Trade talks cloud Canadian supply management’s future

© AgMedia Inc.

Federal Agriculture Minister Gerry Ritz offers little to reassure supply-managed farmers about the terms of a TPP deal

photo: Gerry Ritz

Comments

I read with great interest Prof. Bruce Muirhead's guest editorial on Supply Management on July 31, 2015 (see http://www.guelphmercury.com/opinion-story/5767936-canada-must-keep-supp... ). Only in the fine print at the very bottom of his guest editorial is it disclosed that Prof. Muirhead is an ongoing beneficiary of a Supply Management member, Egg Farmers of Canada. Perhaps having a significant part of his pay cheque tied to the survival of Supply Management has clouded or biased Prof. Muirhead's outlook.

Prof. Bruce Muirhead postulates that the US government's desire to eliminate Canada's Supply Management ("SM") System is proof that SM works to protect Canada and Canadians. I agree that SM is excellent for the 17,000 SM farmers who are the highest paid farmers in Canada; SM farms being just 8% of all Canadian farms. While the SM system excludes most foreign products that compete with SM commodities, this is no proof that SM is good for Canadians. Unfortunately, Canadians are price gouged about 38% more for milk, and from 50% to 300% more for other SM commodities (eg. cheese, eggs, chicken, & turkey) than what the vast majority of the world pays.

Canada's import tariffs for SM goods, as high as 285%, are imposed on Canadians, supposedly to protect SM producers. If these tariffs were reduced, likely the profitability of SM farmers would be reduced, bringing them in-line with non-SM farmers. Only the most inefficient, negligent, or incompetent SM farmers would be threatened by that tariff reduction, yet all Canadians would benefit from the billions of dollars per year saved by reduced retail prices for these food staples.

From 1990, NZ dairy exports have grown from NZ$2.1 Billion to NZ$15.5 Billion in 2014. That's up 738%, or an average growth rate of 8.8% per year, doubling and re-doubling in size every 8 years.

In the same time period, Canadian dairy exports went from CDN$196.5 Million to CDN$281 Million. That's up 43%, or an average growth rate of 1.5% per year, doubling and re-doubling in size every 47 years.

Note that NZ's non-SM dairy system enjoyed 17 times greater growth than Canada's SM dairy system. Here is the greatest cost to Canada and Canadians; the SM imposed loss of opportunity, prosperity, and jobs; punishing all Canadians so that SM farmers, just 0.05% of all Canadians, can enjoy higher profits and no competition. The potentially available growth that Canada could have had was pissed into the wind by SM's dysfunctional thinking and actions.

SM says they protect family farms in Canada. In reality, the number of Canadian dairy farms has dropped from 25,825 in 1993, to just 11,962 dairy farms left in 2014, a 54% loss, or an average drop of 3.7%/yr, halfing and re-halfing every 19 years. The mergers and acquisitions (M&A's) of dairy farms are good for SM farmers, and for the Big Ag. corporations who buy them out, concentrating ownership more and more. However, M&A's reduce competition, increase systemic risk, and hurt rural Canada's prosperity.

When NZ finally ended their dysfunctional SM dairy system in 2001, the concentration of NZ dairy ownership was at the extreme; Fonterra had 96% market share, and only two weak competitors (Westland Milk Products on the West Coast and Tatua Cooperative Dairy Company in Morrinsville, Waikato), who shared the other 4%. I suggest this extreme concentration of market share (which in turn was directly caused from the delayed killing of NZ's SM system until 2001), is the cause of NZ citizens paying high dairy prices since 2001.

All of NZ dairies grew tremendously since the NZ de-regulation in 2001, but Fonterra's competitors have grown faster than Fonterra. Small and nimble beats huge lumbering monsters every time. Let this be a lesson for all SM members for when Canada's SM system is finally killed, as the new entrants will serve Canadians better, faster, and cheaper than the fossilized remnants of Canada's current SM system.

Since 2001, Fonterra has steadily lost market share. That is why Fonterra only has 87% market share today, a 10.3% loss since 2001. Today, Fonterra has 6 competitors; Westland, Tatua, Synlait, Open Country, Awarua, and Miraka. Oceania Dairy Ltd, and Yashili, are two new Chinese owned startups that will soon be operational in NZ, raising Fonterra's competitors to a total of 8. This will help normalize NZ's dairy industry more and more each year; giving NZ consumers better choices and more competitive prices.

Canada can learn from NZ's mistakes, by ending the corrupt and dysfunctional SM system before the bitter end that NZ waited for. The sooner the inefficient and ineffective SM system is dismantled, the better for Canada and Canadians.

Nobody is proposing Prof. Muirhead's fallacious argument that Canada's dairy sector is abandoned and destroyed, and all of Canada's dairy supply be sourced from the lowest bidder anywhere in the world. It is sad that SM caused or contributed to a slow rot and loss of productivity as compared to non-SM systems in other countries. SM's tyrannical, negligent, and inefficient reign for the last 44 years has terribly hurt Canada's SM industries. To save SM farms and processors from the natural consequence of the misguided SM system, they will have to receive significant remedial training and government assistance for many years after they are unplugged from the SM heart & lung machine.

Prof. Muirhead says farmers in dairy superpower New Zealand are staring bankruptcy in the face due to downturns in the dairy export markets, especially China. The greed of NZ's Fonterra has enticed them to export about 95% of NZ's total national production of dairy products; 5% kept home for domestic consumption. Prudence says you should never have more than 33% of your business with one customer, and never more than 55% market share. Fonterra violated these rules, and is now paying the natural consequences for their greed and imprudence.

In Canada, SM dairy quality is questionable. For somatic cell counts (ie. puss) in the milk from Jan. to June 2015, Manitoba had the worst milk in Canada, 17% worse than the Canadian average. BC had the best milk, which is 14% better than the Canadian average somatic cell count. The worst month for a Province was 45% more contaminated than the best month.

For bacterial contamination in Canadian milk from Jan. to June 2015, the monthly variability across all Provinces is 48%, which shows an out of control situation, indicating poor dairy management. Nova Scotia had the worst milk, 208% higher bacterial count than the Canadian average. New Brunswick had the best milk, which is 57% lower than the Canadian average bacterial contamination. The worst month for a Province was 13 times worse contamination than the best month. Again, totally out of control. This poor quality milk wasn't dumped, it was sold to unsuspecting consumers. Thank God for pasteurization.

