By Connor Lynch
ST. EUGENE — Skotidakis Goat Farm and milk processor in Eastern Ontario has been battling it out with Dairy Farmers of Ontario at the Agriculture, Food and Rural Affairs Appeal Tribunal in a potentially pivotal case involving millions of dollars. If nothing else, the two-year legal battle highlights that the dairy board thinks the processing operation keeps “incomplete” records and owes it $13 million.
John Skotidakis disagrees, arguing in an appeal to the tribunal that the DFO was overreaching and doesn’t have the authority to audit and inspect the processing operation. A resolution doesn’t appear to be anywhere in sight.
The issue came to a head in 2018. After auditing Skotidakis Goat Farm three times, DFO sent a letter, alleging “incomplete and unreliable record keeping.” The DFO bills processors based on what they use the milk for but when it’s not clear, the processor gets billed at the highest milk class. Skotidakis buys quite a bit of cow’s milk from DFO every year: about $20 million worth, according to the tribunal.
Peter Skotidakis started out with 20 goats in 1975. Skotidakis Goat Farm now includes a 100,000 sq. ft. processing facility at St. Eugene and also milks 3,000 goats on 1,500 acres. The farm produces four different kinds of cheeses and is also known for its Greek yogurt and dips, with product in stores across Canada and in the U.S.
Longstanding DFO policy has been that, when records are lacking, DFO bills you at the highest-priced milk class, 2(a), used for yogurt. So in that letter the DFO informed Skotidakis it would treat all of Skotidakis’ milk as 2(a), sent them a new invoice for about $13 million reflecting that, asked for a payment of $1.8 million that had been agreed upon in an earlier meeting, and wanted a meeting to make sure that the records are up to DFO’s requirements.
What has followed has been a dizzying array of documents and motions and counter motions. In two years, the main question has yet to be dealt with. That’s because a new argument must be answered first. Skotidakis charges that the DFO does not have the authority to audit and independently verify milk processors and their records.
While it is common practice for the DFO to audit milk processors, Skotidakis has presented a number of “complex legal arguments” concluding that the DFO does not have that right and the threshold to hear those arguments is low, the tribunal said.
DFO estimated that Skotidakis owed $13 million and asked the tribunal to order the processor to set that money aside, so that it would be available by the end of the appeal. The tribunal rejected that request and instead ordered Skotidakis to post a security of $3.3 million. That’s about two months’ worth of milk shipments, which is what DFO asks for from processors with bad credit.
Don’t expect to hear much more anytime soon, however. The courts still haven’t heard arguments about the main question in this case and a decision just last month banned some documentation from public viewing.