Egg farmers' quota exchange won't include transfers within families

Thursday, June 13, 2013

by SUSAN MANN

When Egg Farmers of Ontario sets up its electronic quota market transfer system next year, it will likely be a “truncated auction,” says public affairs director Bill Mitchell.

The auction will apply to quota sales that are currently done privately. Transfers or quota moved to update barns under the same ownership will be exempt.

Farmers have been increasingly concerned the lack of opportunity and lack of information about the sales is making it more difficult to buy quota without having to go through egg and pullet service industry representatives, Egg Farmers says in a press release.

Mitchell says the service industry representatives are sometimes feed sales people. The concern with the current system is a lack of transparency and openness. Everybody doesn’t have access to the opportunity to buy the quota because the industry representative may only tell four or five people it’s available, he notes.

Private sales for 2011 and 2012 averaged about 170,000 units annually, or about two per cent of the provincial quota, Mitchell says. Family transfers and quota moved to update barns can vary widely each year but would typically be about two to four cent of total provincial quota.

Farmers have been talking about the need for a quota market transfer system for the past two years and their goals are to have a system that’s transparent and provides them with access to quota, he says.

Without a central quota exchange that has a published price, Mitchell says it’s hard to determine what egg quota is worth. The board sometimes hears what’s reported from private sales and Mitchell says they’ve been told recently quota is selling for about $300 per unit. A unit equals one bird.

Unlike a traditional auction where the highest bidders are guaranteed a purchase, in the truncated action the successful bids are the ones that are closest to matching the clearing price for the volume offered to the volume wanted, Mitchell says. “It doesn’t create a natural incentive to bid the price up.”

The traditional auction is one form of an exchange “but that creates a natural bias for bidding up values,” he explains.

Mitchell says details of the quota market transfer system still have to be worked out, but Egg Farmers will likely have a third party run it. The transfer system would be run on-line and there will be provisions for those who don’t have Internet access. It will be up and running early next year.

To prepare for the change, Egg Farmers has put a moratorium on egg and pullet quota sales tranactions. But Mitchell says most transactions are within family transfers and those aren’t affected by the moratorium.

Ontario has a total of 8.4 million units of layer quota, he says. There are eight million laying hens in Ontario and 440 egg and pullet farmers. BF