The earliest available Canadian milk quality data is 1998. For somatic cell count from Jan-June 1998, the minimum contamination has gotten 5% worse between 1998 and 2015, but all of the other statistics are somewhat better in 2015. For bacterial contamination, everything is significantly worse in 2015 as compared to 1998. If SM dairies cared about consumers, they'd be doing continuous improvement; not resting on their 1998 mediocrity.

How can Canadian dairy producers argue they need to retain their dairy monopoly under Supply Management when they charge 38% to 300% more, but produce poor quality products that are significantly worse now than 17 years ago. Unfortunately, SM dairy farms and/or processors seem to feel there is no need to improve when your customers are forced to buy SM dairy products.

It isn't just dairy. Other SM products such as eggs and chicken show similar mediocrity and disrespect for the Canadian consumer. For example, during SM's 44 year reign (1965-2015), the number of chicken farms has dropped from 176,818 in 1966 to 20,645 in 2011; an 88% drop overall, or an average drop of 4.9%/yr, halfing and re-halfing every 14 years. The poor quality, pathogen contaminated chicken produced from drug and chemical riddled birds is a horror story. I haven't studied turkey, so I am unable to comment.

In spite of SM failing Canadian consumers, SM has the unanimous support of all major political parties. Apparently, most politicians feel that serving SM lobbyists is more important than serving Canadians.

It is time that SM and its dysfunction, corruption, negligence, and incompetence becomes an election issue.

Glenn Black President
Small Flock Poultry Farmers of Canada

New Zealand produces about 3% of the world's milk supply but has a consumer population of about only 4.5 million.
They export because they have a tiny consumer market - not because of greed.
Canada produces about 2% of the world's milk supply and has a population of about 37 million. Supply matches demand.
Indeed, Most countries do this and produce 95% of their milk for their domestic market - the world market is extremely thin and volatile because half of that volume is subsided US and EU surplus being dumped.
NZ converts its only resource (grass) into milk and that thin world dairy market is their problem. They had similar troubles when they focused on converting grass into sheep in the past. They just don't have a lot of options.

In response to "Much Info - Little Understanding"

I am far from an expert, but I am trying to learn. My learning process has caused me to collect information, and I am slowly growing my understanding of this complex subject.

Yes, NZ is a dairy powerhouse. I'm glad we agree.

You say most countries domestically produce just 95% of their consumption. I stated that NZ exports 95% of their dairy production, which you seem to accept by your silence on this fact.

Therefore NZ produces 21 times more dairy than what you suggest is the world's norm (supply 95% of domestic market), which NZ then sold on the world's dairy export markets.

NZ dairy farmers have benefited from 21 times more business than what they would have had if they had stuck to supplying just the tiny NZ domestic market.

You disagree with me that NZ dairy exports were driven by greed.

What then drove NZ's Fonterra to stretch its neck out 21 times further than the rest of the dairy world into what you call a "thin and volatile" export market? Fonterra is a Co-op, run by and for its owner-farmers, similar to DFO for Ontario dairy farmers.

If it wasn't greed that caused NZ' Fonterra to ignore the risks, building a huge dairy infrastructure 21 times bigger than most other countries, what was it that caused them to do this?

Canada's SM system has severe problems that need to be corrected NOW. NZ, Australia, US, and many others have similar & different problems in dairy.

I hold none of these as cookie cutter solutions for Canada. Only a fool would see the flawed systems of other countries as ready replacements to Canada's dysfunctional, unfair, and costly SM system.

While Canada's SM system is likely the worst in the world, it doesn't make sense to jump from the worst to the 2nd worst. Instead, let's jump from the worst to the best.

Canada can (and needs to) learn from our 50 years of mistakes under SM, but just as easily, we can vicariously learn from the mistakes of other countries, so we don't jump from our mistakes to their mistakes.

We can create a "Made In Canada" solution that is good for all Canadians. Unfortunately, our flawed SM system has backed all of us more and more into a corner from which escape will be expensive and difficult. The longer we delay our escape, the more difficult and costly the solution will become.

Paraphrasing Wikipedia (see https://en.wikipedia.org/wiki/Norman_Cota#D-Day ), I think we can learn from other who were trapped by circumstances. US General Cota was one of the highest-ranking officers on Omaha Beach on D-Day during World War II. General Coda is famous for personally rallying the shell-shocked, pinned-down survivors and opening one of the first vehicle exits off the beach. Two famous quotes are attributed to him during this time:

1. General Cota asked a group of pinned down soldiers "What outfit is this?" Someone yelled "5th Rangers!" In an effort to inspire the soldiers to move from the cover of the seawall and lead a mass of recently landed soldiers through a breech, Cota replied "Well, God damn it then, Rangers, lead the way!". "Rangers lead the way" later became the motto of the Rangers.

2. General Coda is also quoted as saying to his troops, "Gentlemen, we are being killed on the beaches. Let us go inland and be killed."

In the film "The Longest Day", actor Robert Mitchum, portraying Cota, delivers another famous quotation attributed to Colonel George A. Taylor: "There are only two kinds of people who are staying on this beach: those who are already dead and those that are gonna die. Now get off your butts, you're the fightin' 29th."

Today, SM is terrible for 35 million Canadians, but excellent for the 17,000 SM farmers, who are only 8% of all Canadian farmers.

Soon, we will have somebody step forward to lead Canada and Canadians out of the terrible trap called SM.

Glenn Black, President
Small Flock Poultry Farmers of Canada

You said you are far from an expert, I agree.

I did not say New Zealand is a dairy powerhouse. Just the opposite in fact.

The US and EU are powerhouses, while NZ produces three per cent of the world's milk in a world that is essentially focused successfully on being self-sufficient in milk.

If NZ stopped exporting milk most of the rest of the world would scarcely notice.

The tiny trade in milk is half from US and EU surplus and half from NZ and Oz where they have grass, few consumers and few other options.

