Ontario opens the market for specialty chicken breeds

Wednesday, November 5, 2014

But, unlike the quota system for conventional chicken farmers, the allotment has no financial value and must be returned to Chicken Farmers of Ontario

by SUSAN MANN

This fall, Ontario became the second Canadian province with a specialty chicken breeds program but, unlike pioneer British Columbia, farmers here can grow for the market by applying to the chicken board rather than by buying quota.

In Ontario, the "right" to produce for the specialty chicken market, also called the specialty breeds allotment, is assigned to the specific farmer the board granted it to. Unlike quota held by conventional chicken farmers, the right can't be traded, transferred or rented. It can't be pledged to secure a loan and it has no financial value attached to it. Farmers who quit specialty production must return the right to Chicken Farmers of Ontario (CFO). Farmers must reapply for their right every year, according to the program unveiled Sept. 11.

Even though they don't have to buy quota, specialty chicken growers will have some fees to pay, including a $100 license fee for Chicken Farmers of Canada (CFC), a five cents per kilogram for each specialty breeds allotment for the CFO sector development charge and the same CFO producer license fees as quota-holding chicken farmers – 16 cents a kilogram of live weight for CFO and 0.53 cents a kilogram for the CFC levy.

CFO chair Henry Zantingh told Better Farming by email that the program "was designed to be responsive to specific market demands for head-and-feet-on specialty breeds chicken in Ontario." The program is "a separate system and a different business model than for conventional chicken." And there are no plans to merge the two systems in any way, he says.

The breeds under the program are silkie, Frey's special dual-purpose chickens or similar British Columbian varieties. Starting with quota period A-128 (Dec. 28 to Feb. 21, 2015), the minimum amount farmers will be encouraged to grow is 5,000 birds per growing cycle. They must be kept in separate barns and can't be combined with conventional white rock chickens.

The program is open to existing quota holders or others who can meet requirements, such as passing barn and workplace safety inspections, completing on-farm food safety and animal care audits and demonstrating that a specialty market is being met.

This is not the first time in Canada that chicken farmers under supply management can produce for a market without buying quota. Mike Dungate, CFC's executive director, says purchased quota isn't required for chicken produced under the market development policy, which has been in place for more than a decade. Registered producers ask for the amount they need each quota period "and we give it to you as long as you market it as you were required to market it. If that's the case and you're in good standing, then the likelihood is you'll get it allocated to you the next period."

Zantingh says that, in designing the Ontario specialty breeds program, CFO's research revealed the head-and-feet-on chicken desired by Ontario's Asian community has been underdeveloped both for farmers and consumers. "That is why much of the market for these products has been supplied from B.C. and other provinces."

In addition, there are Ontario farmers who don't hold quota but have been producing for the specialty chicken market. But CFO director, communications and government relations, Michael Edmonds and Mike Philp, CFO's Specialty Breeds Chicken Program Team Lead, didn't know the total number. Chicken Farmers representatives only found a small number of non-quota holders, which Philp said was two to five, during their research.

Zantingh says the "new specialty breeds program will require those farmers who were operating in the unregulated markets to come into compliance with the new regulations."

He didn't supply any numbers as to how much the industry was losing a year in unregulated specialty chicken market activity.

Currently, the specialty market in Ontario is estimated at just 0.3 per cent of Ontario's total production of 200 million chickens annually, but CFO officials say that could grow to the same level as British Columbia's.

In British Columbia, specialty production in 2013 was 5.8 million kilograms, or about three per cent of its total annual production of 200 million kilograms a year of live weight, says Bill Vanderspek, executive director of the B.C. Chicken Marketing Board. There are 45 specialty chicken farmers in B.C. and a total of 326 mainstream growers. The province has had a specialty chicken breeds program since 2002. Specialty breeds under their program are Taiwanese and silkie chickens.

As in Ontario, there were growers in British Columbia producing the specialty breeds outside the system before their program was implemented in 2002. They were growing mainly for the Chinese population in Vancouver, Vanderspek says.

The B.C. program started in 2002 with a permit system under which growers paid a 20-cent per kilogram liveweight fee to the board. The growers "were basically buying quota over time," he says. "After 10 or 12 years, they would own the quota, so they were kind of buying it on a layaway plan," he says.

But in 2005, after a review by the B.C. board's supervisory body of all specialty programs in the province, all of the permits were converted to quota "and a grower needed to be in business for 10 years before they would own all of the quota and could transfer it," he explains. Another change occurred in 2010 when the board split the province's chicken quota into mainstream and specialty quota to protect the small market share of specialty quota. Mainstream growers can't grow specialty chicken with their quota, while specialty farmers can't grow mainstream chicken with their quota.

In Ontario, Zantingh says the specialty breeds program demonstrates the supply management system's ability to "successfully evolve to meet the needs of the market."

Garth Whyte, president and CEO of Restaurants Canada and an outspoken critic of supply management, says the Ontario program "is a good first step. But there are still other things that are happening and there are other pressures that the chicken industry is facing. There are some real pressures between provinces with Alberta and with Ontario looking for more quota for chicken production. This doesn't deal with that." BF