Judge's reasons

Justice Peter Lauwers gave a lengthy and detailed explanation of how he came to find whistleblower Norman Bourdeau in contempt of court in the lawsuits swirling around the Ontario egg industry.

He notes that Bourdeau, during cross-examinations in May, 2010, assured Gray's lawyers that he had turned over all documents he had taken from L.H. Gray and Sons Ltd. Later, it became apparent that Bourdeau had kept copies and used them to prepare a 170-page submission to the Ontario Farm Products Marketing Commission and to circulate information to about 170 others.

Lauwer says "Mr. Bourdeau sees himself as a 'crusader' and instrument of justice" and calls himself a "whistleblower".  As such, Lauwers said Bourdeau seems to think he's above the law that required him to turn over all of the documents.

He said it's "disingenuous" of Bourdeau to argue a year later, in May of this year, during another cross-examination that he thought the order applied only to originals and did not prevent him from keeping copies.

Bourdeau said he kept and used copies to provide information to regulators and police forces. Gray's lawyers complained that he also contacted Gray's clients, including supermarket chains, and some egg farmers.

Lauwers says Bourdeau's "animosity towards Gray is especially palpable and may explain some of his behaviour" and says that he can understand why Bourdeau feels that way, given the terms of his dismissal from employment at L.H. Gray and Son Ltd.

Lauwers said Bourdeau was "indifferent to the terms of the court order and reckless."

The lawyers are to appear before Lauwers again on Oct. 13 in Oshawa to present their views about an appropriate penalty and whether Bourdeau should pay Gray's legal bills for this case and, if so, how much.

All of this, in the words of Justice Roland Haines in London court, is merely a small side issue to the main court action, which is lawsuits Svante Lind of Best Choice Eggs has filed against Gray, against Burnbrae Farms and against the Egg Farmers of Ontario marketing board.

Lauwers made it clear that this case is separate from Lind's lawsuits which are still a long way from trials and decisions.

Gray wins in Oshawa

Justice Peter Lauwers, in a scathing 20-page judgment, has found whistleblower Norman Bourdeau guilty of contempt of court in the ongoing egg-industry legal battles.

Allison Webster, lawyer for L.H. Gray and Son Ltd., successfully argued that Bourdeau was in contempt for continuing to circulate confidential information from electronic files that were placed under court protection here.

The judge not only found Bourdeau guilty, but also said he lacks credibility.

His judgment came hours after Justice Roland Haines in London court dismissed another contempt-of-court charge Webster filed against Bourdeau. Baines said Webster was unable to demonstrate “beyond a reasonable doubt” that Bourdeau “deliberately and willfully” missed a deadline by one week to provide a list of everybody he circulated information and allegations to about Gray’s egg-grading business.

The lawyers are due back in court here Oct. 13 and Lauwers said he will listen then to lawyers arguments about the penalty he should impose.

On that day he is also scheduled to hear a request from lawyer Donald Good, acting on behalf of Svante Lind of Best Choice Eggs, to merge three lawsuits against Gray, Burnbrae Farms and the Egg Farmers of Ontario marketing board, and then to decide whether information from the electronic files ought to be allowed as evidence and, if so, which files that contain e-mails and egg-grading records.

         

Gray loses case

L.H. Gray and Son Ltd. has lost its motion to have whistleblower Norman Bourdeau convicted of contempt of court for missing a deadline by five working days.

Justice Roland Haines also rejected Gray's request to be awarded court costs. Nor will Bourdeau's lawyer get costs.

Justice Peter Lauwers has yet to hand down his decision on another Gray motion to cite Bourdeau for contempt of court. In that case, one of the key issues is whether the documents Bourdeau took from Gray were put into court protection to keep Gray from destroying evidence, or if the intention was also to keep Bourdeau from circulating information from those files.

While he's pondering the case, Lauwers has all of the reams of court files on the egg cases in his chambers. Gray's lawyers asked to have the records sealed, but Lauwers made no decision on that request. Keeping them in his chambers, however, ensures the public can't look at them.

Egg board offers incentive

The Egg Farmers of Ontario marketing board is offering an incentive to persuade farmers to stick with 12-month flock replacement.

The move comes because there are indications that many more farmers are considering a switch to 13 months and the board is concerned that may result in shortages in peak demand periods just before Christmas and Easter and in poorer egg-shell and interior-egg quality.

The incentive is an extra half of one per cent hens that can be placed with the next new flock.

Harry Pelissero, general manager of the egg board, said "the trade" indicated concerns about how many are considering going to 13 months, so it convened a meeting to discuss the situation. He said about nine per cent are now on a 13-month cycle and there were indications that might increase to 20 to 25 per cent.

Bourdeau faces contempt charge

Whistleblower Norman Bourdeau was in court in London today facing another contempt of court charge.

Lawyer Allison Webster, acting on behalf of L.H. Gray and Son Ltd., has filed four contempt of court charges, plus a couple of motions, all aimed at silencing and punishing Bourdeau who alleges Gray has cheated egg farmers and consumers by representing undergrades, mainly cracks, as Grade A eggs.

Two of the charges have been settled by the lawyers with a fine of $500 each and $1,000 to be paid to Gray for each case. One is awaiting a decision by Justice Peter Lauwers in Durham Regional Court in Oshawa. This case is now in the hands of Justice Roland Haines who said he will have a decision by Friday.

