Turkey Farmers of Ontario ordered to pay hefty penalty for overproduction

Wednesday, April 13, 2016

by SUSAN MANN

Turkey Farmers of Ontario must pay damages of $1.7 million to Turkey Farmers of Canada for overproduction from two years ago, an arbitration panel has decided.

The three-member panel also decided in favour of the national agency’s decision of June 2015 to apply a 2.3 million kilogram (live weight), which is the same as 1.9 million kilogram (eviscerated weight), marketing reduction to Ontario in addition to the monetary damages.

Turkey Farmers of Canada, legally known as the Canadian Turkey Marketing Agency, is the national organization responsible for the orderly production and marketing of turkeys and turkey meat in Canada.

The arbitration panel’s decision, handed down March 2, was unanimous. The panel members were: retired Supreme Court of Canada judge Ian Binnie; Alberta lawyer David Jardine, who specializes in administrative, regulatory and supply management law; and Michael Hulet, Penn State science professor. The national and Ontario turkey organizations jointly selected the panel members.

Both Turkey Farmers of Ontario and Turkey Farmers of Canada agreed to have the damage assessment and marketing reduction matters resolved by binding arbitration.  That agreement came after the Ontario board complained to the Farm Products Council of Canada in July 2015 about Turkey Farmers of Canada’s decisions regarding Ontario’s overproduction. The Ontario turkey board withdrew its complaint to the Farm Products Council after agreeing to take the matter to arbitration instead, according to documents and letters posted on the council’s website.  

Ontario board chair, George Campbell, vice-chair Brian Ricker, and the board’s lawyer, Geoffrey Spurr of Wilson Spurr LLP Lawyers in St. Catharines couldn’t be reached for comment.

UPDATE: April 15, 2016 — Turkey Farmers of Ontario is working with Turkey Farmers of Canada on paying the $1.7 million in damages, says Brian Ricker, vice chair of Turkey Farmers of Ontario.

“We’re working that out,” he said. The provincial organization is working out terms and “we haven’t quite got those all finalized. We won’t have to pay it all in one year so that will give us an opportunity to make a payment arrangement.”

Ricker said it was a misinterpretation of “some of our regulations” by farmers in Ontario that led to the overproduction in the province.

About the decision of the arbitration panel in favour of Turkey Farmers of Canada being able to apply the damages and marketing reduction, Ricker said he didn’t have any particular emotional attachment to the decision. “I wasn’t surprised or not surprised or disappointed or not disappointed. It just was what it was.” END OF UPDATE

According to documents on the council’s website, Ontario disagreed with the level of both the monetary penalty and the marketing reduction. Ontario said the appropriate monetary damage amount should have been $154,695.20 and the marketing reduction should have been 703,160 kilograms (eviscerated weight) and not the 1.9 million kilograms (eviscerated weight) assessed by the national agency.

Turkey Farmers of Canada executive director Phil Boyd said by email the marketing reduction and damages are based on Ontario’s overproduction for the 2013/14 quota year.

“Ontario, as a province, marketed more (turkey) than the marketing level agreed to in the Promotion Agreement,” he said. The turkey was marketed domestically but the national agency doesn’t track where it was sold.

UPDATE: April 15, 2016 — For 2013/14, Turkey Farmers of Ontario's quota allocation was 76 million kilograms (eviscerated weight).

The Turkey Farmers of Ontario's overproduction amount was 2.3 million kilograms (live weight), which is the same as the 1.9 million kilograms (eviscerated weight) and that's the same as the marketing reduction being applied by Turkey Farmers of Canada. END OF UPDATE

In a March 14 public statement on the council’s website, Turkey Farmers of Canada says “the (arbitration) decision confirms the enforceability of the Turkey Promotion Agreement as an essential aspect of the Federal-Provincial Agreement for Turkey within the comprehensive supply management system.”

The Promotion Agreement is a contract between each of the eight boards that oversee provincial production (Ontario, Quebec, New Brunswick, Nova Scotia, Manitoba, Alberta, Saskatchewan and British Columbia) and the national agency. It commits each provincial turkey board to the level of marketing agreed to in each quota year, which runs from May to April.

The agreement also gives Turkey Farmers of Canada the contractual authority to determine if a province has over marketed and, if so, to assess damages, Boyd said.

Ontario hasn’t yet paid the monetary damages and the marketing reduction hasn’t been applied to the province yet, he said, noting it’s not a permanent reduction.

The two turkey organizations are still in discussions, Boyd said.

There are 176 turkey farmers in Ontario. The province’s total current quota allocation is 83 million kilograms (eviscerated weight). BF