Supply management lives up to its name during pandemic

Chicken and egg sectors had to make quick adjustments as retail sales soared and restaurants shuttered

It’s been a roller-coaster, but supply-managed commodities have been able to quickly adjust to huge swings in demand caused by the pandemic.

Karen Kirkwood.
photo: Supplied

“The chicken industry has been very quick to respond to the shifts in the market from COVID-19,” said Karen Kirkwood, executive director of Alberta Chicken Producers. “We’re able to make sure there’s the right amount of product so Canadians have access to Alberta chicken and Canadian chicken right across the country. “We haven’t had a situation where we have oversupplied to the degree where we have had to dump product.”

The chicken industry hasn’t had to depopulate flocks, either.

“We’ve been very fortunate in that regard. Because we have a supply-managed system, we’re able to regulate and control production,” she said. “It’s been a huge benefit to be supply managed at this time.”

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When COVID-19 hit in March, chicken sales increased as people stocked up or were panic buying.

“This was quickly followed by a sharp dive in the market, mainly due to the closure of food service,” said Kirkwood. “It had a huge impact on the industry.”

The western Canadian chicken industry is somewhat isolated from the full impact of the food-service industry, since most of the processing for that is done in Central Canada.

“Our processors in the West have a larger percentage of retail than in the East,” said Kirkwood. Chicken production was cut back in the April-May period by about 7.5 per cent in Western Canada. For the summer months, production has been cut by just over six per cent.

“Before COVID-19, we were projecting growth to be about 2.5 per cent, and now we’re in the negative, about minus six to seven per cent this current period,” said Kirkwood.

This decline is due to reduced food- service sales.

“Takeout and Skip the Dishes don’t come close to making up the losses from the closure of restaurants,” she said.

Although there are fewer birds in barns, the pandemic has added costs.

“Our producers are producing less and they have to implement physical distancing measures for service providers com- ing to their farms,” she said. “For the processors, it’s costing them in terms of implementing physical distancing measures in their plants, and retrofitting their plants to ensure employees are safe and protected.”

Even though Alberta has reopened the food-service sector, people are slow to return to restaurants.

“It’s really hard to predict behaviour,” said Kirkwood. “We’ve never seen market fluctuations as much as we have with COVID-19. We speak with our processors on a weekly basis to get a sense of what their customer orders are, and it’s challenging for them to predict what effect the different phases (of opening) will have on demand and buying behaviour.

“Every week, it’s continuing to evolve and change.”

Scrambled market

Alberta’s egg farmers didn’t have to reduce production but surging retail sales and plummeting commercial sales required major shifts, including finding a home for smaller eggs.

Egg producers also had to deal with wildly fluctuating demand. As with chicken, retail sales shot up when the pandemic started.

“People started hearing about all these runs on products and they wanted to make sure they didn’t miss out,” said David Webb, marketing and communications manager with the Egg Farmers of Alberta.

“On the retail side, over the first couple of months, we saw a 30 per cent increase of sales at grocery stores.”

That was partly offset by a 30 per cent decrease in sales of processed eggs, which are used by commercial bakeries and other food processors. Restaurants, hotels, and caterers either stopped or greatly reduced their buying. And although fast-food chains were open, people working from home weren’t buying breakfast sandwiches on their way to their job.

Dealing with abrupt changes in demand took a co-ordinated effort from a host of different players.

Graders, processors and the Canadian Food Inspection Agency worked together to divert medium and small eggs (mostly used in processing) to grocery stores. But a North America-wide shortage of egg cartons required those groups to work together for approval to sell flats of eggs.

Provincial boards like the Egg Farmers of Alberta worked with the Egg Farmers of Canada to increase storage capacity of processed egg product.

Recent donations to food banks and other charities helped use up small and medium eggs.
photo: Egg Farmers of Alberta

“Not all of the product that goes to processors could go to retail because it’s not all Grade A,” noted Webb. “They really increased their storage capacity to store their product for when restaurant and food service reopen.”

There were also significant donations to food banks and other charities across Canada, which helped use up the small and medium eggs. Older birds lay smaller eggs, but there was a way to deal with that, too.

“What we did was implement the early fowl removal program, which hasn’t been used since the 1990s,” said Webb. “We started looking at older flocks that were coming up to be depopulated anyway, and moved their depopulation dates up sooner.

“We want to limit the number of birds being eliminated with a change to quota being the last resort.”

The sector continues to make adjustments as retail sales slowly shift back to normal and restaurant and commercial sales start edging upwards.

But the sector was able to show it can successfully manage even complex changes in demand, said Webb.

“Egg farmers did not really have a need for a change in quota or production. It was really the industry working together.”

About the author

Reporter

Alexis Kienlen

Alexis Kienlen lives in Edmonton and has been writing for Alberta Farmer since 2008. Originally from Saskatoon, Alexis is also the author of two collections of poetry, a biography, and a novel called "Mad Cow."

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