Ontario Farm Products Marketing Commission releases long awaited egg industry report

Tuesday, December 17, 2013

by SUSAN MANN

After seven months investigating Egg Farmers of Ontario, the Ontario Farm Products Marketing Commission says it needs to do more study before it can reach a conclusion on whether it’s satisfied the organization appropriately regulates the sector.
 
The commission says in its nine-page report released this month it hasn’t yet decided whether Egg Farmers adequately regulates the sector through fair and transparent processes and procedures and that Egg Farmers conducts itself appropriately.

But an internal audit team from the Ontario Finance Ministry, engaged by the commission, reviewed certain aspects of Egg Farmers’ governance structure and its findings were positive. They didn’t find any areas of significant concern, the commission’s egg report says. The audit team reviewed documents from December 2007 to December 2010 and also some from this year for comparative purposes. The audit team wasn’t asked to investigate and didn’t look into allegations of wrong doing.

Harry Pelissero, Egg Farmers general manager, says nothing was found. “I would view that as basically receiving a clean bill of health on that part.”  Egg Farmers received a copy of the report last Thursday.

Premier and Ontario Agriculture Minister Kathleen Wynne declined to comment on the report saying by email provided by her agriculture ministry communications spokesperson, Mark Cripps, it would be inappropriate to comment “on what is part of an ongoing commission investigation.”

The commission launched the investigation in response to a request from Norman Bourdeau filed in late 2010/early 2011 and supported by Verified Eggs Canada Inc. They made a number of allegations against one of Canada’s largest egg graders, L.H. Gray & Son, and against Egg Farmers of Ontario.

Bourdeau dropped his request for an investigation without explanation on April 18, 2013 and withdrew his submissions, the report says. He also told the commission he has no further interest in the outcome of this matter. Verified Eggs said it wanted to proceed. Spokespeople for Verified Eggs couldn’t be reached for comment.

In May, the commission decided it would investigate Egg Farmers as part of its supervisory role over marketing boards. But it wouldn’t look into specific allegations against L.H. Gray or any other egg industry participants except when necessary to support its Egg Farmers investigation.

Bill Gray, L.H. Gray president, says he hasn’t received a copy of the report. “We’ve heard nothing on our side.”

Gray says he couldn’t talk about the allegations as they are before the courts. None of the allegations have been proven in court.

Gray says they welcome the commission’s continued study of Egg Farmers.  

The report says many of the allegations and some of the same parties requesting the commission study are part of two civil court proceedings. Egg Farmers is named as a defendant in one of the actions. “Based on the commission’s review of the available court documents, it appears that these court proceedings are complicated, heavily contested and still in the early stages of litigation,” the report says, also noting the commission isn’t part of the actions and isn’t aware of all of the proceedings or orders in these matters.

As part of the commission’s continued look into Egg Farmers, it will be:

• Contacting the Canadian Food Investigation Agency to find out what action it has taken in response to information it received from the Strathroy-Caradoc Police Service that might be important to the commission’s investigation. Bourdeau made two separate complaints to the Strathroy-Caradoc police, which determined the matter should be referred to the CFIA.
• Continuing to monitor the civil court proceedings to determine if they have any bearing on the commission’s investigation.
• Continuing to examine Egg Farmers’ role in grading and sourcing eggs and what processes Egg Farmers employs to ensure fair and equitable treatment of all egg industry partners. Egg Farmers has a very limited role in egg grading, the report says, because it’s the federal government that’s primarily responsible for egg grading in Canada and for the registration and operation of egg grading stations under egg regulations.

The commission looked into egg grading practices in Ontario and found that Ontario’s reporting on the size and grade of eggs is generally in line with the rest of Canada, the report says.

Another aspect the commission will be studying more of is the Nest Run Grade, which is one of the four grades established by the federal government in the egg regulations of the Canada Agricultural Products Act. Nest run eggs are usually from layers nearing the end of their laying cycle and they are intended to go directly to the industrial market, the commission report says. During its work to date, the commission has learned that Ontario had more Nest Run Grade eggs than the rest of Canada. Pelissero says the nest run eggs do go directly into the industrial market.

Nest run eggs are ones laid usually in the last month of the hen’s laying cycle. “Sometimes the shell quality or the yolk quality is not there,” he says.

The grading station knows the ages of the birds. If 100 dozen eggs are sent in from a flock that has less than a month left of laying eggs, the grading stations will sample grade 15 dozen eggs. “They will take the grade out from those 15 dozen eggs and extrapolate that over the other 85 dozen eggs,” he explains. But “the farmer will get paid as if all 100 dozen eggs had been graded and that’s how we get the eggs reported to us from the grading station.” But when the grading station declares the 100 dozen eggs to Egg Farmers, “they’re declared to us as nest run. So for reporting and payment purposes, the farmer gets paid as if all 100 dozen eggs are graded,” he says.

The grading station gets paid less for nest run eggs, but producers don’t. The system buys back surplus eggs not required by the grading station for the table market and in turn sells them to the industrial market. Farmers get paid $1.90 a dozen, while the grading station gets paid $1.80 a dozen “when the system goes to buy those eggs back,” he says. “We pay less because the grading station hasn’t had to grade all the eggs.”

The commission’s report says in 2012, 12.1 per cent of all Ontario eggs were graded nest run compared to 8.4 per cent for the rest of Canada and the numbers are based on grade declarations for the industrial product market.

Pelissero says he’s trying to clarify this and to find out from other provincial egg organizations if any of their farmers get paid according to a nest run weight. “We do have eggs for processing, which in theory are meant to be eggs that go directly from a barn into the breaking (industrial) facility.”

Ontario has eggs from the equivalent of 700,000 birds’ production annually that go to processors. “We capture them as nest run (eggs).” BF