Tribunal dismisses egg leasing pool quota appeal

Monday, January 11, 2016

by SUSAN MANN

Sunderland-area egg farmer Daryl Phoenix is considering his options after an agricultural tribunal dismissed his appeal of the method Egg Farmers of Ontario is using to distribute additional quota the province gets due to market growth.

In its Jan. 6 written decision, the Ontario Agriculture, Food and Rural Affairs Appeal Tribunal said it wasn’t satisfied Phoenix proved his case “and therefore the appeal is hereby dismissed.”

Phoenix said in a telephone interview he’s not sure what his next steps will be but he’s unhappy with the tribunal’s decision.

The tribunal said Egg Farmers of Ontario developed the Layer Leasing Pool in 2012 to distribute market growth in the egg sector. The leasing pool differed from the traditional pro-rata method Egg Farmers previously used to allot production and marketing rights.

As part of the leasing pool, all quota holders have the right to an equal share of market growth, the decision said. Furthermore, market growth rights are distributed based on an annual lease concept whereby quota holders with sufficient barn space can lease the right to produce eggs from Egg Farmers. Farmers leasing quota through the policy pay an annual fee.

Phoenix wanted the Egg Farmers leasing pool policy amended so the market growth is distributed using the historical pro-rata approach, the decision said.

Phoenix said in the tribunal’s written decision the Layer Leasing Pool method is unfair as it “allowed small egg producers the same access as larger producers” to the additional quota allotted to Ontario. In addition, it caused market distortion and encouraged inefficiency that would inevitably lead to increased production costs and higher consumer prices.

Egg Farmers rejected Phoenix’s request to change the policy at both a hearing and a reconsideration hearing, the decision said.

In a Sept. 4, 2014 letter to Egg Farmers, Phoenix said the leasing method the board is using is “very unfair. The lease should be done on a percentage basis.”

At the tribunal hearing in Guelph on Dec. 21, 2015, Phoenix said an egg producer with 6,000 units of quota could apply to the program and receive the right to lease up to 6,630 units of quota, “which would essentially double that egg producer’s production.” Phoenix has 53,000 units of quota and the most he could get under the leasing program is the same number of quota units, 6,630, as the producer holding the smaller amount of quota.

The tribunal said in developing its layer leasing policy, Egg Farmers gathered and considered input from egg farmers, processors, government and the provincial regulator. The Egg Farmers policy complies with provincial legislation and the marketing board’s regulations, the decision said.

There was no evidence “to suggest that it was outside Egg Farmers of Ontario’s authority to introduce equal distribution under the LLP (Layer Leasing Pool),” the decision said.

There also wasn’t any evidence that would have allowed the tribunal to rule the layer leasing pool policy distorts the system, the decision noted. BF