So, in summary, they are on islands, far from markets, insignificant in the total world market, with very few profitable options.

This seems to breed unhappiness.

In response to "Read the post again, perhaps slowly..."

WorldMapper.org (see http://www.worldmapper.org/posters/worldmapper_map45_ver5.pdf ), re-stating data from United Nations Conference on Trade and Development, 2002 says: "In terms of US dollars worth of dairy products exported (net), New Zealand has the highest per person earnings [ie. GDP] at US$ 641 a year. Dairy produce from New Zealand is exported to 140 different territories, 3.5 million dairy cows live there. Less than a quarter of the world territories have net dairy exports."

Australia Financial Review ("AFR"), being equivalent to Canada's Financial Post newspaper, says Fonterra Co-operative Group is the "world's biggest dairy exporter", and New Zealand "relies on dairy for a quarter of its export earnings." (see http://www.afr.com/business/agriculture/fonterra-slashes-milk-payout-for... ).

Fonterra says they have "10,500 farmer shareholders working alongside 16,000 staff spread throughout New Zealand and in markets across the globe; we supply products to more than 100 markets." and that Fonterra is "the largest processor of milk in the world". (see https://www.globaldairytrade.info/en/sellers/fonterra/ )

Bloomberg says "Fonterra, New Zealand’s biggest company, accounts for about a third of the world’s trade in dairy products and posted revenue of NZ$19.8 billion in the year through July 2012." (see http://www.bloomberg.com/news/articles/2013-08-06/new-zealand-s-world-da... )

NZ's government (Dept. of Trade & Enterprise) says "Dairy is the backbone of New Zealand's food and beverage industry - it is the world's top dairy exporter and accounts for a third of the world's dairy trade. As New Zealand's biggest export earner (exports totalled NZ$12.1 billion in 2011), dairy contributes 25 percent to New Zealand's merchandise export earnings." (see https://www.nzte.govt.nz/en/buy/our-sectors/food-and-beverage/dairy/ )

It seems there is general agreement that NZ is the world's largest dairy exporter, and has 1/3 of the world's dairy export market.

I think that qualifies as "dairy powerhouse".

Do you dispute some or all of the above reference sources? If yes, please provide the data &/or links to your better sources that correct your allegations of systemic error by all the above world-class journals and government sources.

There is no doubt that the US domestic dairy industry is huge. Same for Europe. For example, DairyAmerica now claims to be the world's largest producer of skim milk powder. Fonterra was marketing DairyAmerica's skim milk powder exports for the last 13 years, & helped DAiryAmerica grow to what it is today.

Rather than talking about "dairy exports", if we were to talk about total dairy production (ie. both domestic + exports), then Fonterra and NZ are a minute fraction of the world's total dairy production. Even then, Fonterra is still the world's largest processor of milk.

Perhaps that clarifies and dissipates the disagreement between us about the size and impact of NZ and Fonterra.

Please clarify your comment "This seems to breed unhappiness"

Glenn Black, President
Small Flock Poultry Farmers of Canada

Instead of searching and selecting only for information that protects your strongly held preconceptions, try thinking.

Your first five paragraphs focus at tremendous length on NZ milk production being important to NZ.

But, it is not important to the rest of the world.

Then you finally say....Rather than talking about "dairy exports", if we were to talk about total dairy production (ie. both domestic + exports), then Fonterra and NZ are a minute fraction of the world's total dairy production.

EXACTLY.

If NZ stopped exporting milk most of the rest of the world would scarcely notice.

The world dairy market would still be awash in US and EU surplus.

An industry that is important only to itself and it's homeland is not a powerhouse.

USDA reports that the world's dairy exports are just 7% of the worlds total dairy production. Just about every country has a dairy industry, mainly for domestic consumption, but only a few countries/regions export dairy.

Of those who export (mainly EU, US, NZ, Australia), NZ has about 1/3 of that export market. For the countries that import dairy, NZ has been a critical supplier.

US has been attempting to grab significantly more of dairy export market for last decade with NZ and Fonterra's help. Because of NZ, DairyAmerica is now the world's largest producer of skim milk powder.

To me, NZ and Fonterra are much more than insignificant. If you choose to ignore these facts, I can live with that sad outcome.

Glenn Black, President
Small Flock Poultry Farmers of Canada

You went from adamantly claiming NZ's 3% of world dairy production makes it a dairy superpower to now saying that "NZ and Fonterra are much more than insignificant."

If that is as close as you can come to saying you were wrong, I can live with that outcome. It is some sign of growth.

We know Fonterra and NZ are a minute fraction of the world's total dairy production.

If NZ stopped exporting milk then most of the rest of the world would scarcely notice and the world dairy market would still be awash in US and EU surplus. Small increases in the US and EU milk production could easily replace all of NZ's production.

Extreme specialization in dairy is NZ's Achilles heel - one they are already regretting but they have few consumers and fewer options.

NZ is a small country. US, EU, and China are huge in comparison to NZ.

About 1/4 of all countries in the world export dairy products. Just about every country has a domestic dairy industry.

For those countries that import dairy, NZ is extremely important to them.

I agree that NZ and Fonterra went too far with dairy exports. They have done so since 1880's when they were 100% tied to their dairy exports to UK.

I have already posted elsewhere on BF that most marketing and business experts say there is excessive risk when any customer (or group of similar customers) is more than 33% of your sales, or when any distribution channel or market share is more than 55% of your business.

NZ violated these prudent rules again and again, resulting in NZ being badly burned by the UK in the 1880's, the UK entrance to EU in the 1970's, and China in 2015.

I don't know the current status of world inventory levels for skim, whole, and buttermilk powdered milk, but if NZ and Fonterra suddenly stopped exporting, I suspect that there will be shortages, supply chain disruptions, price fluctuations, and similar problems. Since 3/4 of countries import dairy products, a hard stop would likely have significant effects on 1 or more of these nations and their dairy imports.

Can we agree:

1. That the dairy export market is about 7% of the total world dairy production (both domestic and export)?

2. Fonterra has about 1/3 of the world's dairy export market?

3. With a 1/3 share of the 7% export market, Fonterra owns about 2.3% of the world dairy industry market (both domestic & export)?

