Tuesday, April 29, 2014

Council has pullet inquiry report

The two directors of Farm Products Council of Canada who conducted an inquiry into the application to impose supply management on the pullet industry have turned in their report.

It contains no recommendations. It's now up to the council to decide what it will recommend to Agriculture Minister Gerry Ritz.

Brent Montgomery and John Griffin were appointed to conduct the inquiry, including public hearings, after the Pullet Growers of Canada filed an application to set up national supply management in July, 2012.

Montgomery and Griffin report that they received 84 submissions and 23 applications to make appearances at public hearings that were held last spring in Ottawa and Winnipeg.

They report that Pullet Growers of Canada claims 554 members from Ontario, Quebec, New Brunswick, Nova Scotia and Manitoba.

Alberta, Saskatchewan and Prince Edward Island provided evidence that they support the application. British Columbia took no stand, noting that its pullet producers are satisfied with the prices they are paid and that t the public has reached the limit on what it’s willing to pay for eggs.

A national agency for pullet growers would increase pullet prices to the cost of production, as determined by a formula based on producer surveys. Any increase would automatically increase the price of eggs because egg producers have national supply management with prices reflecting the cost of production.

The data in the report indicates there are only 32 independent pullet growers in Ontario and 36 in Quebec – i.e. pullet growers who own no egg quota.

Those with egg quota account for 68 per cent of pullet production in Ontario and 56 per cent in Quebec.

The Quebec pullet industry is controlled by feed mills that contract for pullet production and handle the placement of those pullets into egg farms. The feed mills take a commission.

The proposal for a national agency calls for a levy of five cents per pullet and estimates it would apply to 15 million pullets per year and therefore raise $750,000 per year.

The business plan estimates annual expenses of $500,000, leaving $250,000 to build reserves.
The Pullet Growers of Canada told Montgomery and Griffin that they have consulted the federal agriculture and trade departments about gaining import controls, but they have no plans to present at this time.

There are not many imports of pullets, but there are considerably imports of chicks and hatching eggs. In British Columbia, for example, about half of the chicks and hatching eggs come from the U.S.

The proposal says that if Pullet Growers of Canada is approved as a national supply management agency, it will operate on the principle of no value for quota, based on the Quebec example.

It’s not clear how either Quebec or a national agency could operate a no-value-for-quota policy since it’s obvious that prices that cover the full cost of production, plus providing a “reasonable” return for growers, would have considerable value.

That’s a conclusion that every supply-management marketing board in Canada has reached, prompting them to give up any notion of a no-value-for-quota policy.