The short version is that Webster was hard-pressed to "prove beyond a reasonable doubt" that Bourdeau acted "deliberately and willfully" in missing a deadline of March 4 by one week. He said he was ill with pneumonia and unable to compile and furnish a list of everybody he has provided with an outline of his allegations against Gray.

The long version includes Webster's arguments that Bourdeau's claim of illness lacks credibility, that he has a pattern of failing to comply with court orders and his allegations threaten serious harm to Gray's egg-grading business.

Lawyer Rod Refcio, acting for Bourdeau, has taken only a tenth as much time as Webster to argue his client's positions.

Webster wants the judge to fine Bourdeau more than $5,000. Refcio argued for a "not guilty" verdict and said if the judge does find him guilty, the fine should be the same as the two other cases - $500 to the court, $1,000 to Gray.

Webster said if Gray wins, she wants more than $5,000 in court costs. Refcio said if he wins, he will be satisfied with $2,000 in court costs.

One minor point that greatly interested me was Webster's reference to Bourdeau's allegations, saying they amount to "defrauding egg farmers and consumers."  It's the first time "fraud" has been mentioned in open court.

Fraud is, of course, a criminal offence.

Nutri Ouef replies

Richard Decelles, general manager of Nutri-Oeuf, has taken issue with my July 5 post about business deals in the egg-grading and egg-processing industry.

First, I was wrong in saying that his Nutri-Ouef, a Quebec-based co-operative owned by 35 farmers, has a partnership or interest in Sparks Farms near Calgary.

I was right about Phil Carnovale buying the egg-processing plant that Global once owned and that Nutri Ouef is now an investor in that business. Decelles said it became a shareholder last year in this business, Supreme Egg Products.

Decelles said when Global sold the facility to a real estate investor, it never thought a competitor would open up there. Carnovale was a former Global partner. Global rolled its business in with Gray and they call their new egg-processing plant and business Egg Solutions.

He says I am wrong in suggesting that Bill Gray of Gray Ridge Farms is in any way an investor in Nutri Ouef or any of its affiliates and partnerships. He says Gray and the Hudson family, owners of Burnbrae Farms, are stiff competitors to Nutri-Ouef.

What Decelles did not say is that Bill Gray is a partner with Meb Guiliani of Sparks Eggs of Alberta in owning Ovale in Quebec.

Decelles says Nutri-Oeuf is in Manitoba, not Alberta. It's interest in Countryside in Manitoba, however, means it has some interest in Countryside's partner in National Egg whose other partners include Gray Ridge, Sparks, Golden Valley (half owned by Gray, half by B.C. egg producers) Ovale and Star Egg Company Ltd. of Saskatoon.


Decelles says Nutri-Oeuf also lost some farmers after Ontario Pride Eggs, which is one of its affiliates, bought Best Choice from Svante Lind.

That, Decelles notes, means Nutri-Ouef now has some Ontario shareholders. Maybe more egg farmers will join the co-operative to distance themselves from Gray Ridge and Burnbrae.

But, then again, the egg-grading and egg-processing industry is so intertwined now that almost all of the players are partners to one degree or another. And where is the Bureau of Competition Policy? And does anybody supervising supply management marketing boards care to take notice of how the whole system is being perverted for the benefit of a handful of multi-millionaires?

Food banks questioned

Food banks ought not to be necessary, according to a column in today's Globe and Mail written by Elaine Power of the School of Kinesiology and Health Studies at  Queen's University, Kingston.

When they were begun in the midst of a severe recession in the early 1980s, they were supposed to be temporary. The real fix, it was argued, was adequate social assistance so all people can afford food and housing.

Instead they have steadily grown every year, through recessions and booms, summer and winter, spring and fall.

Yet, Power says citing government-funded surveys, many people remain hungry, partly because they are too ashamed to ask for food, partly because the food offered is insufficient or inappropriate to their dietary requirements.

Food banks have also become a convenient dumping ground for food-processing companies. It "solves" their surplus or quality challenges and makes them look good.

I agree wholeheartedly with Power. My daughter worked for a time at a food bank and provided some revealing insights. One is that attention is focused on increasing donations and recipients, not on helping wean people off assistance.

This results in ever-larger facilities with bigger and better trucks, freezers, etc. And, I learned a few years ago, the local food bank approached centres for housing seniors, encouraging them to ask for free food.

Power is also right in concluding that "tackling poverty means wresting with diverse ideas about causes and solutions.

"It's time to begin that political conversation," she says. "But first we have to remove the obstacle that food banks have become."

Buy local, buy fresh - listeria

Primeridge Pure cheese curds have been recalled because of a risk they are contaminated with lysteria monocytogenes, says the Canadian Food Inspection Agency.

The recall notice says the curds in question were sold July 9 at the Owen Sound Farmers Market and from the Leslieville Cheesemarket in Flesherton.

They have marking on the label saying “packed on 08.07.11.

The CFIA says “there have been no reported illnesses associated with the consumption of this product.”

CFIA cuts to HACCP

The Canadian Food Inspection Agency is slashing the frequency of its food-processing plant audits for compliance with Hazard Analysis Critical Control Points (HACCP) protocols.

Instead of inspections two to four times a year, each lasting one to two days, the CFIA will now have a HACCP specialist doing an audit lasting four to five days every second year.