4. Fonterra, as a single corporate entity, with 2.3% of the world dairy production (both domestic & export), is the largest single dairy processor & vendor in the world?

If we can't agree on all 4 of these points, please give me and everybody else your sources of you objective, unbiased evidence upon which you rely, and a full explanation of your step-by-step logic.

Glenn Black
Small Flock Poultry Farmers of Canada

So where were you when BSE hit ?
I personally know some one who got a cheque for the amount of $0.52 ( yes 52 cents ) for a cull dairy cow . Price of beef did not drop one bit . So now you want every one to think they are going to realize lower prices with the demise of SM . Are you for real ? Farmers got stiffed , consumers ate more beef and who do you think got that money in their pocket ?
Don't forget that that your prices for SM also include organic SM which is double or more the cost to consumers . Which those organic consumers are more than happy to pay .
Goes to prove that most look at others with lust in their eyes . Every one thinks every one else is rich while never walking a mile in their shoes .

SM needs an overhauling big time but lets get realistic as to what it needs to look like . You have blown smoke about Fonterra many times but now have posted their down fall . You can sit on a fence but sooner or later something falls to one side or the other . Every fence sitter should go naked to show the truth .

Little bits of shallow info off the web, without any meaningful context, combined with too much free time continue to seem to produce a huge volume of comments of little value.

How about a 140 character limit?

Might help promote quality posts.

Funny you should hold out the NZ dairy industry as a model. It's been a disaster for farmers and is becoming one for the NZ economy. You would have to hate your fellow Ontario farmers pretty badly to wish the NZ dairy system on them. You do earn your living from farming don't you?

Had to laugh out load at the fellow who made the comment about "how virtually no poultry farms exist north of the mason Dixon" due to the cost of heating the barns. By that logic; no vegetable farmers exist in Canada because of the harsh winters. Come on man. Ever been to the Holland marsh? Deep Southern Ontario?

Farmers have always been very vulnerable to politics. It was no surprise that Harper killed the wheat board. A majority of farmers supported it and our American neighbours hated it because of the advantages it gave our western farmers. Harper was nevertheless philosophically opposed to it. Ironically Harper has supported supply management during all this time. That has never made sense to me. It doesn't make any sense to me either that Harper would hurt supply management just before an election.

Maybe there is hope for this forum yet. It's nice to see a discussion about supply management where people aren't personally insulted and attacked with such venom. I really support this approach and I hope this change lasts.
The world would be a better place if people could attack ideas and not each other.

The U.S. wants it GONE and Stephen is the person to do it before he leaves power as big Money is being offered.

It's interesting that anonymous posters who, by definition, aren't people, always seem to ignore the financial bullying 200% tariff barriers allows supply management to inflict on the rest of the farm community, yet are overly-quick to attach the "bullying" label to identifiable people who object to this abuse of legally-sanctioned market power.

In addition, when, not if, we see an all-out effort to "bully" the federal government into a sort of "having your cake and eat it too" quota buyout program, the bullying label will no doubt be anonymously affixed to identifiable people who, for sound economic reasons and principles, oppose it.

As for personal insults and venomous attacks, pro-supply management advocates, especially Eugene Whelan, invented it when Whelan bullied Beryl Plumptre, Chair of the Food Prices Review Board, and also when Whelan launched scurrilous ad-hominem attacks against anyone, but particularly economists, some of them my friends, who disagreed with his policies. Given the venom and scurrilous ad-hominem attacks on the part of the "Godfather" of supply management when it was introduced, nobody needs apologize for any sort of "what goes around comes around" tactics directed at supply management now.

If personal insults and venomous attacks were acceptable to supply management advocates when it suited their purpose 40 years ago, they have little call to complain if and/or when their own tactics get used against them - or to look at it in another way, if it took "bullying" by Whelan to get supply management established, "bullying" is a perfectly-acceptable method to get rid of it now.

As usual, and as always, my views may or may not reflect the views of any organization with which I am affiliated.

Stephen Thompson, Clinton ON

just wondering if Stephen and others are still promoting cross border shopping to get their cheaper American dairy/eggs and chicken?

stan holmes

All I need to do to thwart the bullying of supply management is go to a nearby township to get my eggs (local AND fresh) from any one of a number of Amish farmers and intend to do so tonight when I'll be in that area anyways.

And, interestingly enough, when supply management for eggs was first "bullied" into existence in Ontario by former Ag Minister, Bill Stewart, without any vote or public participation process whatsoever, the exemption for non-quota operations was 500 hens but as I understand it, that was "bullied" down to 100 hens because the plethora of 500 hen flocks was (rather-easily) making a laughingstock out of supply management's cost-of production "Holy Grail".

So, when it comes to "bullying" , that's what supply management is all about:

(A) supply management's "God-fathers", Eugene Whelan and William Stewart bullied it into existence,
(B) the very purpose of supply management is to bully consumers at their end of the marketing channel by artificially increasing the farm gate price at the other end of the channel.
(C) supply management abuses its legally-sanctioned market power to be financial bullies in the farm community
(D) supply management bullied Chobani right out of the country and effectively bullied Organic Meadows into bankruptcy by denying Organic Meadows the ability to control their marketing channel.

And while supply management supporters snigger about a sub-80 cent dollar's effect on cross-border shopping by Canadian consumers, the dollar's present status makes it even more imperative that we sign TPP and thereby rid ourselves of the scourge of protectionism at a time when supply managed farmers can best make the adjustment to reality.

Of course, my views may or may not reflect the views of any organization with which I may be affiliated.

Stephen Thompson, Clinton ON

many families that had 600 or 700 hens where told than they could 500 hens forever. Yet when the person with 500 hens died and the grandson wanted continue to have 500 hens the grandson was told No.

I looked after my mothers hens for 20 years after she moved to town 3 years ago when she died I was told we could no longer keep the hens anymore.

It likely falls into the Grandfather clause that was used rather loosely . It is not how ever a Grand-the-family or forever clause .

I don't recall hearing about supply management proponents engaging in name calling or abusive behaviour when supply management was created. Even today most would avoid a website like this just to avoid the abusive environment.
Bill Stewart was no bully. And he certainly had no influence on other provinces like Quebec.

