Monday, December 21, 2015

Leasing vs. owning egg quota

In testimony during a tribunal hearing in Guelph this week, the difference between renting and owning egg quota was outlined during questioning by lawyer Herman Turkstra.

Under the current Egg Farmers of Ontario leasing program, it charges $7.30 per hen per year. Of that, $5.85 goes to the national agency and the board uses the rest to hold down levy charges to underwrite it’s administration budget.

If the production increase were achieved instead by increasing farmers’ quotas, they could either use the quota or sell it at the going market rate of almost $300 per hen.

Selling would yield a windfall of $397,800 if each quota holder got the same volume he could currently achieve under the board’s leasing policy.

That, as Turkstra outlined, is 6,630 for a quota holder whose barns are now full, but who decides that in order to qualify for the leasing volume, would split his quota and move some to another property he owns.

He now qualifies to lease 6,630 hens per premises, a total of 13,260 hens.

The board used to increase or decrease quotas to balance supply and demand. In 2010, it began allowing farmers whose barns were full to lend their excess quota to the marketing board which then, in turn, leased those birds to farmers who had enough space to house the extra hens.

In 2013, the board decided to lease all of its additional production rights (gained from the national agency) rather than distributing them as additional quota.

It also decided to give every quota holder the same number of additional hens – provided they had barn space to house them – rather than a percentage increase based on the amount of quota they each own.