he could speak “from painful, personal experience. “…I operated 45 Pizza huts for a number of years and bought a lot of expensive mozzarella. And now my Starbucks customers are loving their lattes and I’m buying a lot of expensive milk.”

He pointed out that the CRFA has been fighting for 15 years to change supply management, which he described as a “perverse system…imposing on the Canadian economy, our trade policies and our individual businesses.”

He said that since 1986, Canadian milk prices have been on average two to three times higher than world prices, with Canada imposing tariffs of 241 per cent on milk, 245 per cent on cheese and 298 per cent on butter to protect dairy farmers.

He added that that fluid milk prices rose 54 per cent from 1994 to 2007, while the cost of milk production went down by 1.5 per cent.

He also repeated the often-heard complaint from pizza restaurant operators and CRFA officials that a dual price policy for cheese in Canada gives frozen pizza manufacturers a big competitive advantage over restaurants by allowing the manufacturers to pay 30 per cent less for cheese.

He blamed the situation on his home province.

He said that supply management started in the 1970s as a short-term method for smoothing out the ups and downs of price and supply. However, according to Aronovici the policy hung on because farmers in Quebec hold 47 per cent of the national dairy quota, and a federal party needs to win rural constituencies in that province if it wants to form a national government.

Aronovici brought up Australia and New Zealand as countries that had successfully weaned their farmers off supply management. After the two countries dropped this system, farmers became efficient, said Aronovici.

“When they lost the ability to overcharge their customers, as they do in Canada, they adapted and innovated.” Thus dairy production is increasing in those countries while it is shrinking in Canada.

“And what a great time to de-regulate our dairy industry,” he said. “The emerging middle classes in India and China offer huge markets and an insatiable demand for higher value foods like dairy products.”