Eugene Whelan was probably the worst bully Canada ever had as an Ag Minister. He very-much did launch scurrilous and very-public ad-hominem attacks on anyone, particularly economists, who disagreed with his pro-supply management policies. His public bullying of Beryl Plumptre when, as Chair of the Food Prices Review Board, she criticized supply management, remains to this day as one of the most despicable and detestable things ever done by an Ag Minister. The environment created and enhanced by Whelan's abusive and bullying behaviour makes anything today look like a Sunday School picnic.

William A Stewart was no better and, if anything, was probably an even-worse bully, but he did it privately - for example, at one point in the early 1970s he threatened to cut off funding to the University of Guelph in an attempt to punish two faculty members who had produced a scathing indictment (The Huff-Perkins Report) of the tobacco marketing board. Although Huff and Perkins (two of my Undergraduate Professors) did spend the rest of their careers at Ag Canada, their analysis was eventually proven to be deadly accurate, and then some. The undeniable fact of the matter is that Stewart bullied them out of their jobs because they disagreed with him, period.

The ultimate abuse of power on Stewart's part came when he, at the stroke of a pen, created the Ontario Egg Producers Marketing Board, thereby riding rough-shod over everyone except those lucky enough to have had hens on their farm that day.

Therefore, when anonymous supply management supporters on this site complain about anti-supply management "bullies", they conveniently forget the role bullying played in creating (and in Stewart's case, not allowing criticism of) supply management as well as conveniently forgetting the role that the bullying of consumers, processors and non-supply managed farmers has in maintaining supply management, they are, of course, trying to have it both ways.

However, anonymity, as practised on this site, remains the ultimate form of bullying because all sorts of inaccurate claims can be, and are made without ever having to offer even as much as one scintilla of proof.

My views may or may not be the views of any organization with which I am affiliated.

Stephen Thompson, Clinton ON

So what would you call present day politicians if so many who have passed on are now bullies ?

Any comments are my own , of my own free will and thinking !

I doubt very much anything will happen to the present system in Canada, we just aren't capable of change in this country.

I hope that change come to allow everyone to have 1,000 hens or 3,000 chickens with NO quota

The ability to raise 1000 hens or 3000 hens with "NO quota" is irrelevant.
I hate to be the bear of negativity here, as there is plenty to go around with all the anonymous posters on this site, but for anyone to get themselves all worked up over this news is nonsense.
This is pure Kremlin-style, orderly marketing supply management still with a few minor tweaks, and I don't see any benefit to the consumer.

Raube Beuerman

I was contacted this afternoon, by the CEO of the Chicken farmers of Ontario, to inform me that CFO has decided to raise the number of broilers one farmer can market to 3,000 annually under their new non quota program.

On a 2nd note ironically I called a small flock quota holder today but he was on the phone making a deal to sell his 1,000 units of quota, as he wasn't interested in continuing on in the ridged unworkable supply managed system for a small flock quota holder. He said 10 years ago he purchased the quota for $23,000 and sold it today for $119,000 that is an amazing return on your invest for just owning the right to produce some thing lol.

Sean McGivern

My sincere thanks to CFC, CFO, OFPMC, OMAFRA, Small Flockers, Local Fooders, Affordable Fooders, and all other for helping make this improvement happen, or allowing it to happen.

While SFPFC has been lobbying for more than 2.5 years to move our quota exemption from 300 to 2,000 birds per year, Practical Farmers of Ontario, Sustain Ontario, and many others have been active on this issue for far longer. My thanks to all.

There is a "but", and its a big one. This Artisanal Chicken won't be for everybody due to the significant increase in bureaucracy, on-farm inspections, overhead costs, and mandatory documentation. For example, Artisanal Chicken farmers will face the "interesting" requirements of CFO's fine print including:

1. On-Farm Food Safety Assurance Program ("OFFSAP") compliance (including HACCP, risk management, and biosecurity);

2. On-farm audits, both planned and surprise;

3. Animal Care Program compliance;

4. Farm Worker Safety Program compliance;

5. CFO's Infectious Poultry Disease Isolation Policy compliance;

6. CFO's Digital Communication and Transactions Regulation compliance

7. Licence Fees, Levies, Service Charges and Penalties Regulation compliance

8. Artisanal chicken farmers will be active partners in growing the Artisanal Chicken Business Community by funding community development and program related costs [SFPFC: more overhead costs]

9. Produce birds with a reference weight of 2.225 kilogram live weight [SFPFC: it is unclear what happens if our Artisanal customers want different weights of birds than CFO's "reference weight"]

10. CFO may take similar action against every other artisanal chicken business community partner(s)who has been a party with an artisanal chicken farmer to any growing and marketing of artisanal chicken contrary to this Policy [SFPFC: guilt by association, how far will the witch hunt go?]

Fortunately, for those who see this as a "bridge too far", the small flock exemption of 300 birds will continue under the new name "Family Food".

Now, we have a choice, and an opportunity to grow.

Glenn Black, President
Small Flock Poultry Farmers of Canada

Had to look up the definition of artisanal I was afraid the chickens would have to be able to draw but just as long as the farmer can show some artistic bent with his chicken then your away to the races

china hurt new Zealand dairy farmers. Canada needs a floor price on milk

In response to "Milk Prices" http://betterfarming.com/comment/16609#comment-16609

I agree that New Zealand, especially Fonterra, has recently been hurt by the slowing or loss of market for NZ dairy products.

About 95% of NZ's dairy products get exported. The tail wags the dog at this elevated level of export market shares.

With only 5% attention span of Fonterra for domestic markets, I suspect some NZ'ers feel the export markets get the best service, quality, and quantity, while the citizens of NZ get what's left over.

When Fonterra was formed in Oct. 2001, they processed 96% of NZ's milk supply. Fonterrra only had two competitors, Westland Milk Products on the West Coast and Tatua Cooperative Dairy Company in Morrinsville, Waikato.

From 1990, NZ dairy exports have grown from NZ$2.1 Billion to NZ$15.5 Billion in 2014. That's an average growth rate of 8.8% per year, doubling and re-doubling in size every 8 years.