These audits will also apply when there is a food recall or when an inspector suspects the HCCCP protocols are not being followed.

I learned about this CFIA cut only because somebody tipped me off about changes at Gray Ridge Egg Farms which has been told it will now be HACCP audited once every two years.

Inspection standards are reverting to the Food Safety Enhancement Program.

In response to a call to CFIA, I got an e-mail saying "a new and revised Food Safety Enhancement Program (FSEP) came into effect on July 01, 2010. (They erred. It's July 1 this year.)

"FSEP was amended to reflect changes in the current food safety environment and to introduce a new method of verifying FSEP recognized establishments. 

"As a result, regular inspection was reduced for those establishments that were regularly in compliance to regulations. 

"FSEP audits have been substituted by complete reviews of the establishments HACCP system by an inspection team with a HACCP Specialist.

"This four to five-day review may be initiated in all federally-registered establishments that have implemented FSEP at a minimum frequency of once every two years; or following a recall; or should the inspector determine that the HACCP system may be potentially compromised.

'The overall impact of these changes has been to incorporate a more risk-based approach to inspection without compromising inspection presence in FSEP recognized establishments (meat, dairy, shell eggs, processed eggs, processed products, maple, honey and hatcheries)."


There is no word on whether the Americans will accept this change. It was they, after all, who forced CFIA's hand at meat-packing plants exporting to the U.S.        

OMAFRA botches investigation

Susan Whelan

The record of an appeals tribunal hearing of an appeal by Dr. Ken Allan of Perth underlines the wisdom of hiring expert investigators.

That's what the Ontario Ministry of Agriculture, Food and Rural Affairs has done for most cases, turning to the team at the Ontario Ministry of Natural Resources to handle investigations.

But in this case, when inspector Craig Richardson thought Allan was breaking the rules governing the sale of livestock medicines, he acted as his own investigator.

Lawyer Susan Whelan, who chaired the panel of the Ontario Agriculture, Food and Rural Affairs Appeal Tribunal, ruled that he didn't gather convincing evidence. For example, an orange box on the seat of Allan's pickup truck is not evidence that there were livestock medicines or vaccines in the box, nor was there any evidence that Allan had sold any to farmers at the Ottawa Livestock Exchange that day.

And when it came to discipline, the ministry didn't bother to send letters by registered mail, so it can't prove that they were delivered. Allan says he didn't get them.

There were a few other deficiencies pointed out by the tribunal, all adding up to the conclusion that if Richardson and OMAFRA thought they had identified cheating, they failed miserably in proving it.

World trade impasse

The United States is emerging as the villain in the Doha Round of world trade talks that started in 2001 and have been stalled for at least five years.

The most recent critic is Robert Zoellik from his post as head of the World Bank. He was the U.S. Trade Representative from 2001 to 2005 when the talks failed to reach a deal by the original 2005 deadline.

Zoellik says the U.S. should eliminate its tariff on ethanol, make deeper cuts to farm subsidies and scrap some of its contentious anti-dumping measures. 

That's an agenda that would be welcomed across the board by Canadian farmers.

Michael Punke, U.S. Ambassador to the World Trade Organization, countered by saying the U.S. has been trying to negotiate a deal.

“Our goal has been not just any deal, but a good deal,” Punke said in Geneva.

That translates into a refusal by the Democrats to reform the U.S. farm subsidies, trade barriers and notorious anti-dumping regime that has done enormous damage to Canada's farmers.

The U.S. has been insisting that China, India and Brazil make concessions to allow easier access to its markets. They have their heels totally dug in, especially India. Not only is it resisting pressure to open its financial and service sectors to some competition, but also it won't budge on protection for its agriculture and food sectors.

When the Doha Round began, the focus was on a better agricultural deal for Third World countries and at the time, that included China, India and Brazil. Since then their economies have been expanding and those countries have begun to aggressively export agricultural and food commodities, including pickles from India to Canada, corn, soybeans, beef, pork and chicken from Brazil and many processed foods from China to Canada.

Zoellik made no mention of Canada or Europe in his criticisms about the stalled negotiations. He said the U.S. needs to become the leader.

An impasse during the previous round of negotiations, called the Uruguay Round, was broken by a so-called “kitchen meeting” among the U.S., Europe and Japan.

It featured the biggest deal for agriculture in the history of world trade negotiations, but it failed to drastically cut domestic farm subsidies and import barriers, so it fell short of helping the world’s poor.

Import barriers were all converted to tariffs which, at the time, appeared to make it easier to reduce those barriers during future negotiations. In practice, Canada, as an example, has insisted on keeping some of the world’s highest tariffs for dairy and poultry and U.S. and European farm subsidies remain greater than the money they spend on international aid.

There has also been an increase in trade barriers related to food safety and quality, including a number of Chinese and Russian bans on chicken and pork from U.S. and Canadian packing plants.  The bans make trade uncertain and companies therefore insist on bigger margins when they consider exports to those countries.

Ironically, farm subsidies and trade barriers remain a stumbling block despite record-high commodity prices and political unrest in countries where citizens budgets are being squeezed.

                                    

Detained eggs

I have just learned that between March 19, 2009, and June 23, 2010, the Canadian Food Inspection Agency detained 12 truckloads of eggs shipped from Burnbrae and Gray Ridge to Best Choice Eggs at Blackstock.


