The province will begin collecting a $2-per-litre levy on milk-producing companies on Monday and will continue to collect it until June 30, 2018.
Ontario will collect the tax at a rate of $5 per tonne of milk produced, compared to the current rate of 7.75 per cent.
The levy will also be applied to milk that is stored in refrigerated warehouses, which would be subject to a new charge of $1 per ton of milk stored.
The new tax would be assessed in the same manner as the existing levy.
The current levy is applied to dairy farms and milk processing companies.
“It’s not the only one that’s been brought in, but it is a key one,” said Millwork president John Dvorak.
“We’ll be seeing some big changes over the next year.”
“This will bring in a lot of revenue to our industry and that’s the goal.
We’re hoping that will help us move forward.”
Ontario dairy farmers are already dealing with a $1.6-billion budget deficit and a shortfall in farm income due to the increased tax.
Dvorak said his company expects to see a $3.2-billion surplus over the long term, but that it won’t be enough to cover the shortfall until at least the next fiscal year.
“We are not expecting to be able to cover this debt for the next four years,” he said.
“So, we need to take the next two to three years to get there.”
A new tax will affect everyone in the dairy business, but Dvorik said that in some cases, the cost of milk production would fall because the tax would lower the price of dairy products.
“When the price goes down, the producers are less inclined to go out and produce milk.
If it is reduced, they will be able do that.”
Dvorack said the government needs to be careful not to drive down the cost to consumers, because there are many other reasons for people to buy milk instead of dairy.
“A lot of people have dairy on the side and they’re buying the product to make sure they have milk for their family,” he added.
“There are a lot more factors that affect people than just milk.”
Milk is the only product that will be exempt from the new levy, but the government will continue the levy on any milk produced in the future.
“If there’s a change in the regulations that applies to milk, then we’ll adjust the levy to reflect that,” said Dvorack.
“This is a good way of doing that.”