Weanling pig pricing saga
Tuesday, November 17, 2015
UPDATE: November 25, 2015
by SUSAN MANN
There are no further avenues of appeal for Sunwold Farms Ltd. in its case challenging Agricorp’s impartiality in decisions it made while reviewing its reassessment of the farm’s AgriStability benefits.
Sunwold director Ray Price says he’s unaware of any other opportunities to appeal the Superior Court of Justice Divisional Court’s decision denying the farm’s application for a judicial review of the Agricorp decision.
“It’s unfortunate the way that it’s structured and the way that the court decided,” he says.
Price also questioned why Agricorp’s decision-review process includes the Ontario AgriStability Review Committee when “it (the committee) has absolutely no credibility with anybody.”
He says the entire process is flawed and looks as if Agricorp was just trying to save money by not paying the benefits Sunwold was entitled to receive.
Sunwold Farms applied for the judicial review because “we believe they (Agricorp) are in conflict. They (Agricorp) have an appeal group (the Ontario AgriStability Review Committee) that listened to the (Sunwold) appeal. Even though they (Agricorp) are the ones that administer the program, they’re also the ones judging if the (review committee’s decision) is accurate or not. To us that’s a conflict of interest to be both an operator and a judicial body.”
Price says a big part of Sunwold’s appeal to the court was it considered it unfair to have the same one or two people from Agricorp involved in many of the steps of the decision-making process.
Price says Sunwold challenged Agricorp’s reassessment of its 2007, 2008 and 2009 AgriStability benefits to the Ontario AgriStability Review Committee, which “agreed with us.” However, the committee’s decision was non-binding on Agricorp and the Crown Corporation decided to not accept it. “We couldn’t actually appeal that decision (of Agricorp to not accept the committee’s decision) to anywhere. All we could appeal was the process by which Agricorp didn’t use the committee’s decision.”
Sunwold wasn’t asking the divisional court to decide on “the merits of whether or not we got paid right or not. We were saying, “You (Agricorp) can’t be both the prosecutor and the judge,’” he notes.
For 2009, the Agricorp payment that resulted from the Crown Corporation’s reassessment of Sunwold’s AgriStability benefits was more than $500,000 less than what the farm’s operators had expected, Price says.
The Canadian government is arguing at the World Trade Organization that farmers have suffered damages because of the United States Country of Origin Labelling (COOL) law. Introduced in 2008, the law makes it mandatory for American processors to segregate Canadian and Mexican-born livestock from American animals and label the animals’ country of origin. With Agricorp’s decision to use United States Department of Agriculture (USDA) pricing for segregated early weaning pigs, “they’re saying there isn’t damage.”
Price says “we’re saying it couldn’t be USDA pricing because USDA pricing is American pricing.” The Canadian government and the country’s livestock groups have noted for several years that American processors pay discounted prices to Canadian farmers for their livestock due to COOL. BF
END OF UPDATE
by SUSAN MANN
An Ontario divisional court has dismissed an application by a pig farm requesting a judicial review of Agricorp’s decision on the operation’s AgriStability benefits from eight years ago.
The farm, Sunwold Farms Ltd., requested the judicial review in the Ontario Superior Court of Justice Divisional Court because it questioned Agricorp’s impartiality. The Crown Corporation’s staff members were involved in various stages of the process reviewing decisions involving the farm’s AgriStability benefits for 2007 to 2009.
Sunwold argued Agricorp staff members “were improperly engaged in several different steps of the proceedings,” including the Ontario AgriStability Review Committee, the Agricorp ad hoc committee process and the briefing to the Agricorp CEO, says the divisional court written decision handed down Nov. 6. It was issued by justices Katherine E. Swinton, Anne M. Mullins and John S. Fregeau.
The justices heard the case in Hamilton on Sept. 30. They concluded “there is no unfairness in their (Agricorp staff) participation at each of these stages.”
Agricorp spokesperson Stephanie Charest says by email the corporation assesses each application for benefits on its own merits.
She notes Agricrop has processed more than 100,000 AgriStability applications since 2007. In almost all cases, producers accepted Agricorp’s decision.
Sunwold, a producer of segregated early weaning pigs for sales to a related company in the United States, received AgriStability benefits in 2007 and 2008, the decision says. It didn’t specify how much the benefits were. Sunwold Farms couldn’t be reached for comment.
AgriStability is a provincially and federally shared farm business risk management program that helps farmers when their income dips below a threshold based on the previous five-year’s production margin. Agricorp administers the program in Ontario.
In 2010, when Agricorp officials were processing Sunwold’s AgriStability application for 2009, the claims department became concerned income from the segregated early weaning pigs wasn’t at fair market value “and that pricing varied from year to year,” the decision says. The farm originally sold pigs at a fixed contract price but in 2008 that changed to a variable price at approximately market prices, the decision says.
Agricorp’s guidelines specify it must assess farm income at fair market value and exclude income related to any farming activity that occurs outside of Canada. To establish Sunwold’s benefit amount, Agricorp had to determine the “at the border” fair market value of the farm’s pigs, the decision says.
Agricorp’s claims department reassessed Sunwold’s 2007 and 2008 benefits and “assessed a lower payment for 2009 than Sunwold had expected,” the decision says. There were no amounts given in the decision.
Agricrop told Sunwold in an April 23, 2010 letter it used United States Department of Agriculture (USDA) data on the segregate early weaning composite price from 2005 to 2008. From January to October 2009, it used price determinations from a private firm called Phoenix AgriTec Inc.
In June 2010, Sunwold requested Agricorp use the USDA cash price for 10-pound pigs for all years. The farm’s request for this amendment “triggered the internal review process, which involves Agricorp’s quality department,” the decision says.
After reviewing the matter, Agricorp changed its decision in July 2011. It decided to use the USDA composite price until March 2008 and USDA cash prices after April 2008.
Sunwold wasn’t happy with that decision and asked the Ontario AgriStability Review Committee to review it. Sunwold agreed with the use of USDA composite pricing until March 2008 but requested Agricorp use the data from the private firm, Phoenix AgriTec Inc., from April 2008 onwards, the decision says.
A panel of five producers, who are on the review committee, looked into the matter. On Dec. 21, 2012, the committee recommended Agricorp overturn its decision as it “believed the price of segregated early weaning pigs moving from Canada to the United States was lower” after the American Country of Origin Labelling legislation was enacted in 2008 compared to the USDA cash price, the decision says. The review committee “concluded that there did not appear to be an accurate, public, transparent price available.”
The review committee’s recommendations to Agricorp are non-binding, the decision says.
Agricorp’s ad hoc committee, made up of representatives from the senior management team and senior staff, evaluated the review committee’s decision and recommended the Agricorp CEO not accept it. The CEO decided to maintain Agricorp’s original position and not accept the review committee’s recommendation.
Agricorp “expressed the view that the average USDA cash price should be used since it is public, transparent, verifiable” and in the corporation’s view is the best indicator of fair market value of segregated early weaning pigs at the border, the divisional court decision says. BF