Skinning the cat

The national egg marketing agency is skinning the cat - again.

It seems able to increase prices whenever it feels the need.

In the current case, it didn't bother to consult the Canadian Egg and Poultry Processors Council, as it usually does, before it hiked the price it is charging for eggs for processing.

That decision will cut into margins in the food-processing industry because those companies which buy Canadian-priced egg products have to compete with imported products made with U.S.-priced eggs.

Normally the national agency has priced processing eggs according to U.S. market prices in order to give Canadian food processors a reasonable chance to remain competitive against imports.

Herman Turkstra, lawyer for the egg processors' council, said it is asking the Farm Products Council of Canada to intervene. That government-appointed council oversees the national egg, chicken, turkey and hatching egg marketing agencies.

A price increase for processing eggs will reduce costs for the egg farmers who underwrite the price differential between table-market and processing-market eggs.

Turkstra indicated that the government council is balking at allowing the national egg agency to continue to pass on all of the costs involved in diverting eggs from the one market to the other in the cost-of-production formula - i.e. passing on all of the costs to table-market egg consumers.

Small processors appeal to commission

Guelph – John Slot, general manager of the Ontario Independent Poultry Processors, argued long and hard during a day-long hearing here that the association ought to be included in a newly-established and powerful committee established to advise the Chicken Farmers of Ontario marketing board.

A panel of four members of the Ontario Farm Products Marketing Commission, led by former agriculture minister Elmer  Buchanan, listened patiently to Slot, then to presentations from the Association of Ontario Chicken Processors (AOCP) and the marketing board.

In a nutshell, the independents fear that they won’t be able to buy enough chickens to satisfy their market demands, mainly from niche markets such as organic, Kosher, Halal, dual purpose, raised-without-antibiotics and Cornish-hen birds.

The AOCP counters that it represents the full spectrum of chicken processors, both large and small and many serving the same specialty markets, and it has finally managed, after years of failed attempts, to develop a productive working relationship with the Chicken Farmers of Ontario marketing board.

Lawyer Herman Turkstra, representing the processors, said it would be “disruptive” to interfere with this progress by adding the Ontario Independent Poultry Processors (OIPP) to the Chicken Industry Advisory Committee.

Slot countered that this new spirit of co-operation appears to come at the expense of "throwing the OIPP members under the bus".

Turkstra argued that the commission has three members on the committee to match the three from the AOCP and the chicken board and they, plus the commission member who acts as chair, will ensure the best interests of the industry are served, including the interests of small-scale niche-market processors.

Turkstra and the chicken board also argued that the OIPP is free to make its views known at any time and Henry Zantingh, vice-chairman of the marketing board, assured the commission those views will receive serious consideration.

Zantingh said OIPP concerns could be carried by the chicken board representatives to the advisory committee meetings, but he also made no promises that their views would be presented or supported by the board.

Slot argued that the OIPP has been recognized in industry negotiations for more than a decade, that it was involved in two previous rounds of negotiations to establish allocation of chicken supplies among processors and it is only now that a deal between Ontario and Quebec is in the works that it has been excluded from key meetings.

He said the deal could have serious adverse implications for small-scale processors, such as a one per cent “sleeve” on supplies. Kevin Thompson of the AOCP said that the Quebec-Ontario deal would, in fact, offer smaller-scale processors even greater flexibility than they now have, but did not explain how.

Turkstra said the OIPP can, if it remains concerned about any policy the chicken board eventually adopts as a result of committee recommendations, launch an appeal, first to the chicken board, then to the tribunal (Ontario Agriculture, Food and Rural Affairs Appeal Tribunal).

The Ontario-Quebec deal remains to be ratified. The first step is approval from the Quebec government’s body that supervises its chicken marketing board. Then it will be up to the Ontario commission to ratify whatever policies and regulations the Ontario board decides it wants to implement.

Reg Cliche, chairman of the AOCP and an employee of Maple Leaf Foods Inc., the largest chicken processor in Ontario, said the committee has made a great deal of progress developing a strategic plan for the Ontario chicken industry.

He and Thompson said that plan will be unveiled in a matter of weeks or months.

In the meantime, the committee is exercising confidentiality. Slot said that means the OIPP members don’t know what’s coming and have had no input.

Thompson and Cliche both said the OIPP’s involvement would be “disruptive,” but under close questioning by Slot, could not point to anything that the OIPP has done or said that’s disruptive.