In the same time period, Canadian dairy exports went from CDN$196.5 Million to CDN$281 Million. That's an average growth rate of 1.5% per year, doubling and re-doubling in size every 47 years.

Note that Canada and its SM system had just 17% of the growth that NZ's dairy farmers enjoyed. That's quite a difference! The other 83% of the potentially available growth that Canada could have had was pissed into the wind by SM's dysfunctional thinking and actions.

The number of Canadian dairy farms has dropped from 25,825 in 1993, to 12,430 in 2011; a 4% per year average drop, halfing and re-halfing every 18 years.

In 2014, there is only 11,962 dairy farms left in Canada, another 1.3% drop from 2011. Like the passenger pigeon decimation in the early 1900's, the death rate declines as it gets closer to extinction. This isn't good news, it's just how extinctions tend to occur.

Remind me again why Canada's SM farmers prefer to be fat, dumb, and happy with just their conquered Canadian market?

Let's do a mind experiment.

Assume that there was a perfectly accurate crystal ball where both NZ and Canadian dairy farmers could see the two paths before them in 2001 (ie. the path taken by Canadian dairy farmers under SM, or New Zealand de-regulated dairy path). Would Canadian dairy farmers have chosen the path they are currently on? Would NZ dairy farmers have second thoughts about the path they chose in 2001? What do you think would have happened if each nation had put it to a secret ballot vote by their dairy farmers?

Instead of dairy farmers voting, let's get the MP's to do a free will, non-whipped vote, decided on the basis of the greater good of all citizens, rather than the special interests of the dairy farmers? What would have been Parliament's vote outcome in 2001?

Again, rather than MP's voting, let's do a training course for all citizens so they can make an informed choice, then do a national plebiscite. What would have been the outcome of that vote in 2001 about the future path of the nation's dairy industry?

All of NZ dairies grew tremendously since the NZ de-regulation in 2001, but Fonterra's competitors have grown faster than Fonterra. Small and nimble beats huge lumbering monsters every time. Let this be a lesson for SM chicken farmers if Small Flockers were allowed to compete head to head against the big, bad, CAFO monsters.

Since 2001, Fonterra has steadily lost market share. That is why Fonterra only has 87% market share today. Today, Fonterra has 6 competitors; Westland, Tatua, Synlait, Open Country, Awarua, and Miraka. The Russian-controlled company, NZ Dairies Ltd, started in 2007, but eventually went bankrupt, and the factory was purchased by Fonterra in 2012.

The extremely high profits of Fonterra after de-regulation attracted others who were also interested in high profits from exporting dairy products to the world.

Not just the domestic customers worry about Fonterra. The foreign customers of NZ dairy have become more and more worried about their fragile dependence upon NZ's ongoing supply of their dairy needs.

Oceania Dairy Ltd, and Yashili, are two new Chinese owned startups that will soon be operational in NZ. Yashill will produce infant formula for the Chinese market (does this sound familiar to an aborted attempt near Toronto ON that was never able to get a sufficient guarantee of milk supply from DFO?). With ownership & control by China, they hope to focus their NZ dairy exports to China through good times and bad, reducing China's risk that they'd be cut off when their need is the greatest.

The primary export markets for NZ dairies export are to China, USA, Japan, the European Union, Malaysia, Australia, Philippines, Taiwan, Singapore, Belgium, Venezuela and Saudi Arabia.

Generally, whenever a customer controls more than 33% of your business, you put yourself at great risk during a turndown. It appears Fonterra got greedy. Any business that has more than 55% (some experts say no more than 80%) share in any market or distribution channel places themselves at great risk as business goes through various cycles.

By limiting your market share to just the best customer or the most profitable, and allowing competitors to co-exist, you gain the ability to capture some of this marginal business when a downturn occurs; keeping you alive. Canada's SM and NZ's Fonterra forgot, ignored, or failed to learn this lesson.

Whether by TPP or otherwise, Canada's Supply Management systems will soon be tried, found guilty, and executed. Its treasonous body will be drawn, quartered, and the various bloody parts will be put on display throughout Canada as a lesson to those who might consider following in SM's footsteps.

After this gruesome task is complete, hopefully Canada and its mandarins will learn from the lessons available in NZ and the former tyranny during the reign of SM, to construct a more perfect system that will better serve the Canadian people.

Glenn Black, President
Small Flock Poultry Farmers of Canada

The DFC are well aware, from online information provided about the TPP, that in order for Canada to participate in this behemoth of a trade deal that there would have to be changes or elimination to supply management.
For them to "pass a resolution" in demanding that the government make no changes to SM as it currently stands, is the mindset that 'we matter', but no one else in Canada does.
Shame on you DFC.

Raube Beuerman

Does it really matter what resolution or policy DFC passes or sets as policy when their life line is a string that Gov can cut when ever it wants to ? You are giving too much credit where it is not due . Of course they are going to make it LOOK like they are standing up for their members but in the end will they even have a hope .
The only farm representation of late that has stood up and done what it's members have asked for is Grain Farmers of Ontario .

If there are significant changes to SM you can be sure that, like the GFO taking the Ontario government to court, SM groups will want to take the federal government to court.
Regardless, the end result will be the same.

Raube Beuerman

While I support a certain free trade autonomy i somehow find it a bit unfathomable that an insignificant country like New Zealand that is thousands of miles away across a vast ocean could determine how the second largest country in the world should manage its industries. My question is "Just how big is the lobbying industry in new Zealand that it is able to influence the trade negotiations of a bunch of countries one of which is the just about largest storehouse of resources in the world?"

Why would a big industry like dairy and feather worry about competition from new Zealand I think is a better question

In response to "Dairy Farmers" http://betterfarming.com/comment/16593#comment-16593

It isn't just NZ dairy farmers. Just about all of the participants in the TPP talks require significant change in all of Canadian Supply Management sectors if Canada was to be permitted to join the talks.

Previously, Canada was unwilling to discuss SM changes (Canada's way or the highway). The rest of the world was OK with Canada sitting on the sidelines.

Canada decided to "observe", but not negotiate at TPP. Canada was permitted to do that.

