More chicken quota for Ontario growers on the way

Thursday, November 20, 2014

by SUSAN MANN

Ontario’s chicken allocation for the quota period starting in February 2015 is four per cent higher than this February because of Chicken Farmers of Canada’s new allocation system.

Chicken Farmers of Canada directors set the allocation this week for the A-129 quota period (Feb. 22, 2015 to April 18, 2015) using the new system approved in principle by the board in July. Mike Dungate, Chicken Farmers of Canada, says Ontario’s allocation will be 53.5 million kilograms of eviscerated chicken for the A-129 quota period, while for the same months this year it was 51.4 million kilograms of eviscerated chicken.

Dave Janzen, Chicken Farmers chair, says “projections would indicate Ontario will definitely be getting additional kilograms of chicken” under the new agreement.

Dungate says the average allocation increase across Canada was 3.5 per cent using the new system. Chicken Farmers directors set the allocation for each eight-week quota period several weeks in advance of the period.

Janzen says “in July the board of directors agreed to this (new agreement) in principle and it has just taken this long to work out all of the implementation details.” Allocations for the A-127 (Nov. 2 to Dec. 27) and A-128 (Dec. 28 to Feb. 21, 2015) quota periods were also set using the new system.

Dungate and Janzen outlined the new agreement that includes 55 per cent of future growth being allocated based on “provincial comparative advantage factors.” The other 45 per cent of growth “is allocated on an historical, provincial share basis,” Janzen says.

The new comparative advantage factors include seven components and they’re worth different percentages ranging from five to 10 per cent. “Fifty-five per cent of all future growth will be distributed according to how a province scores against these seven comparative advantage factors,” he says. They are:

• Population growth year over year that a province experiences.
• Gross domestic product but just the return on labour numbers. When Statistics Canada releases GDP numbers, they’re split into return on capital and return on labour and this factor just considers the return on labour part.
• Consumer Price Index. This is a cost factor and it works against a province getting more of the growth allocation.
• Farm input price index that tracks provincial feed prices on a quarterly basis. Declining feed prices in a quarter that’s being measured will give a province an advantage in getting more of the growth allocation.
• Quota utilization. An internal provincial measure that tracks how well a province meets its quota allocation. It’s a measure of how well a province is managing its production.
• Further processing component. This factor takes into account the volume of chicken a province has going to make further processed products. Provinces, such as Ontario, that have a huge further processing industry need more allocation for this market.
• The relationship of production to population. This factor takes into account a province’s share of national production compared to national population.

Prior to the new system’s use, the Chicken Farmers’ production allocation for provinces was predominately set “on an historical market share basis for several years,” Janzen says.

The new agreement took six years to complete with the most intense negotiations occurring from 2012 to this year, according to a Chicken Farmers Nov. 20 news release. Challenges, starts and stops and roadblocks were “ever present, but at the end of the day have been overcome through this new agreement,” the release says.

Janzen says “the biggest roadblock was how the allocation had been set previous to this (the new agreement). There were several provinces that were absolutely not willing to move away from just allocating based on their historic share.” He declined to name the provinces.

Dungate says the new agreement “is a balance of issues,” while Janzen says “there is something in all of these factors that every province can tap into over time.”

Alberta, which had withdrawn from the national agency last year over allocation, was the first to sign the new agreement and is in the process at its provincial level of formally rejoining, the release says. BF