Dairy has become more expensive than some top cuts of meat in Canada, says the head of the food services industry ((Associated Press))

Dairy has become more expensive than some top cuts of meat in Canada, and the cost is hitting restaurants and food processors the hardest, says the head of the food services industry.

"A kilogram of cheese is more expensive than a kilogram of steak. A litre of milk is the same price as a litre of orange juice from Florida," said Garth Whyte, president and CEO of the Canadian Restaurant and Foodservices Association.

"They now call cheese white gold," he said. "It's very, very expensive. I saw it today. A 500 gram brick at an [Ottawa] grocery store was on sale — $2 off. It was $6 for 500 grams, so it was $12 a kilogram. A top sirloin steak was on sale for $9 a kilogram," said Whyte in an interview with CBC News Monday.

The association has called for a 16.5 per cent reduction in the price of industrial milk at a meeting Monday with the Canadian Dairy Commission in Ottawa.

"That is what we need to be competitive," said Whyte.

The association is concerned because restaurants have been particularly hard hit during the recession.

Food-service businesses like restaurants, pizza chains and caterers are not able to pass on the increased cost of dairy because they've already seen a drop in business, said Whyte.

Since 1994, the price of dairy has jumped by 60 per cent, twice the rate of inflation, he said.

The Canadian Dairy Commission, a Crown agency, manages the price and supply of the nation's dairy production to ensure milk producers remain healthy.

Last week, a report by the Conference Board of Canada criticized the dairy industry's supply/management system, saying it hurt dairy farmers' ability to compete globally.

The Dairy Farmers of Canada responded to the conference board report by saying that milk producers in other countries have been devastated when forced to compete in the free market.

'There's a tipping point'

However, Whyte said food processors and restaurants are hurting the most under the current system. People are staying at home to eat and fewer people can afford to buy dairy products, like ice cream, cheese and yogurt.

"Look at the price of cheese strings, even a quart of milk. A friend of mine who has three young kids pays $50 a week for milk. Who can afford that?" he said.

Whyte noted that some food processors, like frozen-pizza makers, have managed to secure exemptions allowing them to purchase cheese for 30 per cent less. The reduction allows them to export to the U.S. market where they would otherwise not be able to compete. Fresh pizza makers, meanwhile, pay 30 per cent more for cheese, and that's not fair, said Whyte.

Whyte said that if something doesn't change, it could become cheaper for food processors to purchase milk from the U.S.

"There's a tipping point, that would be a problem," he said.