Pros and cons to chicken price proposal, groups say

Tuesday, September 23, 2014

by SUSAN MANN

An Ontario Farm Products Marketing Commission proposal to change how minimum live prices are calculated for the province’s supply-managed chicken industry is generating support and some criticism.

Commission chair Geri Kamenz says the changes are being proposed because “for supply management to have integrity going forward, cost of production formulas need to be current. They need a degree of transparency to maintain support for the sector, and they need to continue to provide a stable and profitable return to efficient producers.”
 
Currently, the minimum live prices farmers receive and processors pay are determined by three factors – chick costs, feed prices and producer margin. The chick costs and feed prices are updated for each of the 6.5 quota periods in a year, while the producer margin is updated annually. The current method for determining minimum live prices has been in place since 2002.

Under the new proposal, summarized on the Ontario regulatory registry, the minimum price will be based on an actual cost of production stemming from a survey of producer costs and a model farm “for elements not covered in the survey.” The summary didn’t say what those elements are.

Similar to the current system, the new proposal includes the component of updating the feed and chick components each quota period while the remaining elements will be updated annually “based on publicly available indices,” the summary says.

“The intent of the cost of production formula is to establish a price that gives producers a fair return over time,” the summary says.

Michael Edmonds, Chicken Farmers of Ontario communications and government relations director, says "this is available for public comment so I don't think we would be able to offer you an interpretation of what the commission has filed here."

The industry has been working for some time cooperatively on a cost of production formula, he says. "The commission has now opened the discussion up to public input and once the commission gets the feedback we will be informed of any further details. That's probably all I can give you right now."

Mike Terpstra, executive director of the Association of Ontario Chicken Processors, which represents the province’s large chicken processors, says the association supports the commission’s direction on the method to determine live prices.

But it’s too early “for me to say what the impact will be on the processors,” he says, adding he doesn’t know what live price will be generated from the new method to determine the cost of production.

John Slot, general manager of the Ontario Independent Poultry Processors, which represents the province’s small chicken processors, says his organization won’t be sending in any comments to the commission.

“If the (cost of production) study is done fairly and equitably, then the outcome is the outcome,” he says.

Glenn Black, a small flock grower on Manitoulin Island and president of Small Flock Poultry Farmers of Canada, has already submitted comments and has urged others to do so too. Black has previously declined to disclose the number of members in the organization he represents, saying the membership has asked to keep it confidential.

He says the current system to determine the price for farmers is badly flawed. But if adequate protections and limitations aren’t included in the proposed changes the new system will be “easily manipulated” by those in the industry to make it as bad or worse than the current system.

Black adds the current system “has encouraged and permitted retail prices of chicken to rise far faster than the general rate of inflation.” Chicken is 32 per cent less affordable than it was 10 years ago for low-income people, minimum wage earners, those living in poverty and the average Ontario family, he claims.

Comments are due Nov. 6 to the Farm Products Marketing Commission.

Kamenz says the commission will review and analyze all of the comments “to ensure the best possible outcome in the best interests of all of the parties impacted.”

There’s no date set for when the new proposal will be implemented. “We will try to move forward responsibly but also as quickly as possible,” Kamenz says. BF