Ethical Dilemma #6: Peninsula Farms and the Canadian Food Inspection Agency

Peninsula Farms was a small business in Lunenburg, Nova Scotia, that began with one cow.  The Joneses owned the cow and kept her around to maintain their lawn.  The cow produced milk, of course, but the Joneses didn't know how to milk her.  So they learned proper milking techniques.  The cow was producing more milk than they could use, and the surplus was going to waste.  The Joneses researched the local market to find out what kind of milk product they would sell.  They discovered that whole-milk yogurt was in demand.  They then found out how to make yogurt in large batches.  They also studied the health and safety regulations to make sure they were meeting government standards.  The Joneses were so successful that they exceeded the government criteria.  The Joneses then bought more cows -- enough to make Peninsula Farms a profitable business.

Government inspectors had always given Peninsula Farms a high rating on their regular inspections.  It was a surprise to the Joneses, then, when six federal inspectors from the Canadian Food Inspection Agency (CFIA) visited the farm and, with just a cursory examination of the plant and its procedures, impounded more than $50 000 worth of yogurt.  This halted the production and left Peninsular Farms customers without product they wanted to buy.  The Joneses faced a total loss of more than $100 000 as they were now behind $50 000 worth of new production in addition to the yogurt that had been impounded.  (Their cooler was full of the impounded yogurt and there was nowhere to put any new yogurt.)  They were losing sales and customers as well.  The space that Peninsula Farms' product took on grocery shelves was soon filled with competing brands.  Faced with such a loss, Peninsula Farms was forced out of business.  It was discovered after the fact that their plant was above standard and their yogurt tested totally clean, with no trace of offending bacteria.

No one wants to be poisoned by the foods we eat.  The Canadian Inspection Agency does a wonderful job of protecting us from dirty factories, unsafe packaging, and dangerous storage practices.  As a result, we eat foods that do not, as a rule, make us sick.  Canadians are grateful that the CIFA is diligent in their efforts on our behalf.  However, in this case, do you believe the Canadian Food Inspection Agency was too diligent in this case?
Should there be special rules for small ventures that cannot afford such an interruption in their businesses?
If you were the Joneses, would you start over?  Explain your decision.

****Please read the article below before answering this post****

Idealism and yogurt

    New York professor of Spanish literature and management consultant find niche market making yogurt in rural Nova Scotia

Published: The Globe and Mail, August 14, 1989, Report on Business

By Deborah Jones

    Ask Sonia Jones what makes an entrepreneur tick, and she will wax poetic about the main character in Miguel de Cervantes Saavedra's seventeenth-century masterpiece Don Quixote de la Mancha. ''I love his willingness to go forth and tackle every problem,'' said the practical-looking Ms Jones, chairman and chief executive of Peninsula Farms Ltd. of Lunenburg, N.S., a maker of all-natural yogurt, frozen yogurt and ice cream.

    Don Quixote, an adventurous country gentleman addled with idealism, ''wanted his life to be useful to others: orphans, widows in need, damsels,'' she enthused.

    What have such altruistic notions to do with running a business such as Peninsula Farms , which employs 42 and sells $2.7-million worth of dairy products in the three Maritime provinces each year?

    ''The love of living and learning and helping and doing is part of the entrepreneurial spirit,'' Ms Jones said.

    She and her husband, Gordon Jones, were well-to-do New Yorkers when they moved to Nova Scotia in 1972 in search of an academic job for her and uncrowded sailing room for him. Ms Jones, a Harvard-trained professor of Spanish literature, found a job at Dalhousie University. The pair eventually settled with their two small daughters on a farm in pastoral Lunenburg on Nova Scotia's south shore.

    Starting a new business was the furthest thing from their minds. Ms Jones was happily teaching students about her first love and specialty, Cervantes. Mr. Jones had left the corporate world far behind when he retired as a management consultant.

    But then Daisy came along, and Peninsula Farms - the tale of which Ms Jones has set out in her book It All Began With Daisy - inadvertently began.

    Daisy was a Jersey cow the family acquired to have a supply of milk. However, she produced far too much milk for them to use. Ms Jones began making yogurt from the excess and then, on the suggestion of a friend, started selling some to health food stores in Halifax.

    One day David Sobey, then president of Sobeys Stores Ltd., which operates a chain of supermarkets in the Atlantic region, came calling. He told Ms Jones that if she cared to produce her yogurt more commercially he would be willing to stock it. The couple considered the offer, and decided to take him up on it - on condition he allow them to expand lowly.

    Today, the Jones's products are sold throughout the region. Peninsula Farms yogurt holds a 25 per cent share of the Maritime yogurt market, Ms Jones said, and this year the company introduced all-natural ice cream.

    She has also written a yogurt cookbook, which went on sale this year, and is working on a proposal by a Nova Scotia film production company to turn her book about Daisy into a movie.

    Peninsula Farms has not been entirely a story of adventurous romance, the likes of which Cervantes would have relished. Although they now draw a healthy salary, the Jones's did not pay themselves for eight years and, at times, their personal possessions were used as collateral for business loans.

    Indeed, the company would not have endured ''if there hadn't been this spirit of adventure and this desire to live life in a vital way, and if we both hadn't enjoyed this whimsical adventure,'' Ms Jones said.

    She relishes the idea of being an entrepreneur and teaches a course in entrepreneurism at Acadia University in Wolfville, N.S., although she is not entirely convinced that an entrepreneurial spirit can be taught.

    ''Unless you have a sense of humor and a touch of whimsy and an incredible willingness to work yourself very hard, and you have a certain willingness to take risks, you're not likely, even if you want to be an entrepreneur, to pursue it to the end.'' Ironically, Ms Jones appreciates Nova Scotia precisely because it seems to have fewer born entrepreneurs than her native United States. ''I find myself really loving Nova Scotia because it isn't grubby-grabby. . . . You need a middle ground between California crass materialism or pure drudgery,'' she said.

    And what of Daisy, with whom it all began and whose likeness is part of the Peninsula Farm logo? The cow is probably in yogurt heaven now.

    In 1981, the Jones's sold their herd and began purchasing raw milk from Farmers co-operative dairy. Daisy, who would be about 18 years old now, was auctioned off as just one of many lot numbers.

    ''We lost track of Daisy. We didn't know she was going to be famous when we sold her,'' Ms Jones said ruefully.