The information is in court files in Oshawa.


This raises a couple of questions. How did these substandard eggs escape Canadian Food Inspection Agency scrutiny before they left Burnbrae and Gray Ridge grading stations?  


Were these shipments deliberately sub-standard to hurt Best Choice's reputation with its clients, or were they typical of eggs the province's dominant egg graders ship to all their customers? 


After experiencing these situations at Best Choice, did the Canadian Food Inspection Agency subject Burnbrae and Gray Ridge to greater scrutiny, including surprise inspections?

Improper storage for eggs

It has taken months, but I have finally received reports from the Canadian Food Inspection Agency on a huge volume of eggs improperly stored in unrefrigerated facilities at Spruce Brook Farms north of Guelph.

I have been told that these eggs, stored for Gray Ridge Egg Farms, were imported from the United States.

Although the documents from the Canadian Food Inspection Agency are heavily censored to protect the guilty, it's clear that the eggs were in bad shape because the CFIA ordered them rewashed before they could be sent for breaking at a processing plant.

I learned from a previous interview with Harry Pelissero, general manager of the Egg Farmers of Ontario marketing board, that farmers footed the bill to divert these eggs from the table to the processing market.

These eggs were "found" by the Canadian Food Inspection Agency - after a tip with pictures - in early February, 2010, raising a question in my mind whether they were imported on a supplementary import permit in late 2009.

Gray Ridge in trouble - again

Gray Ridge Egg Farms is in trouble with the Ontario Ministry of Labour – again.

This time the plant in Strathroy was shut down until safety guards were put in place.  Inspectors found a similar situation at Burnbrae Farms egg-grading facility in Strathroy and temporarily shut it down.

Scott Brookshaw of Gray Ridge is not returning my call, but is reported saying he suspects an employee filed a complaint with the Ministry of Labour, prompting the inspection that identified the infractions.

Brookshaw is skirting on the edge of regulations which carry sanctions for those who threaten or intimidate employees who provide information to federal or provincial inspection services.  The ministry may also be investigating a Gray Ridge requirement that all employees sign a confidentiality agreement when the new company was formed. The former company was L.H. Gray & Son Ltd.

There is a news report that this was the 15^th infraction within the last two years at Gray Ridge facilities at Strathroy and Listowel.  There were other citations before that.

“We’ve been running for how many years and it’s (the guarding) never been an issue,” Brookshaw told a reporter for another publication. With the problem fixed, “we’ve been running ever since, so not sure if there’s much of a story there.”

In fact, the ministry ordered additional guards on egg packers after further inspections July 8 and 12 and issued a number of additional orders.

A ministry official said there have been orders issued about unsafe racking and some about other issues.  An informant says some of those other orders relate to sexual and physical harassment of workers, including one incident of knife thrown by one worker at another.

Brookshaw told a reporter he’s aware that the company has had “the odd little thing” that has come up but the June order was the first on the company’s machinery. In fact, according to a well-informed source, there have been issues with the grading machines since 2007, including a recommendation that an engineering study be done on the grading machines.

“We have a very good rating with WSIB (Workplace Safety and Insurance Board) so our workers are pretty safe,” Brookshaw said, adding that ministry representatives recently complimented the company on its policies and procedures for its Strathroy and Listowel plants. If people don’t think a working environment is safe, they don’t tend to stay, he adds. “Our turnover on our long term staff is very minimal.”

In fact more than 120 people have left since 2007 and more than 25 are on permanent disability. Gray Ridge has been ranked “high risk” because of injuries.

                                            

Egg imports and surpluses

For the past two years, grading stations have been declaring huge egg surpluses in January.

I suspect there is a boondoggle taking place. This year, for example, there were so many surplus eggs  that processing plants couldn't handle them all. At one point there was a two-week backlog, Tim Lambert, general manager of Egg Farmers of Canada (the national egg marketing agency) told me during the annual meeting of Egg Farmers of Ontario earlier this year.

Yet a month earlier the egg graders were claiming they couldn't get enough eggs, so they applied for supplementary import permits which were granted by the federal government. How many were granted remains a question the Department of Foreign Affairs and International Trade has yet to answer in response to an Access to Information request I filed months ago.

When this happened in 1974-75, Ontario Agriculture Minister William Newman judged it to be a  breach of marketing board regulations and he moved to kick Joe Hudson, owner of Burnbrae Farms Ltd., off the Ontario egg board. However, because Newman lacked authority to dismiss an individual board director, he resorted to his power to dismiss the entire board.  Then he re-appointed only those not in contravention of board regulations; that also caught Waldron Eckstein of New Hamburg who happened to be a few birds over quota.

I remember this case well because I worked jointly with Lloyd Bibby, then the farm reporter for the Waterloo Region Record, to expose Hudson.  We obtained information on Hudson's importing from the U.S. and his sales of surplus eggs to the marketing board.  Hudson sued, but withdrew his lawsuit when I assured him that the information on imports had not been supplied by another board director, George Lindblad.

I have never revealed my source, nor will I until the person dies. But I know the information was accurate and it nailed Hudson. Let's just call this a case of a helpful whistleblower.

Today his arch rival, Bill Gray of Gray Ridge Egg Farms, is beleaguered by another whistleblower.  I have some Access to Information requests out about eggs Gray imported. I'll let you know when I get documentation.

