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
Comments
Let me see if I understand this correctly - Agricorp's senior management team and senior staff believes it knows more about the market value of Canadian SEW pigs in the US, before and after the implementation of COOL, than a hand-picked review committee of five producers.
Unfortunately, Agricorp appears to have failed the first and most-important test of accounting - whatever system or methodology is used to determine value MUST be that system most-accurately representing reality.
This means that a "public, transparent, verifiable" method of establishing value is worthless if it doesn't reflect reality, which is what the producer review committee tried, but failed, to get Agricorp to understand. If changes in legislation change how value is calculated, as is what appears to have happened with COOL, then using the same input variables to calculate value on both sides of the change produces gibberish because, in this case, two completely-different ways of calculating value are employed, and which Agricorp appears to be refusing to recognize.
The bigger problem, and it's a problem created by almost every farm group and government department, is that nobody ever talks to people in the business, regardless whether it is hog brokers or even farm management practitioners - a call to one, or more, SEW export brokers could have, and would have shed more light on the situation than government could have ever brought to bear on their own.
It's a tragic situation that could have easily been prevented if the AgriStability system allowed for, as the legal system does in litigation issues, expert witnesses who give opinion evidence under oath - it's time this aspect of agriculture joined the 21st century.
Finally, why would any of the five-member review panel want to continue to serve on the panel since their input is considered to be valueless?
Stephen Thompson, Clinton ON
Here we go ago again.
What part of overproduction subsidies don't you understand?
Even worse, is the fact that these overproduction subsidies are only available to Canadian livestock producers who "dump" the excess on the U.S. causing current U.S. prices to tank as we speak.
The only time overproduction exists is when the product can't be sold at any price, and that's not the case here - therefore, there is no such thing as an overproduction subsidy, but rather a low-price subsidy. There are times when there is a seller's market and times when there is a buyer's market - a large amount of production is a good thing for the buyer, but not so good for the seller, but to the buyer, it's not overproduction, but rather, a good deal allowing him/her to spend the saving on something else.
Therefore, even if overproduction subsidies existed, and they don't, every economist, myself included, understands the concept, flawed as it is, perfectly.
Stephen Thompson, Clinton ON
Hugh and cry from U.S. pork commentaries is that they are losing money from too much production ....AGAIN! How could this possibly happen eh? A few years ago there was an Ontario sow buyout subsidy program for overproduction of hogs was there not? Deja vu all over again and so soon eh! Furthermore, the U.S. pork producers receive almost nothing in subsidies such as Agi-Invest, Agri-Stability, RMP-ASRA etc etc.
Are you saying that Ont Pork producers should get nothing so that crop guys can have more...to go with ethanol mandates?
Sounds like one of those ideas that probably "looks good on paper", but who do you plan on selling all this "subsidized" crop to?
Maybe you shouldn't complain about "being hungry when your mouth is full".
It wasn't overproduction, it was low prices - consumers weren't complaining, why should they?
Besides all that, producer greed willingly supplied the market. How can consumers and taxpayers feel sorry for people whose greed ended up biting them in the wallet?
Stephen Thompson, Clinton ON
i can't believe that you could say the low hog prices of several years weren't because of over production. let me give you a lesson in simple economics. over production creates low prices. i'm a hog farmer and lived through it so i may know a tad bit more about it than you do.
(!) Overproduction is a myth concocted by producers, not consumers.
(2) Overproduction is a cop-out by farmers who got greedy and lost.
(3) Overproduction comes about only when product can't be sold at any price
(4) The market doesn't care that farmers may be losing money when they sell their product for what the market is willing to pay - that's the farmer's problem
(5) low prices for any given commodity are a function of many things including consumer incomes, export realities (and currency values), the prices of competing products, consumer tastes, legislative hurdles (export bans because of BSE in livestock and/or COOL legislation for hogs), processor demand and presence and, therefore, to some extent, the amount of product being offered to the marketplace.
