Sweda Farms is challenging the Egg Farmers of Ontario marketing board on its approach to eggs for processors.
The national supply management agency, Egg Farmers of Canada, has been allocating 700,000 birds per year to Ontario to place those hens to produce eggs for processing.
The aim of the national policy is to reduce the need for imports.
But last year, when the foodservice industry collapsed because of the COVID-19 pandemic, demand for processed eggs declined.
That left the market with a surplus of processed eggs and the marketing boards with bills for storage.
In Ontario, rather than reducing the number of hens put into production under the national agency’s Eggs For Processing allocation, Egg Farmers of Ontario paid farmers to cull hens 10 to 12 weeks early.
This cost about $1.7 million, funded by egg producers via levies.
Sweda questions if this is fair and said it would be better to reduce placement of hens by 30 per cent for the Eggs For Processing Program.
Should that leave any customers short of processed eggs in the short term, there is access to Industrial Products program and imports. Then more birds could be put into production in Ontario.
Farmers are not paid their full cost of production formula price for the Eggs for Processing production, only their feed and poult costs.
And in the ongoing operations of supply management, there has always been a substantial percentage of eggs diverted from the “table” to the “processing” market.
Those diverted eggs are paid according to a formula price that tracks the United States markets which traditionally are about a third less than Canada’s table market price.
Egg farmers, through levies, cover the gap between “table” and “processing” egg prices.
Egg processors are major beneficiaries of all of these programs and the two largest are also Ontario’s largest quota holders and egg graders – Burnbrae Farms and L.H. Gray and Son Ltd.
Both have directors on the Egg Farmers of Ontario board and Sweda has raised the question of conflict of interest.