This situation of supplementary imports during December and surplus declarations in January is an enormous cost to farmers who pay the difference between "table market" and "processing" prices. Table market prices are much higher because there is a tariff of 192.3 per cent on imports; if you buy $1 eggs in the U.S., the tariff on those eggs will be another $1.92.

But if you gain a supplementary import permit, there is no tariff, so the imported eggs are much cheaper than those the graders buy from Canadian farmers.

Processing egg prices are set low enough to enable Canadian processors to compete with imports, meaning in practice that they reflect Barry-Urner market prices in the U.S.  This leaves importing egg graders in a no-lose situation. If they can sell the imported eggs at table market prices, they make a windfall profit. If they can't, they dump them on the egg board as surplus eggs at little or no cost. And if the importers are Gray or Hudson, they can process the surplus eggs at their own facilities, pocketing the processing-industry profits.

It's egg farmers who are burdened with the risks and losses because they fund the gap between table and processing-market prices through a levy they must pay on every dozen of Grade A eggs they market.

So how come, when Hudson was both importing and declaring surplus eggs in 1974-75, he was found guilty of breaking regulations and kicked off the board, but nothing is being done these days?

It has taken me months to chase down the answer. Neither the Ontario Farm Products Marketing Commission nor the Canadian Egg Marketing Agency would give me an answer when I asked whether there are regulations against applying for supplementary import permits, then turning around and declaring surpluses.

Today I finally got an answer via an Access to Information request to the Farm Products Council of Canada, which supervises the Canadian Egg Marketing Agency.

The answer: "A thorough search of records was conducted by officials of the Farm Products Council of Canada who  confirmed that there are no regulations or directives restricting applicants for supplementary egg import permits from declaring eggs surplus for the purposes of having them diverted from the "table" to the "processing" market."

So how come the high-paid staff at the national egg agency and the Ontario egg board haven't made this known to egg producers and led them in a vigorous lobby to stop this boondoggle?

Egg case delayed

The court date for the egg-industry lawsuits has been postponed from July 19 and Donald Good, lawyer for one of the litigants, said it may not take place until October.

The court was to hear Good’s application to combine three lawsuits – against L.H. Gray & Son Ltd., Burnbrae Farms Ltd. and the Egg Farmers of Ontario marketing board.

There was also a possibility that the lawyers would have an agreement to present to Justice Peter Louwers on a process to decide which documents obtained from a whistleblower can be allowed into the case as evidence.

There are some documents among about a million electronic files that are private and confidential financial information not related to the lawsuits.

Good says in an e-mail that negotiations for this type of agreement on a process are “under consideration,” as are out-of-court settlements.

Svante Linde\ of Best Choice Eggs at Blackstock alleges that the two egg-grading companies conspired with help from the egg board to drive him out of business. He has, in fact, recently sold his egg-grading business.

The whistleblower, Norman Bourdeau of London, turned over the electronic documents which the court now has under its protection. Bourdeau claims Bill Gray ordered him to destroy the records, so the court has said it’s not prepared to turn them back over to Gray.

There are excerpts, plus some of Bourdeau’s allegations, in court documents at both London and Oshawa that indicate that Gray manipulated automatic grading equipment to put cracks into cartons that should only contain Grade A eggs and there are e-mails among Gray, staff at Burnbrae and Harry Pelissero, general manager of the egg board, that indicate they worked together to thwart Linde when he couldn’t buy enough eggs and applied to the federal government for permission to import from the United States.

Linde complained when the eggs that Pelissero obtained from Gray and Burnbrae failed to meet Canadian Food Inspection Agency standards.

He also complained when Pelissero used grading data, largely reflecting operations at Gray and Burnbrae, to accuse Linde of rejecting Grade A eggs to reduce the money he owed the egg board and farmers. The allegation in the lawsuits is that the data from Gray and Burnbrae was wrong, not  the grading at Lind’s Best Choice Eggs.

Gray has responded to the allegations by claiming to have done nothing wrong.

                                    

Chicken board targets small flocks

The Chicken Farmers of Ontario marketing board has hired several people to scrutinize small flocks.

While the board says its focus is disease control, small flock operators have been intimidated by previous moves to make life more difficult for them. They have been suspicious that the board’s hidden agenda is to push them out of business.

In its current newsletter, the chicken board is telling its members that the moves ‘focused on regulated non-quota holding small flock growers . . . will support the development of an integrated risk management framework. . .”

It says “this project will assess the biosecurity risks of small flock growers to commercial production and recommend potential mitigation strategies.”

But the board is also after “economic/production risks” which are ”being assessed by comparing Form 300 data to CFO statistics and government slaughter data.” In other words, the chicken board wants to know whether small-flock owners are cheating and taking market from its members.

The project coincides with a decision by the national agency to reduce production because rising costs have prompted major price increases.

“To lead this project, CFO has enlisted the expertise of Dr. Tom Baker” who recently retired from the Ontario Ministry of Agriculture, Food and Rural Affairs where he was in charge of inspection of slaughter facilities.

He will be “joined by Jean Marie Buregeya, a graduate student at the University of Guelph enrolled in the Master of Public Health (MPH) program. Jean is interning with CFO for the summer and will focus on assessing the potential biosecurity risks associated with small flocks.”

