Egg farmers pledge 12,000 to Ontario’s food banks

In basic economics, protectionism in the form of 200% tariff barriers is always bad for consumers, always bad for the economy, and in the case of supply mnagement, always bad for other farmers.

There is no need for debate, or even discussion - those who defend protectionism are either zealots, or poorly educated, or both.

Those who offer "proof" of things which defy both basic economics and common sense deserve to be ridiculed because they are simply being pedantic, obtuse, and/or incredibly oblivious to reality.

For example, even after the Dairy Farmers of Ontario published data in late 2010 showing that the farm gate price of milk in Ontario was within pennies per liter of the US retail price, supply management supporters on this site claim it is "fact" that lowering the farm gate price won't reduce the retail price - these supply management supporters deserve to be ridiculed and pilloried within an inch of their lives for stupidity above and the call of human possibility.

As I see it, the rants always come from supply management supporters because they have nothing else. According to their "logic" it is OK for supply management to be bullies to over 30 million consumers, and to other farmers, but when somebody verbally does to them what they believe is their right to do to the wallets of others, they turn into cry-babies.

When supply management stops bullying consumers, and when supply management stops being financial bullies in the farm community, then, and only then, will the supply management bullies and cry-babies be able to see, and deal with, how they are seen by others.

Stephen Thompson, Clinton ON

Supply management means screwing consumers all of the time, and screwing other farmers all of the time, but Canadian dairy and poultry farmers are so greedy, and so self-centered, they won't ever "get clued in" to the basic economic truth that supply management is net-negative when it comes to jobs, economic activity, and social responsibility.

All the more reason why supply management is not well-liked, and will not be missed.

Stephen Thompson, Clinton ON

You state that the high price of SM foods is due to the high input costs paid by Canadian farmers. Is it the major reason, or a just a distraction from the true root cause?

To find out, lets take a look at growing chicken meat birds, the case that I have done the most research on.

CFO states that 60% of the cost of raising meat birds is the cost of feed. Since that is the majority of the cost (almost 2/3 of the total cost), it's a good place to start.

Up until August 2013, CFO swore up and down that it took 2 kg of chicken feed to put 1 kg of meat onto the chicken. Quota chicken farmers swore that this was just a reasonable COP (Cost of Production), which was their birthright under SM.

Back on March 13, 2013 I Blogged about this bogus and extremely high FCR that CFO was charging, and described how the Canadian Supply Management System has allowed Canadian SM chicken farmers to become "fat dumb & happy" for a very long time. Compared to other countries, Canadian farmers and processors have lost our competitive edge long ago.

For example, New Zealand chicken farmers have a FCR (Feed Conversion Ratio) as low as 1.38 (see news article about Tegel Poultry from 2012/09/06 at http://www.wattagnet.com/154106.html ).

In Aug. 2013, Ontario's Farm Product Marketing Commission ordered CFO to reduce the FCR charged to 1.72 because CFO had been enjoying a bogus 16.3% premium for the previous 10 years.

When we compare Tegal in New Zealand to Ontario chicken farmers, Ontario is 24.6% less efficient on FCR. That FCR factor is totally within the control of Canada's SM system (eggs, hatcheries, and growers are all within SM).

Since feed is 60% of total cost, if we assume that the other costs are the same, that becomes a 14.76% higher farmer gate price for chicken in Ontario just because of this one factor.

Unfortunately, Ontario chicken farmers have become a disaster in just about every other way too.

The longer SM is in place, the more fossilized Ontario's quota-based chicken farmers become, and the more the consumer is forced to pay to keep them alive as they sink into the mud deeper and deeper.

I therefore conclude that it is the quota-based chicken farmers who have shot themselves in the foot. Unfortunately, the chicken processors, riding on the coat tails of the SM system who have similar but different problems; all of which the consumer is forced to pay for.

Is it the same for turkeys, pullets, eggs, and dairy? Most likely, but I will leave that to others to confirm and report.

Glenn Black
Small Flock Poultry Farmers of Canada

It is entirely appropriate to "blame those who set a made-in-Canada price for a product sold in Canada at a cost relative to a true Canadian COP" because this statement is flim-flam designed for one purpose alone - to use legislation to transfer large amounts of wealth from poor consumers to a few rich farmers, and disadvantage other farmers in the process.

Why should Canadian consumers pay almost 38% more for a commodity like milk than US consumers a mile away, just so that 15,000 quota-owning millionaires can continue to be financial bullies in the farm community?

Stephen Thompson, Clinton ON

Canada is about 7 billion, that includes the price support subsidy that SM farmers recieve. Mexico is slightly more. The US is over 30 billion, but remember that their population is 10 times greater that ours. Europe is higher, but remember that they are at a real disadvantage because of the high Euro. Makes the 100 million RMP cap figure look like a rounding error. Raube Beuerman

One writer refutes the retail price argument and the response is switching the topic over to stock prices?

This would be a failing tactic in a grade 11 debating class.

I don't think any facts will interfere with your seemingly rigid view of the world, but just for the benefit of others, companies can easily import eggs when production is lagging demand growth and they do so on a regular basis.

This is built into the system in the form of supplemental import permits and egg imports have in fact soared in the last few years as egg sales have risen about 3 per cent annually.

Egg farmers have been working to get more hens into production fast enough to keep up with this strong growth. American surpluses fill the short term gap.

Supply management actually works by determining the fair price that farmers need to be paid to cover the cost of production and then managing supply to fill all available markets above that cost and quite a few below cost as well.

When growth is faster than forecast, as has been the case for eggs for several years, then supplemental imports are available to make sure that the market is never shorted.

A tight market drives up imports but has no effect on prices. US egg imports mean higher wholesale and retail margins - not savings for consumers.

PS - Since you brought up stock prices, I have one free tip - a good manager will have a stop loss order placed at 6 to 8% below the purchase price to protect clients against dramatic 20% declines. It takes a 40% increase in another position to offset that sort of mismanaged loss. Perhaps such clients should seek new advisers.

Hope this has been helpful to you Stephen!

Hhmmm I remember a crash of the stock market between those years . Do ya think he is the only one that lost money on stocks ? You really should of thought that one out better .