Stephen Thompson, Clinton ON
So this would be where SM shines because production is regulated and price is not allowed to run wildly high . Hhhmmmmm
So if your saying overproduction is a myth hatched by producers, then we are to believe underproduction or under supply is also the responsibility of the producer? If we go by that then consumers have been lied to over these last couple years when told high retail pork prices were because of a deadly PED virus.
Overproduction is a term farmers use when their greed backfires on them after they've paid too much for inputs (land in particular) resulting in too high a cost structure. Anyone with their cost structure under control is immune from what farmers call overproduction, unless like at those times with things like pigeons, emus and other pyramid/Ponzi schemes, there is no market at all.
When a farmer complains about overproduction, it means his/her costs are too high and other than legitimately blaming dairy and poultry farmers for causing high land prices, has only himself/herself to blame.
Overproduction, to a consumer, means nothing more than being able to buy something at a better price than he/she might otherwise have paid.
The only people who have been "lied-to" over the years is farmers who have lied to themselves about how overproduction is an evil, but that farmers bidding up the price of inputs to unsustainable levels is not.
Stephen Thompson, Clinton ON
I have yet to see a farmer bid up the price of inputs . When a farmer goes to buy inputs it is How much for ......
Land is not an input . Farmers yes bid up the price of land and land rent .
Anything a farmer buys and/or rents for his/her farm, including land, is an input.
Score: Economic reality 1, anonymous poster 0
Stephen Thompson, Clinton ON
explain how when selling hogs for $30 each as we have done a few times when the market has collapsed due to over production how to bring the costs down to make a profit?
This is not hard to figure out, those with the highest costs go bankrupt, therefore creating less supply, which in turn results in increasing prices.
All the while, those with the lowest costs are able to weather the storm, and survive.
The problem with modern day agriculture and simplistic farm groups is that they think they can(and often do) save every farmer from failure.
It is also the reason why there are so few young farmers today, unless they are born into it(otherwise known as recipients of economic outpatient care).
Bring back capitalism into farming, and you'll have young farmers again.
Unfortunately unlikely.
Raube Beuerman
I've been thinking the same thing, but you sum it up very well.
The biggest impediment to young farmers is old farmers and all of their government perks and the idea that they are owed a "profit". Farm groups are always lobbying for more gov't support/interference for themselves, while paying "lip service" to helping get young farmers into the industry. Seemingly non of them can remember how they were able to start out...although admittedly many of them "inherited" their start.
There are farmers out there now that have way too high cost structures and could care less...because of Gov't support.
There are also many young people out there that could use their innovation and energy and "farm circles" around those contentedly sucking on the gov't teat.
Complacency is not really a good thing and this "skipping a generation of young farmers" will come back to bite us...eventually.
D. Linton
Editor: Anonymous comment will be published if re-submitted and signed.
Again, that is not what consumers are told when questioning higher retail pork prices.They are told its low supply due to high mortality rates in piglets caused by PED not inefficient farmers.
Unfortunately now days the little guys are always looked at being the inefficient ones and unless there are young farmers out there that somehow can start big, then they will be the first ones to be "cleansed" in the rollycoaster pork industry.
i don't care what any economist says what you are being told is the truth and every hog farmer knows it. PED lowered the supply which caused the price to jump to record levels. just like hook space is limited now as there are more pigs again and the price is dropping. simple supply and demand. these same people that say there is no such thing as over or under production are the same ones that say when quota goes milk will become cheaper cause there will be more supply. GO FIGURE!!!
Once again, the only time an oversupply and/or overproduction exists is when price goes to zero - the rest of the time supply and demand find an equilibrium, with price serving as the equating mechanism.
Farmers, especially the anonymous ones on this site, don't understand anything about cross-elasticity, don't understand anything about price-elasticity, don't understand anything about consumer dynamics and behaviour, don't understand that farmer response to low prices is to produce more, and, instead, lump all the farm gate price woes, including the self-inflicted ones, into a neat, and inappropriate bogey-man they call "overproduction".