The third hire is “future University of Guelph student, Kerry Woolnough, (who) has joined CFO as an intern to assist with data entry related to assessing the production implications.”

The CFO has sent a biosecurity survey to a random selection of small flock growers to help it “better understand biosecurity practices that are currently in place within small flocks in Ontario. A sample of Small Flock growers’ premises are also being inspected against CFO’s Small Flock and Farm Gate Marketing Regulation.”

The board says “this effort supports responsible supply management stewardship by reinforcing the cost-effective and socially-responsible production of safe, high quality chicken and sustainability-enhancing solutions for the Ontario chicken industry.

Ag research would help relieve poverty

Research and development for U.S. agriculture would be a good way to help poor nations and farmers, argues Daniel Sumner of the University of California at Davis in a report that is highly critical of U.S. farm policies that hurt poor people.

The report, called Picking on the Poor, is part of a package of reports prepared for the American Enterprise Institute and intended to influence politicians as they prepare the next U.S. Farm Bill for 2013-2017.

Sumner says the long delays in negotiating a new World Trade Agreement have cost poor nations and farmers billions of dollars.

He cites several examples of U.S. farm policies that are hurting them:

-      -  Import protections, such as those applied to sugar, and export subsidies, such as for cotton.

-      - Biofuels policies that use crops to produce fuel, driving up world-wide prices for food, and then erecting tariff and other barriers to keep ethanol and other foods out of the U.S. market.

-      - Regulations that keep imports out of the U.S., including Country of Origin labeling and some food safety standards and protocols.

-      - Food aid that favours U.S.-produced, U.S.-stored and U.S.-transported commodities.

Sumner said the U.S. Food Aid programs are a “relic” of times when there were persistent surpluses.

He argues that U.S. farm policies ought to be reformed to cut subsidies and import barriers and to increase agricultural research and development.

He said the research advances tend to flow around the world and eventually benefit all farmers, including those clinging feebly to survival in poor nations.

 Although Sumner does not include it in his report, the World Trade Organization has reached agreement on major points of reform on international food aid. The United States stands out as the country that would be forced to make the most and biggest changes to its policies under this agreement.

The agreement will not, however, take effect until an overall deal is reached. 

Ethanol policies blasted

Intense lobbying will likely surround the future of ethanol production and subsidies when the U.S. Farm Bill is under negotiation, beginning this fall.

It’s due to replace the existing Farm Bill than runs out next year.

Christopher Knittel of Massachusetts Institute of Technology (MIT) has prepared a report that calls for an end to government-legislated amounts of ethanol and other biofuels and for their replacement with a carbon-based cap-and-trade system.

Under cap and trade, each commodity, industry or company would have a limit on the amount of carbon they could emit each year. If they are successful in bringing their emissions below target, they could “sell” the difference to others who exceed their limit.

Under cap and trade policy, ethanol distilled from corn would likely carry a tiny “credit” that could offset a “deficit” for oil.

Under existing U.S. policy, Knittel estimates that 40 million acres are diverted to corn production for ethanol. Under cap and trade, he estimates the diversion from food production would be only 672,000 acres.

Knittel makes six points against existing policy, such as no clear evidence that the biofuels policies have a lower social cost compared with petroleum-based fuels, that there is no research to show that biofuels are a cost-effective way to reduce petroleum-based fuel consumption and it’s a poor way to subsidize farmers.

If the aim is to reduce U.S. dependence on imported fuels, then Knittel says the U.S. should drop its tariff on ethanol, including sugar-based ethanol from Brazil.

If the aim is to subsidize farmers, it would be better to simply hand them cash, he says. That would not distort markets.

Knittel’s report is part of an American Boondoggle package of reports released by the American Enterprise Institute and designed to influence politicians as they begin to debate the new U.S. Farm Bill.

U.S. urged to sign WTO deal

A study commissioned by the American Enterprise Institute calls on the United States to sign the trade deal that's on the table now at the World Trade Organization negotiations.

If the U.S. accepts what's on the table now, it would likely break the impasse in the Doha Round negotiations that have been frustratingly slow over the last 10 years.

It would also force major belt tightening by Canada's dairy and poultry farmers who would face the threat of losing their markets unless they scale back prices. Any reduction in prices would come right out of their profit margins. One result would be a decline in quota prices as the least profitable farms would be forced to fold and dump their quota into the market.

There would be gains for Canada's export commodities, such as grains and oilseeds, because a cut in U.S. subsidies would reduce their production and exports.  There could, however, also be some increase in wheat, corn and soybean acreage as cotton and sugar beet producers would be looking for alternative crops to grow.

Tim Josling of Stanford University is the economist urging the U.S. to make a deal at the World Trade Organization negotiations in Geneva.

“The deal on the table is by no means bad,” he says in a report prepared to influence politicians crafting a new U.S. Farm Bill for 2013-2017. “And it is unlikely that a better deal will be on the table in a year or two,” he adds.

The U.S. has been holding up an agreement by insisting that Third World countries, especially the “emerging” economies such as China, India and Brazil, reduce their tariffs on American industrial-sector exports and market access for financial products and services.

The Doha Round is supposed to “correct” deficiencies in the previous Uruguay Round that failed to bring agriculture-industry benefits for developing nations.

There is concern by farmers about losing subsidies and facing increased competition from imports.

