Chicken industry reaches long-delayed allocation agreement

New deal gives Alberta fair share of chicken allocation

Canada’s broiler chicken industry has reached a new quota allocation agreement, avoiding a potential showdown with a federal regulator that could have thrown the system into chaos.

The deal will see Alberta producers get more quota and rejoin the Chicken Farmers of Canada (CFC).

“The reason we stepped out was because our population was growing at such a greater rate than the rest of the country and our piece of the pie was getting smaller and smaller and smaller — and we didn’t think that was fair,” said Erna Ference, a producer from Black Diamond and chair of Alberta Chicken Producers.

Her organization estimated that based on the provincial population, Alberta chicken producers were only receiving 80 per cent of what their allocation should have been.

All 10 provincial chicken-marketing boards have now signed a memorandum of understanding which partially bases allocations for each of the eight-week rolling production periods on factors reflecting provinces’ comparative advantage. The result is something called “differential growth” in which some provinces get proportionately more chicken than others, depending on economic conditions.

A complicated formula bases 45 per cent of future chicken market growth on historical market share and 55 per cent on comparative advantages, including population growth, cost of living, farm input prices, and other factors.

“We had some very basic principles and all of those have been achieved,” said Ference.

Intense pressure

white-feathered chicken

photo: Thinkstock

The Chicken Farmers of Canada had been under intense pressure by the Farm Products Council of Canada, which had threatened not to approve its allocation requests unless a new national arrangement could be struck, officials said.

If the council had rejected CFC’s allocations, the industry could have lost a main pillar of supply management: the ability to match supply with market demand. Lacking that ability could have produced a production free-for-all among provinces, returning the industry to the interprovincial chicken wars of the 1960s and 1970s which led to the creation of supply management in the first place.

The council’s threat helped push CFC past the dickering of recent years towards the new allocation agreement, said Jake Wiebe, Manitoba Chicken Producers chair.

“The fact that we were standing on the edge of the precipice had us saying, how much is supply management worth to us?” said Wiebe.

Wiebe said Laurent Pellerin, who chairs the Farm Products Council of Canada, had given CFC deadlines for reaching a new agreement, although he kept extending them.

“But he said if there isn’t a comparative advantage (component), Farm Products Canada will not approve our allocations.”

Dave Janzen, Chicken Farmers of Canada chairman, said he was feeling heat from Pellerin to reach a deal or risk imploding the system.

“He was putting a lot of pressure on me and using it as a motivator for me to keep working with the provinces,” said Janzen, who farms at Abbotsford, B.C. “There was tremendous risk on us not coming to any agreement.”

Give and take

Alberta and Ontario are the big winners in the deal with some provinces giving up part of their projected future growth so they can have more.

Wiebe said, in his own case, that’ll cost him 80 birds per cycle based on future estimated growth. His Manitoba operation produces 60,000 kilograms of chicken per cycle.

But the loss is worthwhile in order to preserve the system, he said, adding Manitoba was one of the leaders in proposing the new allocation formula.

“We’ve really rallied with (other smaller) provinces and said, ‘Sure, some of this isn’t exactly what we’d like. We’d like to be growing faster. But the reality is, we’re also the ones that’ll be hurt the most if supply management goes.’”

The increased allocation in Alberta will be distributed to existing producers, said Ference.

The agreement announced Nov. 20 still has a way to go before it is formalized, with 10 provincial boards, the farm products council, and Agriculture Minister Gerry Ritz all needing to sign off on it.

“We’re hoping this is all finalized by summer and we’re back in by then at the latest,” said Ference.

Meanwhile, CFC is proceeding as if the agreement were already finalized, so the chicken sector can turn its attention to other pressing matters, said Janzen.

The main one is spent fowl imports. Canada alleges U.S. processors are fraudulently labelling fresh chicken as spent fowl, and reselling it in Canada as fresh.

CFC says over 100 million kilograms of the product enter Canada annually this way, bypassing tariffs and displacing more than 10 per cent of Canadian chicken production.

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