In addition, and for about the millionth time, the end of supply management will see a lower consumer price because there will be nothing to maintain the artificially-inflated farm gate prices created by supply management, and the end of this artificial price banditry has NOTHING to do with supply.
Stephen Thompson, Clinton ON
The five points in your earlier post really made me sit up and take notice.
All of them but especially, this part in #5...."low prices for any given commodity are a function of many things including (listing half a dozen other factors, and then....)....... to some extent, the amount of product being offered to the marketplace."
And now in this later post, a new pearl of wisdom...."the only time an oversupply and/or overproduction exists is when price goes to zero."
This stuff speaks for itself.
it's nice to see i'm not the only one who see these things.
There is no truth what so ever in your theory that the price of any thing will drop with the destruction/end of supply management . Sm will have to be propped up by subsidies because the cost of producing any thing here in Canada is more than the USA ( our closest trading partner ) on every like hydro , drugs etc .
Further land does and is selling for $20,000 an acre in the USA and even higher in other parts of the world .
keep talking, your making Supply management look better and better.There is a reason why its lasted over 50 years and you have pretty much nailed it with your "equilibrium" and "equating mechanism" talk.
Part of the natural evolution process of farming involves consolidation! As a result, we see less farmers every year. Farms of almost any commodity are getting larger. A lot has to do with technology, as well as, science. Again it involves all commodities.
Firstly, any hog farmer could have participated in the hog buyout program which, for several of my clients, had the government pay them handsomely for something they were about ready to do for nothing (get out of hogs because of ethanol mandates). In addition, by selling all of their hog inventory, these clients picked up a good chunk of AgriStability money they otherwise wouldn't have seen. I'd call that "making a profit" and so did those of my clients who took the buyout.
Secondly, selling hogs for $30 each is simply the "tuition" hog farmers pay in exchange for the chance to sell hogs for many times that amount at some point in the future - by applying the principle of "dollar-cost-averaging", the $30 figure becomes relatively-meaningless except for working capital considerations.
Thirdly, it always seems to be those people who complain about making no money on $30 hogs who also never admit to selling the same hogs for many times that amount when times are better and who never hedge and/or forward contract anything when prices are higher.
Finally, hog producers who are still in business and who are likely to stay in business, don't complain about $30 hogs, they do something about it (like aiming for 30 pigs per sow per year), obviously have and have obviously done it well.
Stephen Thompson, Clinton ON
Some can deny and deflect all they want, however, you are absolutely correct, it was overproduction causing low prices. The same situation is now being talked about ...AGAIN in the US pork commentaries. Unfortunately, they don't have all the subsidy bailouts Canada has for its livestock producers. Think about it, as we move into TPP, this difference in US vs Canada Livestock Subsidies will become a problem!
When pork prices tanked the price to the consumer never changed . Over production never even figured into the equation . Then not long after we had the OCHHP followed by the prok buy out program . Then record high prices and now more crying about low prices while making out like bandits on RMP with secret price targets . All programs the US producer never got .
I wonder if you've got your facts right? The US breeding herd is up one percent, the Canadian breeding herd is up one half of one percent...not really giant numbers.
Some packing plants in North America have been shut out of the Chinese market...that can make a difference of $15/pig all by itself. Canada is struggling to get back into the South Korean market, since a free trade deal gave the US the upper hand...that can lower price. COOL has affected prices, not being in TPP would lower prices, packer strikes can and have lowered prices, demand both domestic and export can lower prices, reports about cancer scares can lower prices, "swine flu" lowered prices, PED certainly affected prices.
When I stop and think about it, "overproduction"(what ever that really is) probably has never affected pork prices, but all of these other issues certainly do.
Thanks for the lesson in economics Mr. Thompson, it makes sense to me.
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