Josling says these concerns tend to be exaggerated in the U.S. and says many existing programs could survive because they are considered “green” – i.e. doing little to distort trade.

Even if limits or reductions are applied to some U.S. green programs, such as its Direct Payments program, Josling argues farmers may not experience much, if any, pain.

If the negotiations fail to reach a deal by 2013, which is when the new U.S. Farm Bill is to take effect, Josling recommends it contain a “circuit breaker” so it could be amended to bring the U.S. into compliance with the deal that is reached.

Right wing critics of U.S. farm policy

Three university economists have released a report blasting most of the U.S. farm subsidies as wasteful, counter-productive and foolish and say the federal budget could be cut by $8 to $10 billion “without affecting food supply or the financial viability of U.S. agriculture.”

Most of the subsidy programs began in the 1930s when farmers were dirt poor and unable to cope with dust-bowl growing conditions. Today “the average farm family currently earns substantially more income than the average non-farm family and is much wealthier,” they say.

Their debt-to-asset ratios are lower than other family-owned businesses and substantially lower than the largest U.S. corporations, they say. In fact, many farming families are debt free and those that do have relatively high debt tend to be the largest farms.

Farmers’ debt-to-assert ratios “have been much lower for most of the last 30 years,” they say.

They challenge many farm lobbying claims. For example, they say there are no greater risks involved in farming than other businesses and “the farms that receive most of the subsidies are successful businesses operated by high-wealth individuals.”

Business failure rates are five times as high for non-farm businesses as for farmers, they say.

The U.S. Farm Bill passed in 2008 will end up costing more than the projected $284 billion, they say, mainly because of food stamp and nutrition programs and because of crop insurance.

They say food stamp and nutrition programs should be in a social welfare agency, not under the Farm Bill, and they note that there has been a lot of lobbying to get particular commodities into the program and it’s also under attack now because of obesity rates in the U.S.

As for crop insurance, they say few farmers would buy the programs now on offer if there were no federal government subsidies that have averaged $5.6 billion per year and 58 per cent of that is going to insurance companies and agents, not to farmers.

“The subsidized agriculture insurance program is a scandal . . .,” they say.

They note that the U.S. is heavily criticized for its farm subsidies, making it more difficult to negotiate a new world trade agreement designed to benefit the poorest nations and their farmers.

They point in particular to a deal to pay Brazil $147 million because the U.S. refused to comply with a World Trade Organization order to stop dumping subsidized U.S. cotton into world markets, and then Congress’s refusal to pay. They say that hurts the U.S. reputation in trade negotiations and commitments.

They note that $5 billion in “decoupled” and “countercyclical program” crop subsidies ends up subsidizing farmers to grow highly-profitable crops. For example, some of the cotton growers who got $727 million in 2009 and $889 million in 2010 are growing corn and soybeans.

They say the Average Crop Revenue Election (ACRE) program, which sets floor prices for key crops at the state-wide average of prices for the previous two years has “almost no redeeming features,” yet farmers are lobbying to change to county averages which would make the program even more expensive.

They note that the dairy industry gets $1 billion a year in subsidies, but that it gets far greater benefits from marketing orders and tariffs. Now it’s lobbying for supply management which the authors roundly condemn as a failure in the U.S. tobacco and peanut industries and in Europe.

They say supply management doesn't work in Canada and they draw attention to the high prices for quota. That discourages the most efficient producers from expanding their farms to take advantage of economies of scale, they say.

The U.S. sugar policy has doubled sugar prices above world levels and they say only $1 of every $1.44 spent reaches U.S. sugar beet growers.

They note that the biofuels policy will force production of 36 billion gallons by 2022, five times higher than the mandate for 7.5 billion gallons next year.

The one area that wins their praise is spending on research and development which, they say, has always yielded a high return on investment. They complain that research and development budgets for agriculture have been in decline and call for increases, especially for farm

productivity.

The authors are Barry Goodwin of North Carolina State University, Vincent Smith of Montana State University and Daniel Summer of the University of California at Davis.

The study was commissioned by the American Enterprise Institute.

What happens in U.S. agriculture policy always has an indirect impact on Canadians.

                           

CFIA revealing more disciplinary actions

The Canadian Food Inspection Agency has begun posting more information on its website about disciplinary actions it has taken.

For example, under the Meat Inspection Act, it suspended the licence of Oullette Packers 2000 Ltd. twice last year – from May 25 to July 9 and from Oct. 10 to Dec. 7.

Licence suspension is the second-most-severe action the agency can take; the most severe is cancellation of a licence. During a suspension, the plant has to stop production.

Another severe penalty is seizure or detention of flawed product. That happened to frozen albumen at the Global Egg Corp. plant at Elmira this January. That facility is jointly owned by Bill Gray of Gray Ridge and Aaron Kwinter.

Fines can also be levied, as happened to Nieuland Feed and Supply Ltd. when it pleaded guilty to two charges in connection with an inspection in January, 2010, at its plant at Listowel.

It was fined a total of $8,000 in district court in Stratford for failing to apply a precautionary label to some feed and for failure to register a ration it was marketing.

I have learned via Access to Information that Burnbrae Farms Ltd. had 14 product detentions at its egg-grading and egg-processing facility in Mississauga during 2009 and 2010. 

