Monday, September 15, 2014

Specialty chicken marketers lose appeal

Small-scale chicken processors who want to develop niche and specialty markets in Ontario are out of luck following a tribunal decision Monday.

The Ontario Independent Poultry Processors filed an appeal, seeking to force the Chicken Farmers of Ontario marketing board to implement the specialty-markets policy it adopted, but failed to implement, earlier this year.

The Association of Ontario Chicken Processors (AOCP), representing the larger processors who account for more than 95 per cent of the market, did not like that policy, mainly because they feared they would have to yield some of their farm supply of chicken so those pioneering specialty and niche markets would get the birds they need.

The AOCP filed two appeals with the tribunal, and each time the chicken board decided to try to negotiate a settlement. That delayed implementation and frustrated the small-scale processors, including ones who, under pressure from the board, filed their proposals and business plans and then sought customers.

John Slot, speaking for the small guys, said those processors suffered “irreparable damage” to their reputations. Lawyer Herman Terpstra, representing the AOCP, said basically “too bad! You made a poor business decision.”

None of that counted with the three panel members from the Ontario Ministry of Agriculture, Food and Rural Affairs Tribunal – Harold McNeeley, Glenn Walker and Richard Smelskie.

What counted with them was the process that evolved since the tribunal began hearing the case in July. It adjourned the case then after Terpstra and lawyer Geoffrey Spurr for the chicken marketing board said the policy under appeal was in the throes of being either substantially rewritten or withdrawn.

On Thursday the chicken board did withdraw its policy and it adopted a “special breeds” policy closely aligned with the national agency, Chicken Farmers of Canada.

The last-minute decision came too late to cancel a resumption of the appeal; the panel ruled, however, that it can’t sit in judgement of a policy that has been withdrawn.

Slot and OIPP member Joe Abate of Arthur said they will not pursue any further appeals because they require so much time and effort and even if they win, it would take more than a year and in that time there could be major changes to supply management flowing from international trade negotiations, such as the Trans-Pacific Partnership, and sharp reductions in Canadian tariffs that enable the marketing boards that would force the marketing boards to reduce prices and/or increase production to stave off competition from imports.

The tribunal dismissed the appeal and said written decisions will come later.

Terpstra and Spurr argued that Slot and the OIPP need to forget about the policy that has been withdrawn, but could ask the chicken board to reconsider its new special-breeds policy.

Slot told the tribunal that the special-breeds policy could be rolled into the previous specialty-markets policy which addresses a much broader range of market potentials.

There is already a lot of controversy over the special breeds policy.

Sean McGivern of Progressive Farmers of Ontario, which has been lobbying for an increase from 300 to 2,000 birds per year farmers can raise without needing chicken board quota, said the deadline to file applications to produce under this policy is only three days.

That is unrealistically short for most farmers, he said.

Slot noted that it’s even more challenging for processors who might want to enter the program.

In practice, all of the production and processing is going to a handful of people and businesses, some of them apparently in flagrant violation of the board’s regulations.

For example, it’s clear that some of the producers for this market have been raising far more than 300 birds a year without quota.

It’s also not clear whether Frey’s Hatchery, which is the exclusive supplier of most of the specialty-breeds birds, shared its sales data with the Ontario Broiler Hatching Egg and Chick Commission and, if so, whether the commission shared that information with the chicken board. There’s supposed to be an information-sharing system to guard against violations of chicken board and commission regulations.

It’s further not clear how processors reported, or failed to report as required by the chicken board, the processing volumes of the specialty-breed birds.

The chicken board has declared that production rights under this new policy cannot be traded or sold. 

It’s not clear how it can make that policy stick; it has been tried by other supply-management marketing boards and they have all subsequently withdrawn the restrictions.

The two breeds covered by the policy have red feathers, which makes them appealing to people of Asian ethnicity, and they will be processed with head and feet left on, also to appeal to the same Asian clientele.

CAMI International Poultry Inc. of Welland pioneered that market, but fell on hard times when the Quebec and Ontario marketing boards banned inter-provincial sales of live chicken, thereby cutting off most of CAMI’s supplies.

Owner Jimmy Lee filed two court actions, one to over-turn the inter-provincial trading ban, the other seeking the right to import live chicken from the United States, but sold his share of the business to a partner.

The partner made peace with the Association of Ontario Chicken Processors who apparently ensured CAMI would get more chicken out of their shares in the Ontario market, and the court challenges were withdrawn.