Motion denied

Friday, October 2, 2015

by JIM ALGIE

A panel of Ontario’s Agriculture, Food and Rural Affairs Appeal Tribunal has denied a motion by the Association of Ontario Chicken Processors to put on hold penalties for processors who fail to buy “mandated levels of chicken.”

The Guelph-based association sought a stay of penalties as part of a broader dispute with Chicken Farmers of Ontario (CFO) over a system for allocating poultry to processors. The farmer-run CFO manages production and marketing of broiler chicken in Ontario under Canada’s supply-management marketing system. It allocates poultry to processors based on “calculated base adjustments” for each two-month quota period. Adjustments in any given period are “based on whether or not a processor met the allocated numbers in previous quota periods,” the three-person tribunal’s Sept. 28 decision says.

The current system took effect in April of 2014 and follows terms of a four-party agreement that included the Ontario processors group as well as Chicken Farmers of Ontario and their Quebec counterparts, the appeal tribunal decision says. However, the new system is “not functioning . . . as anticipated,” chicken processors’ association executive director Mike Terpstra said in an interview by email.

Terpstra declined to say precisely how the processors hope to change allocation policies but he did say his organization seeks to “improve the processor-producer contracting system in Ontario without affecting the four-party agreement.” A tribunal hearing to discuss the broader issue of processor allocations is scheduled for late October, Terpstra said. The producers’ association has no plans to appeal the Sept. 28 decision regarding a stay in penalties.

“Our expectation is that the process will unfold in a timely fashion allowing for changes to the system before the next round of adjustments are implemented,” Terpstra said.

A panel including appeal tribunal member Brenda Lammens and two tribunal vice-chairs, Jeffrey J. Jewitt and Paula Lombardi, heard legal arguments by conference call, Sept. 14, on the processors’ motion seeking a stay of penalties.

The request for a stay followed a June 11 decision of Chicken Farmers of Ontario to defer changes requested by the processors association to “policy and procedures for the chicken processors’ supply distribution system.”

The matter of a stay in penalties arises because base adjustments in supply calculated for each quota period affect the amount of chicken provided subsequently to individual processors. Processors’ claims in the case refer to base adjustment calculations under this system as “penalties” when there is a decrease in quota and “rewards” when there is an increase, the tribunal decision says. The four-party agreement outlines the adjustment system under the heading “discipline,” the tribunal decision says.

“Processors who are assessed base reductions will have less chicken to sell to their customers and processors who receive an increase will be able to sell more chicken than would have been the case without changes to calculated base,” Terpstra said.

In deciding against a stay, the tribunal cited an Ontario Divisional Court decision in the 2006 case of Denby v. Ontario involving a decision of Dairy Farmers of Ontario. In that case, the court held that a stay may be used to “maintain the status quo in terms of the conduct or entitlement of a party.”

In the current chicken processors’ case, the appeal tribunal found that “the status quo . . . is the maintenance of the adjustment policy that is in place and has been in place since April of 2014.” The tribunal noted that the processors’ association “appears to be challenging the implementation of an agreement into which it willingly entered.”

“While it appears that the relief being sought by AOCP on this motion is substantially similar to the relief sought on appeal, nothing in this decision shall be interpreted as being determinative of the merits of AOCP’s appeal,” the decision said.

Chicken Farmers of Ontario director of communications and government relations Michael Edmonds said his organization does not comment on matters before the tribunal. BF