In many cases, the eggs were released from detention the same day after either being re-graded or the grading changed to “nest run” eggs. That implies fraud in the original grading, but we can't know for sure because the reasons for detention have been censored. All we do know is that the detained loads, which may have been up to 28,000 dozen each to fill a tractor-trailer, were not up to snuff for the grade claimed.

Perhaps there were too many cracks and dirty eggs, similar to the data that whistleblower Norman Bourdeau has revealed about L.H. Gray and Sons Ltd. If so, it would bolster the allegations made in court documents filed by Svante Lind that Gray and Burnbrae were doing the same things.

The 84 inspection reports on the Burnbrae facility were heavily censored, but it can be seen that sometimes the egg wash water was graded only “fair” or, in French, “passable”,  and once was deemed “serious” meaning it represented a food safety threat to consumers.

That would indeed be a huge risk if any of those eggs were cracked because contaminated wash water could, unknown to consumers, have been inside the eggs they bought in the belief that they were wholesome Grade A product.

                                    

Independents win hearing

After months of resistance, the Ontario Farm Products Marketing Commission has agreed to hold a public hearing into complaints from the Ontario Independent Poultry Processors association.

The independents have, until now, been frozen out of negotiations on how processors’ requests for chicken supplies will be handled if and when an agreement with Quebec emerges.

The Ontario and Quebec chicken marketing boards have an agreement in principle to throttle inter-provincial trade in live chickens.

 Associations representing the biggest chicken-processing companies in Ontario and Quebec have been involved in these negotiations, but not the independents.

Geri Kamentz, chairman of the Ontario Farm Products Marketing Commission, has told the independents that they could join the Association of Ontario Chicken Processors if they want a say in the negotiations. The independents, however, left that association years ago because they felt their interests were being trampled by the biggest processing companies, led by Maple Leaf Foods Inc. and Maple Lodge Farms Ltd.

Now the commission has announced a public hearing for Tue., Aug. 30, at the agriculture department head office in Guelph. It is officially to determine whether the independents should be added as members of an advisory committee to the Ontario chicken marketing board.

The advisory committee was, itself, only formally put into place in January. It’s first and main job was to deal with the agreement on trade with Quebec.

Ontario has never had the right, under national supply management, to produce enough chicken to fully satisfy all the demand from all the chicken processing companies. In an effort to stop a bidding war involving premiums, the chicken board set up a system to ration sales to processors.

The smaller, independent processors complained that they weren’t able to get enough chicken to satisfy increasing demand for their local, fresh and niche markets. They found they could get the birds they need from producers in Quebec.

That prompted Quebec processors to restore their lost supplies by buying chickens from Ontario farmers. This inter-provincial trade, often involving trucks passing each other going to and from the Niagara area, grew to about 10 per cent of the market.

It also prompted Ontario processors to offer farmers premiums to keep them from selling their birds to Quebec. Kamenz told the annual meeting of the Ontario chicken board in early 2010 that they had to do something to end premiums.

The first marketing board move was to declare a moratorium barring farmers from increasing this inter-provincial trade. Only those with existing contracts were allowed to continue to “export” to the other province.

This moratorium, intended as an interim measure, has lasted two years. Now the two provinces have an agreement in principle to eliminate this inter-provincial movement of live birds. Quebec, however, is not in a position to implement a deal because it’s in the throes of a provincial review of the marketing board’s powers and policies.

Ontario is awaiting the outcome of the Quebec review, but has said it will seek authority to implement a new set of regulations and rationing for processors as soon as a detailed deal can be negotiated with Quebec.

There remains a question about whether this type of deal will be ruled illegal under recent treaties designed to reduce inter-provincial trade barriers.

The commission has posted notice of its hearings on its website within the Ontario Ministry of Agriculture, Food and Rural Affairs website. There is provision for other organizations and individuals to apply as participants at the hearing.

                           

Egg industry business deals

I continue to be amazed by how few players control how much of Canada's egg industry.

For example, I did not know until recently that Bill Gray of Gray Ridge Eggs and Aaron Kwinter of Global built a new plant, called Egg Solutions, in Etobicoke. Gray also "sold" his Lashbrook egg-processing business in Elmira to Global-Egg Solutions. Then they sold the old Global plant to a group that includes Phil Carnavale who used to be a partner with Kwinter.

This Supreme Egg business is, in turn, connected with Nutri-Ouef of Quebec which is partly owned by Gray.

Nutri-Ouef has, of course, recently purchased Best Choice Eggs from Svante Lind, thereby ending years of competition with Gray and Joe Hudson of Burnbrae Farms Ltd. Lind is suing both of them and the Ontario egg board for conspiring to drive him out of the egg-grading business.

Burnbrae is the largest egg-producing, egg-grading, egg-processing company in Canada. Gray is second.

They both operate nationally.

In British Columbia, for example, Gray is partner with a co-operative that grades about 80 per cent of the province's eggs. The new plant they are building includes space for the dominant egg processor in the province. Burnbrae has a relatively small egg-grading business on the island.

Sparks Farms, whose facility recently burned down, is the dominant grader in Alberta and is also a partner with Nutri Ouef.

One question this raises for me is whether Burnbrae and Gray used Nutri Ouef to buy Best Choice. The general manager of Nutri Ouef told me they're not investors in that business, but how do you draw lines between such elaborate networks of partnerships and joint ventures?