Cheaper pizza for Canadians on the horizon

Pizza lovers could soon be paying less for their favourite pies.

A ruling made this week by the Canadian Dairy Commission could soon allow Canadian restaurants to buy deeply discounted mozzarella cheese.

The commission changed the rules used to classify mozzarella cheese, putting the milk product in its own class and essentially removing it from supply-management pricing. Before the ruling, the price for mozzarella cheese in Canada was artificially high when compared to the world market.

The new class, to take effect June 1, is expected to result in lower costs for Canadian-made mozzarella for restaurants that prepare and cook pizzas on site.

Bob Abumeeiz, who owns Arcata Pizzeria in Windsor, Ont., said the ruling could drop the price of a large pizza by as much as 10 per cent.

Price drop 'unheard of'

"I've been in this business 17 years, and this is the first time cheese has ever gone down," Abumeeiz said. "It's unheard of."

Abumeeiz said when he first started in the business, a kilogram of cheese cost $6.75. Today, he said it costs him $10. He spends $17,000 a month on mozzarella cheese.

Abumeeiz said he's "ecstatic about this news."

"Of course, it’s going to affect the price" Abumeeiz said. "The more people that know about it, people are going to ask ‘cheese prices went down — how come the pizza price is the same?’ The customers are aware of what’s going on around them. It’s going to affect the bottom-line of the pizza price."

Mario Dalimonte, who owns Bullseye Pizza in LaSalle, Ont., praised the ruling.

'This is like gas going down to 80 cents a litre.' — Mario Dalimonte, Bullseye Pizza

"This is like gas going down to 80 cents a litre. It's better for everyone," he said.

Dalimonte said cheese is two-thirds the cost of a pizza. He said lowering the cost would allow him to hire more people and give staff more hours of work.

Restaurant and pizzeria owners have been calling for cheaper cheese for almost 15 years, ever since frozen pizza makers — including frozen-food giant McCain — won an exemption from Ottawa that allowed them to buy cheese at the cheaper world market price.

"There's been an inequity with frozen pizza versus fresh pizza with the exact same mozza cheese, and we've been pushing and pushing and pushing (for changes)," said Garth Whyte, president of the Canadian Restaurant and Foodservices Association. "This is a major first step on dealing with this issue, and will be significant savings to our members who sell pizza."

Chains use cheaper 'pizza kits'

While frozen pizza makers have been allowed to buy cheaper cheese, a number of restaurant chains recently began circumventing hefty cheese tariffs by importing their mozzarella by way of pizza topping kits.

The Canada Border Services Agency last year designated the boxed cheese-and-pepperoni combinations as a food preparation, rather than simply cheese, meaning they could be imported duty-free.

"This puts us all on a level playing field," Dalimonte said.

It remains to be seen whether dairy processors will pass the savings from the new '3d' classification on to restaurant owners. Canada’s restaurant industry purchases $2.5 billion worth of dairy products annually.

Cheese accounts for between 50 and 70 per cent of the cost of a pizza.

High prices are part of the reason some pizzeria owners were turning to contraband cheese, smuggled into Canada from the U.S.

Last fall CBC News learned three men, including one current and one former police officer from the Niagara Falls area, were charged in connection with an international cheese-smuggling network.

The men are accused of smuggling caseloads of cheap cheese from the U.S. to sell to Canadian pizzerias and restaurants.

'Farmers have hoisted the white flag.' — James McIlroy, trade consultant

"It looks as though the farmers have hoisted the white flag," said James McIlroy, an international trade consultant based in Toronto, who called the mozzarella move the thin edge of a wedge that will only drive down prices for other milk products.

"This is going to go on and on," said McIlroy. "There's going to be more and more foreign processed products coming into Canada, using foreign dairy products, which are going to cause problems for our processed cheese industry."

Canada-U.S. price gap

Agriculture Minister Gerry Ritz called the move "good news for Canadian dairy farmers, processors and our restaurant industry."

But there will likely always be a price gap between Canadian products and those coming in from bigger markets, particularly the United States, Ritz said.

"At the end of the day I can get a hotel room in the same chain cheaper in the U.S., I can get a steak dinner (for less), it just goes on and on and on," said Ritz. "It comes down to economies of scale."

Ritz applauded the new mozzarella milk class as a good public relations move for Canada's dairy farmers and expressed hope that it would result in more consumption of Canadian-made cheese.