Their concern is that the OIPP has a narrow agenda – looking after the interests of its members – and doesn’t take a broader, industry-wide view. Slot countered that the chicken board has valued the OIPP input and views in the past and, in 2005, the two were in agreement on a proposed memoradum of understanding, but it was the AOCP that refused to sign.

Zantingh said the underlying issue is that, under national supply management, Ontario has not been allocated enough chicken production to satisfy demand.

“Differential growth” has become the catch phrase for proposals to resolve that issue and Slot noted that the OIPP and marketing board staff worked long and hard to develop a proposal on differential growth, but then they were shut out by the Ontario-Quebec consultations that led to the agreement in principle.

At the beginning of the hearing on Aug. 30, Slot read two letters, one dated Friday, Aug. 26, from Henry Van Voorst resigning as chair of OIPP, the other dated Monday, Aug. 29, from Cericola Farms Ltd. resigning from the OIPP. Voorst works for Cericola Farms.

Slot said privately that the resignations were done to take them out of the firing line of an AOCP attack.

Terpstra noted that Cericola Farms holds 1.8 per cent market share and all of the other OIPP members combined hold 1.3 per cent market share. Thompson said AOCP represents members with 96.9 per cent market share.

Slot countered that OIPP had 42.2 per cent of the province's processors as members up until the resignation of Cericola Farms.

Construction begins in New Brunswick

Olymel and Westco have started $2.2 million worth of site preparation construction for their planned new Sunnymel chicken processing plant at Clair in the Madawaska region.

The plant is controversial because it’s large enough to service the entire Atlantic region with weekly processing capacity of 450,000 birds. That leaves Nadeau Poultry, owned by Maple Lodge Farms Ltd. of Norval, Ont., with no birds to process and therefore no markets. The partners estimate it will cost $40 million to build.

Nadeau does, however, have an agreement with a Nova Scotia co-operative to build a new plant there. It is currently processing Nova Scotia birds at its New Brunswick facility.

While construction is underway, New Brunswick’s chicken producers who support Westco and the Sunnymel proposal are shipping their birds to an Olymel plant in Quebec.

At one point, the Nova Scotia government intervened to order producers to ship their birds to Nadeau, but later changed that decision and now says this is essentially a competition between the two companies and it’s not going to intervene.

Nadeau was rebuffed by the province when it recently made another bid to gain assurance of chicken supplies to keep its plant running.

There is an implication for Ontario because one of the issues in the New Brunswick confrontation has been inter-provincial trade in live chicken. That’s a hot-button issue between Ontario and Quebec; marketing boards in both provinces have a tentative deal to effect a truce, but it has yet to be ratified and implemented.

The first step towards ratification will be a decision from the Quebec government’s body that supervises the marketing board. Then it will be up to Ontario’s marketing board and its supervisory body, the Ontario Farm Products Marketing Commission, to pass regulations to bring their part of the agreement into force.

There was a commission hearing in Guelph recently to deal with concerns that a number of small-scale chicken processors have with the process involved in negotiating the Quebec-Ontario agreement and their anticipation that it will have adverse effects on their operations.

No farm policy choices

There are no real choices in the upcoming provincial election.

The Ontario Federation of Agriculture is putting together a platform that is sure to be endorsed in part, if not in full, by all of the major parties.

The Ontario Federation of Agriculture has also just issued a news release praising the government for working to cut red tape. I'll bet the Liberals love that! Maybe accreditation is coming soon from the appeals tribunal, which held re-accreditation hearings in June.

All parties are sure to endorse supply management for the dairy and poultry sectors. None are calling for an inquiry into the egg industry, despite compelling evidence that some things are very much amiss.

None are criticizing the failure of supply management in the chicken industry where the processors with the most eager customers can't get enough and the ones who dominate the industry trying to throttle their growth.

None are calling for an end to the failed milk board efforts to put a lid on quota prices. The failure is that the growth of the most innovative, progressive and efficient producers is stymied.

None seems to mind the turkey industry is dominated by fewer than 10 "farmers".

None is willing to help low-income consumers as much as millionaire quota holders.

And then there's health care.  I have a 93-year-old mother-in-law who has been in desperate need of a space in a nursing home.  Nobody can make arrangements; we are all forced to go through the Community Care Access Centres. There are lots of paper pushers in that bureaucracy, but none of them can place needy seniors because the province hasn't allowed enough spaces to be built. It's been like that for 20 years.