Finally Canada requested to join the TPP negotiations at the 11th hour, and was allowed to do so provided Canada put its SM systems on the table as subject to negotiations (ie. acceptance of Canada's SM systems as a pre-condition was tossed out).

NZ eliminated its SM systems for dairy, chicken, & eggs decades ago. Today, NZ is the #1 exporter for dairy to the world. NZ is also the #1 for chicken yield (eg. Feed Conversion RAtios, 25% better than Canada's fat, dumb, & happy FCR's).

During SM's 50 year reign, Canada's chicken FCR has fallen from one of the best in the world to mediocre.

Glenn Black
Small Flock Poultry Farmers of Canada

The New Zealand Milk Marketing Board was formed in 1923, it was rebranded as Fonterra in 2001 and has a 90 per cent monopoly. It is still a marketing board. Farmers have to hold one share of Fonterra stock for every kilogram of milk they produce. Can you say quota? Ironically, tariff-driven returns from preferred country access TRQs provide high dividends that subsidize their domestic farm milk prices. Clever at PR too.

In response to "A Little History" http://betterfarming.com/comment/16604#comment-16604

I have read that New Zealand's Fonterra is a Co-op, slowly created by many mergers & acquistions of independent farms and other weaker Co-op until only Fonterra is left standing. The New Zealand government had wanted more market diversity & competitiveness, but the farmers & Co-ops that are now extinct were very laid back, set in their ways, and unwilling to change with the times.

Sound familiar?

I know very little about Canada's dairy industry, but it sure sounds like Supply Management, and similar to Canada's chicken industry.

The only clarification of your posting I'd like to make is the remaining 10% of New Zealand dairy that is outside of Fonterra.

Unlike Canada's death grip on dairy, small independents are allowed to exist.

In chicken, Chicken Farmers of Ontario enjoy 99.97% market share. Small Flockers are limited by abusive and tyrannical regulations to just 0.03% market share.

There are more than 16,000 small flock chicken farmers in Ontario who share that 0.03% market share, so on average a Small Flocker has 18 billionths of the Ontario market.

For the 1,138 CFO members sharing 99.97% of the chicken market, each SM chicken farmers enjoys 46,852 times greater market share than a Small Flocker.

Therefore just 6.6% of Ontario's chicken farmers have taken 46,852 times more market share for themselves, leaving the majority of chicken farmers to suffer under their regulatory capture and oppressive regulations.

That is why I call it Chicken Apartheid, where the minority rule the majority.

Under New Zealand regulations, everybody is required to meet the same regulatory requirements (eg. animal welfare, health & safety, environmental, etc.). It's a level playing field.

Not so in Canada. Here, a special interest group of 1,138 chicken farmers rule the roost, dictators and oppressors to the 16,000 Small Flockers and the 35 million citizens of Canada.

Glenn Black, President
Small Flock Poultry Farmers of Canada

Once again you complain about Canadian feed conversion when you darn well its better then most countries in poultry we just polish the higher rate to up the cost of production why do u think our breeding stock is in such high demand we can play around with genetics no matter what the world economy is doing

In response to "Once Again You Complain About" http://betterfarming.com/comment/16601#comment-16601

I agree it's difficult to decide whether there is:

1) Negligence &/or incompetence in the CAFO commercial chicken operations, as evidenced by a poor FCR; 25% worse than FCR world leaders.

2) Scamming of the SM system (and the public who is forced to pay elevated chicken prices) caused by fraudulent FCR's that are manipulated higher than what really exist, thereby inflating the farm gate price of chicken. CFO unjustly reaped about $1 Billion per year for about 10 years (totaling about $10 Billion in unfair profits) for their members by charging higher farm gate prices by posing with a FCR of 2.0 when it was really 1.72 (see http://canadiansmallflockers.blogspot.ca/2013/03/inflated-fcr-steals-945... )

Tegal Poultry, the biggest chicken producer in New Zealand, had a Feed Conversion Ratio of 1.38 or better, as of Sept. 2012, as reported on Watt Ag Net (see http://www.wattagnet.com/154106.html ).

As I understand it, the Ontario Farm Product Marketing Commission ("OFPMC") passed O.Reg. 402 to change the Ontario FCR from 2.0 to 1.72 as of June 2015, making the regulation and its farm gate price adjustment extremely complex.

On Sept. 2014, OFPMC announced: "Regulation 402 is now being amended so that the minimum price for chickens will be based on a cost of production that was determined both by surveying producer costs in additional to using a model farm for elements not covered in the survey. The intent of the cost of production formula is to establish a price that gives efficient producers a fair return over time. Feed and chick components will be updated each quota period with the remaining elements updated annually based on publicly available indices." (see http://www.ontariocanada.com/registry/view.do?postingId=16503 ).

Farms.com stated: "CFO had provided a without-prejudice feed price accommodation of 1.5 cent reduction to the live price in A-111 in response to concerns over the feed price component of the live price raised by the Association of Ontario Chicken Processors (AOCP). This accommodation will now be eliminated effective A-120." (see http://www.farms.com/news/implications-of-regulation-402-amendments-6620... )

I note that CFO has "sanitized" their website, removing any incriminating evidence of their wrongful past.

Most recently, OFPMC was induced to again adjust O.Reg. 402. The FCR adjusts the farm gate minimum price by convoluted magic, defined in Section (18).(5.3).(5) (see http://www.ontario.ca/laws/regulation/900402 ).

Glenn Black
Small Flock Poultry Farmers of Canada

Have you checked into what the similarities and the differences are between the feed that is used in the two different countries ? What is actually being fed to the animals ? What additives and medication is being used ? There are many things like blood meal and other things that may be used in one place and not allowed to be used in others because of a countries feed regulations .

In response to "Feed Conversion Rate" http://betterfarming.com/comment/16608#comment-16608

The link to AgWattNet on Tegal Poultry discusses the long, slow optimization process that FCR improvements require. It's a mixture of genetics, feed, animal welfare features, and other factors.

I assume that Tegal has used statistical experiments to reduce variation, and lower the mean of FCR (eg. DOE, Taguchi, Kaizen, FMEA, HACCP, SPC, Lean Thinking, hybridization, etc.).

