by SUSAN MANN
Egg Farmers of Ontario’s new entrant program is temporarily on hold this year while the organization conducts a scheduled review.
Bill Mitchell, Egg Farmers public affairs director, says when the board launched the program in 2011 “there was a commitment in the original agreement that the operations of the program would be reviewed after five years for performance, tuning and to see how it’s going.”
Egg Farmers isn’t accepting applications for the program this year while the review is ongoing. The program is designed to encourage new farmers into Ontario’s egg farming business. Since it began, there have been nine new entrants under the program.
Each year the program loans up to 10,000 units of quota (one unit of quota is equivalent to one laying hen) to successful applicants. The program’s participants must also buy quota to get access to the loaned quota. For every unit participants buy, the program loans them two units.
After 10 years, participants must start returning the loaned quota to Egg Farmers at the rate of 10 per cent a year over 10 annual installments. The quota is then loaned out again to other participants.
The Egg Farmers board already approved one change to the program as the review was getting underway. In January, the board decided to remove the requirement for participants to buy the quota first before they got the program’s loaned quota.
The change was made in response to two producers who contacted the board with concerns about having trouble getting quota on the exchange to get started under the program, Mitchell explains. The two farmers were accepted under the new entrant program in 2014 and tried to get the necessary quota on several exchanges since being approved.
The farmers became concerned they were running out of time to get quota and be operational by the deadline set by the program. As part of the new entrant program, participants have 18 months from when they’re approved to be in operation.
Before the exchange began in 2014, farmers wanting to buy quota found sellers on their own and made arrangements to buy the quota they need.
Under Egg Farmers’ quota transfer system, bidders who come the closest to the exchange price, and not the highest bidders, get the quota first and that reduces “the certainty of when you can buy quota,” Mitchell says.
The farmers notified the board “that the lack of the ability to control the timing (of when they could buy quota) was going to cause problems with their business plans,” Mitchell says.
Egg Farmers also released a number of reports in January in advance of its zone meetings, including egg numbers for 2015 compared to 2014, the 2015 business plan and areas of achievement, the 2016 business plan and the statement of operations.
Some of the numbers from the reports include:
- There were 446 egg and pullet quota holders in 2015, compared to 434 in 2014. The Ontario egg quota holders were 333 in 2015 and 323 in 2014.
- The number of Ontario leviable eggs graded (including eggs for further processing) in 2015 was 2.9 billion compared to 2.8 billion in 2014.
- The volume of Ontario egg production earmarked for the table market in 2015 was 80.7 per cent, while 19.3 per cent went to the processed and further processed market. In 2014, the Ontario table egg production volume was 79.5 per cent and 20.5 per cent of the volume was earmarked for the processed and further processed market.
- The Ontario egg levy deducted from producers was 29.25 cents a dozen in 2015 and 38.75 cents in 2014, a reduction of 9.50 cents last year compared to the previous year.
- Ontario’s hen allotment stayed the same in 2015 compared to 2014 at 8.5 million. BF
Comments
Capitalism, where the free market rules has been, and remains, the undisputed best system.
Everything else, where the state or somebody else, attempts to take the place of the market has ultimately failed over the course of history.
In the above article we have a system so convoluted with twisted regulations in an effort to keep the house of cards from tumbling down.
SM was to prevent the market from deciding who the winners and losers are, but these poor souls "entering" now.....will be losers.
Eventually, the free market always wins.
Raube Beuerman
There is no such thing as a truly free market and that's a good thing. Government oversight is intended to level the playing field. That's how we end up with safety net programs and prevention of predatory practices and a host of other regulations. Unless you are a right wing extremist most people would agree with this. Where the differences occur is in how much regulation is too much.
If aspiring New-Entrant egg farmers can't buy quota to even get started, how, where and at what un-Godly price will it take to buy quota when they have to start giving back the quota the Egg Board is going to loan to them now?
Enticing aspiring farmers into a program where quota isn't likely to be ever available is little more than a legislatively-permitted form of child abuse.
Stephen Thompson, Clinton ON
Two definitions of oligopoly include:
(A) a state of limited competition in which a market is shared by a small number of producers or sellers.
(B) a market condition that exists when there are few sellers, as a result of which they can greatly influence price and other market factors.
With just over 300 sellers, and with the only way to get to be part of the "inner-circle" is when somebody else gets out, the Ontario egg farming sector is very-much an oligopoly.
The two new-entrants from 2014 who couldn't get quota have been failed by everyone in the system, including themselves, but they've been especially failed by their financial advisors who appear to have failed, in 2014, to exercise their ethical and professional responsibilities to have strongly-advised their clients, who presumably, by early 2016, have their barns already built, about the potential difficulties of finding quota both now and when it comes time to purchase more quota to replace the loaned quota.
It's bad enough that aspiring New Entrant egg farmers don't understand how oligopolies work, it's even worse that the people who offer New Entrant programs don't seem understand it either, but it's unconscionable for professionals to ignore something with this profound of an adverse effect on their clients' futures.
On the other hand, one of the risks of being any sort of an advisor is being over-ruled by your client and then being forced, if you're still with him/her, to get to see the "train-wreck".
Stephen Thompson, Clinton ON
Easy Solution to the problem would be to give the new entrants some of the free allotment that is given to current producers for free every year . What would that matter to current producers when most sell the free quota allotment ? The more exposed SM becomes it is evident that there is so much wrong with the system that it needs to overhauled or done away with .
Egg farms are in a regulated monopoly.
Grocery retailers, with a 3 firm concentration ratio exceeding 80%, are an example of an oligopoly.
I wish anonymous posters could get something right, anything right, even just once:
(1) the Egg Farmers of Ontario (EFO) is a monopoly
(2) there are no numerical qualifiers on the definition of oligopoly except for the term "few" - when just over 300 farms meet the need of some 13.6 million Ontarions, (as of January 1, 2014) that qualifies, in any quarter, as an oligopoly.
(3)The above poster disingenuously tries to shift the blame for supply management's ability to screw the consumer onto the retailing sector, and by doing so, ignores the damage done to consumers by the egg processing oligopoly in Ontario - other than Burnbrae and L.H Gray, who else is there?
I mean, really, we have an oligopoly (egg farmers) selling to a monopoly (EFO) which, in turn, sells to the egg-processing oligopoly and then farmers turn around and blame retail oligopolies for high egg prices - once again, "when pigs have wings"!
Stephen Thompson, Clinton ON
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