A small business making dairy-free nut cheese has been ordered by the Canadian Food Inspection Agency not to use the word "cheese" on its labels, but the owner is arguing that government legislation is out of date.

Lynda Turner Zengarry Cashew Cheeses labels CFIA rules June 29 2015

Lynda Turner, who owns Zengarry Cashew Cheeses, says the CFIA's food-labelling legislation is out of date. (Stu Mills/CBC)

Lynda Turner, owner of Zengarry Cashew Cheeses in Alexandria, Ont., told CBC News that after a CFIA inspection she was asked in early June to come up with an action plan to change the company's labels, website and branding.

The public servant, who is on leave to expand her business, has been given until July 14 to do so.

"They didn't like the fact that I was using the word cheese. They said it was misleading and the CFIA didn't let non-dairy cheese be referred to as cheese on the labels," Turner said.

"Coconut milk, almond butter, cashew butter, peanut butter, they're all allowed on the labels. Why not cashew cheese?"

Poll question

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Ordered labels worth $2,000

Turner said she recently placed a $2,000 order for labels stating the ingredients of her cheeses clearly and that the cashew cheese is dairy-free.

"We're specifically presenting our products as a non-dairy alternative," she said.

"We're not trying to make people believe that they contain milk — we're giving them an alternative to a dairy cheese. We're specifically saying on the label that it's 100 per cent dairy-free."

She's been given the option of misspelling the word cheese — with a Z, for example — or calling her products spreads, but Turner said she feels neither option misleads the public any less.

Order comes as CFIA seeks to modernize labelling

The order against Turner came days before the end of public consultations on the CFIA's food labelling rules.

Until June 30, people were invited to submit ideas online that could lead to recommendations to modernize the country's food labelling system, according to the CFIA's website.

A draft report is expected in the fall.

Canada's Food and Drugs Act states that "No person shall label, package, treat, process, sell or advertise any food in a manner that is false, misleading or deceptive or is likely to create an erroneous impression regarding its character, value, quantity, composition, merit or safety."

The CFIA was not able to respond to a request for comment on Monday.