Does CFC, CFO, or anybody else in Canada's chicken industry consistently and correctly use any of these techniques? If yes, declare it here, and provide the world objective evidence that convinces all of us of the application, and the results achieved.

It is my guess that this posting may be the first time they have ever heard of these techniques (or maybe they learned about them by reading SFPFC's Blog). Most if not all will have to Google them to learn what they mean.

If that assumption of mine is correct, that is prima facie evidence that my charge of "fat, dumb, & happy" applies to Canada's chicken industry under Supply Management.

I searched for info on Tegal's feeds, but was never able to find anything. I assume it's proprietary, and a closely guarded secret, like the secret formula for Coca-Cola. If anybody knows something, I'd appreciate learning about it too.

Glenn Black, President
Small Flock Poultry Farmers of Canada

The Canadian poultry industry never mentions their elephant in the room: the simple fact that there is practically no poultry industry in the US north of roughly the Mason-Dixon Line due to the overwhelming impact the need to heat barns has on COP issues. The Canadian industry can never compete just based on the cost of energy.

In response to "The Canadian Poultry Industry" http://betterfarming.com/comment/16614#comment-16614

Energy usage in huge CAFO barns can be a significant cost, and is higher in the cold winter regions, and is the reasons for the huge growth of broiler farming in the US SouthEast and Southwest.

However Delmarva Peninsula USA was the biggest and first broiler production region.

Delmarva Peninsula (Delaware and portions of Maryland and Virginia, around Chesapeake Bay) is where 7% of the US chicken is produced, 600 million chickens raised per year. That is 7% of the entire country’s production on less than 0.5 percent
of its landmass, the highest geographical chicken density in the US.

New Zealand ("NZ") is a huge broiler chicken producer. For the year ending June 2006, the New Zealand poultry industry produced just under 150,000 tonnes of chicken meat, produced from 85.8 million meat chicken birds.

NZ latitude is from 34.5 °S (similar to Greenville SC USA) to 46.6°S (similar to Sudbury in Northern Ontario), median latitude of 40.55°S (latitude is approx. Marion OH USA, South of Windsor ON and North of Columbus OH USA. That is "North of Mason-Dixon Line" equivalent in the Southern Hemisphere.

Chicken feed costs however, are the #1 cost factor for raising broiler chickens, about 60% of the total cost of raising broiler chickens. That is why the cost of feed, and the Feed Conversion Ratio ("FCR") are the two most important factors that affect the Cost Of Production ("COP").

Glenn Black, President
Small Flock Poultry Farmers of Canada

Little bits of shallow info off the web combined with too much free time seem to produce a huge volume of comments of little value.
When exalting chicken production in the southern US, remember - they don't have chicken farmers, they have contract growers - not a model anyone would recommend. Google contract chicken growing and you will likely be shocked.

What is the percentage of big quota owners with hired help doing the chores (contract farmer equivalent ) to real small family owned farms cfo should publish that if they are so proud of it I propuse that sm farmers income should be published just like civil servants if they break the 100000

Agree totally .
Also many assumptions with no facts is a huge mistake .

In response to "Agreed" http://betterfarming.com/comment/16619#comment-16619

I also agree that verifiable, objective, unbiased evidence that is convincing to all or most people can be elevated to the status of "fact".

I also agree that a "fact" is far better than an assumption.

It is a fine day that all of us can agree on these worthy principles.

There is also a concept of "prima facie" evidence, that isn't yet a fact, but strong enough to encourage us all to seek additional evidence, make further inquiries, and demand explanations so as to determine what is truly going on.

Unlike you, I sign all of my postings. Everybody knows who I am, and can surmise the reasons and motivations behind my comments.

I think I have presented here and elsewhere numerous links to the evidence that I have summarized in my comments & postings. I usually rely on evidence collected from recognized industry experts, professional news reports, first hand accounts, government statistics, and official reports from the agencies involved. Most of what I post is based on over 3 years of research and many hours of analysis. These are no bald assertions, nor personal opinions unsupported by significant evidence. Where I interpret meager facts, or have suspicions, or have opinions unsupported by evidence, I state that clearly.

BF does not always allow all the links I have provided, often removing some links before my comments are published.

On SFPFC's Blog, the full story, with links to the original source, pictures, and graphs are usually provided so everybody can see for themselves, then verify what I have written, and comment as they please with no censorship.

In spite of all this, you seem to throw snide remarks in my direction.

If you have some specific evidence that contradicts what I have posted, share that information here and now.

If you wish to cast general, unsubstantiated, and unclear dispersions against me, your anonymous motives are questionable, and tip your hand as to your true identity and biases.

Glenn Black, President
Small Flock Poultry Farmers of Canada

In response to "Information is Not Knowledge" http://betterfarming.com/comment/16616#comment-16616

I am aware of the sorry state of the contract grower of chickens in the USA, and the powerful integrators such as Tyson, Pilgrim, ConAgra, and others.

A summary of some of the problems (there are many more) in the US chicken farming business are summarized here: http://www.populist.com/2.96.Chicken.html

I think if you read my previous postings and/or SFPFC's Blog, you will see that I do not hold out the US system as any ideal system whatsoever. I certainly don't recommend the US system as an alternative to Canada's Supply Management system.

In the US, the consumer gets inexpensive but low quality chicken, the farmers get screwed over, and the integrators always win.

In Canada, the consumer gets expensive and low quality chicken. The chicken farmers, feed mills, processors, and further processors always win BIG. The small flock, non-quota farmers get screwed over.

Different systems, different victims, same corruption.

Glenn Black, President
Small Flock Poultry Farmers of Canada

encourage you to click on www.

E Paul Toews ST MARYS,ONT.

Editor: Dead link

Add new comment

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
To prevent automated spam submissions leave this field empty.
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.
Image CAPTCHA
Enter the characters shown in the image.
We welcome thoughtful comments and ideas. Comments must be on topic. Cheap shots, unsubstantiated allegations, anonymous attacks or negativity directed against people and organizations will not be published. Comments are modified or deleted at the discretion of the editors. If you wish to be identified by name, which will give your opinion far more weight and provide a far greater chance of being published, leave a telephone number so that identity can be confirmed. The number will not be published.

© AgMedia Inc. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.