n. — Food & Drink
milk with a fat content of 3.25 per cent; whole milk.
Type: 2. Preservation — The term homo milk is a clipping of “homogenized milk” and refers to milk with a butterfat content of 3.25 per cent. The term’s full form, “homogenized milk”, is arguably a preservation from British English, attested in OED-3 as early as 1904 (see OED-3, s.v. “homogenized” (1b)). Homo in reference to milk is attested in two dictionaries (see Gage-5, s.v. “homo” (n)(2) and COD-2, s.v. “homo” (n)(2)). Although these two dictionaries document the term under the headword of “homo”, attestations suggest that the term is more commonly homo milk, at least in writing. As seen in Chart 1, the term is most frequently used in Canada. Originally this word meant milk which had undergone homogenization (with the fat mixed in); in Canada, it has come to mean milk which contains full fat as opposed to reduced-fat or skim milk. The term is most frequent in Canada (see Chart 1).
As evidenced in Image 1, homo milk has undergone enregisterment (Agha 2006: 55) as a typical Canadian linguistic item in popular culture, which means, put simply, that the term has come to be associated with a social context, in this case with the Canadian nation. Homo, slang for homosexual, is jokingly referenced in both the 1988 quotation and in the hot pink of the button in Image 1.
See also COD-2, s.v. "homo" (n)(2), which is marked "Cdn" and Gage-5, s.v. "homo" (n)(2), which is marked "Can. Informal".
Images:

Image 1: Button for homo milk. Photo: S. Dollinger Jan. 2016. 
Chart 1: Internet Domain Search, 14 Nov. 2012