Yet there are tens of millions in subsidies for electric cars, for solar energy, wind energy, and any business that has expansion plans in the works. The businessmen with good, sound ideas and plans don't need subsidies, but why turn them down? And then there are the poor ideas and plans that simply waste taxpayers' grants, loans and tax breaks.

They have called an election, but there are no real choices. It's all smoke and mirrors, bombast and promises they either can't keep, or never intend to honour.

want the marketing boards to solidify their dominance.

Egg import bureaucrats unpredictable

I have come across a lawsuit Sweda Farms Ltd. and Best Choice Eggs filed against the federal government, trying to get answers as to why it suddenly failed to get supplementary import permits for Grade A Large Brown organic and Grade A Large Brown free-range eggs for the pre-Christmas market in 2009.

There are several surprising things revealed in this lawsuit. One is that the Export and Import Controls Bureau of the federal Department of International Trade did not give any reasons for suddenly failing to issue permits when the national egg marketing agency said it could not fill the orders.

Another is that the same bureau issued supplementary import permits to others for those same types of eggs. That, of course, meant they enjoyed a competitive advantage in the marketplace, including a chance to snatch Best Choice's customers.

When Sweda Farms, through lawyer Donald Good of Ottawa, sought reasons for the denial to grant the permits, Kathleen Funtek, director of the Trade Controls Program Division of the Export and Import Controls Bureau said basically that the Minister of International Trade can do whatever he likes. He is not bound by any policy, precedent, etc. Stockwell Day was the minister at the time, but there is no indication in any of the correspondence that he ever saw Sweda Farm's applications or complaints.

So where does the government get its advice on how to handle these types of issues?

Well, as I posted a couple of days ago, there is an advisory committee.

And are you surprised that Sweda Farms has no representatives on that committee, but its chief competitors do?

More detained eggs

According to information recently posted on the Canadian Food Inspection Agency website, there were two detentions of defective eggs at Les Ouefs Ovale S.E.C. of St-Lambert-de-Lauzon, Que., last year. One was on Oct. 28, the other Nov. 11.

No reasons are provided.

Ovale is partly owned by Bill Gray, best known for his ownership of L.H. Gray and Son Ltd. and Gray Ridge Eggs, and by Meb Gillani, in the news recently when his Sparks Farms egg-grading business in Alberta burned down.

Advisory committees on imports

The federal government has set up special committees to provide advice on how highly-valuable quotas for importing eggs, chicken, turkey, hatching eggs and chicks and dairy products ought to be managed.

There are no consumer or public-interest groups on the committees which are dominated by marketing boards and processing companies.

Hardly anything is ever said about these committees and, in fact, when I recently asked, I was referred to four different federal bureaucracies and it took several weeks before I got an explanation from the Department of Foreign Affairs, Industry and Trade where the original request was directed.

The answer is that “the Tariff Quota Advisory Committees (TQACs) provide advice on technical issues regarding the administration of the tariff rate quota (TRQ) allocation system to the Minister of International Trade, through his officials.”

A quota entitles the holder to import either without a tariff or a very low level of tariff, meaning they can sell those imports at much higher Canadian market prices – often two to three times what they pay for the imports. 

By now it should be no surprise to readers of this blog that people from both Burnbrae Farms and L.H. Gray and Son Ltd. sit on the egg committee.

“The committees are not expected to vote or to reach decisions. The Minister responsible for the Export and Import Permits Act retains full discretion to accept or reject any recommendations or proposals of any of the committees,” the DFAIT spokesman e-mailed.

“When the need arises, a meeting is called and each member chooses a representative. The last TQAC meeting was this past June and was regarding chicken. There is been no TQAC meeting concerning eggs in the last year.

“There are TQACs for the chicken and turkey, dairy, broiler hatching eggs and chicks, eggs and egg products, beef and veal, margarine and cheese.”

As an example, the committee for eggs has representatives from the Egg Farmers of Canada national agency, the Canadian Poultry and Egg Processors of Canada, the Canadian Association of Regulated Importers, Agriculture and Agri Food Canada, the Farm Products Council of Canada, the Canadian Food Inspection Agency, the Canada Border Services Agency and Finance Canada.