by SUSAN MANN
Fifty people have applied so far to a new program offered by Egg Farmers of Ontario to help get people into the egg industry.
As part of the New Entrant Egg Quota Loan Pool up to 5,000 units of quota will be available every year. That amount could go to one person or be split among a few people. The quota is loaned for 10 years and then it must be repaid in yearly installments over a five-year period. The program was unveiled at Egg Farmers annual meeting last week.
Harry Pelissero, Egg Farmers general manager, says the board introduced the program because it’s an opportunity “to help new individuals who are interested in the egg business.”
To get access to the 5,000 units of loaned quota, a person has to buy 2,500 units of quota on the open market, Pelissero explains. People buying and selling quota run adds in the egg board newsletter or they can sometimes buy it as part of an ongoing farming operation that’s being sold. For those applying for less than 5,000 units of loaned quota, they must buy one unit of quota for every two units of loaned quota they receive.
Quota for egg production costs $200 to $225 per bird. For someone getting access to the full 5,000 units of loaned quota, they’d have to make an investment of $500,000 for quota, Pelissero says. The program participant doesn’t own the loaned quota.
If a successful applicant gets 5,000 units of quota, it’s repaid at a rate of 1,000 units every year starting in the eleventh year. For those getting less than the 5,000 units, they must repay 20 per cent of whatever amount they borrowed every year starting in the eleventh year until their entire borrowed amount is repaid.
To loan the quota out initially before any has been repaid, the egg board set aside 50,000 units from the last allocation issued by the national organization. The pool is self-perpetuating because once the quota is repaid it gets loaned out again, Pelissero says.
The program is open to anyone except for current or former quota holders in supply-managed industries. To apply, people must complete a one-page application form and pay a non-refundable $100 fee. It’s recommended applicants submit a business plan with their package.
A selection committee recommends the successful applicants while the egg board approves the people who get the quota loans. They must be in production within 18 months of being selected. Applications are due by the end of May, while the successful ones will be picked by September or October, he says.
Currently there are 400 egg and pullet quota holders in Ontario. BF
Comments
This is all well and good, but wait until year 11 when the farmer is on the back half of his/her 20 year loans to buy the farm, meaning he/she is now probably paying more principal than interest and getting relatively little in the way of a tax shield. Then add the after-tax cash flow burden of repaying quota loans, and the setting of a cash flow nightmare leaps onto the front burner.
A few years ago, I tried to do a business plan for a client trying to get into the new-entrant dairy business, and the whole thing turned on the rather-impossible cash flow nightmare beginning the year the loaned quota was supposed to start to be repaid.
However, the even-bigger nightmare, and the one issue which is still being studiously ignored, is the rather-brave assumption that quota will even exist in year 11, and if it doesn't, today's aspiring farmer will be stranded with debt to pay, and neither assets, nor income, to do it with.
This type of egg-laying Ponzi scheme makes Pigeon King start to look good by comparison.
Stephen Thompson, Clinton ON
We as young farmers should not jump up and down with excitement to join these entrant programs. I had my accountant go over the numbers on the dairy and it was great if I wanted to get up milk, then go to work so I could subsidize the farm. All these programs, are just a retirement plan for boomer farmers to ensure someone is there to buy quota. Lets not forget a lot of this quota was given out for free when it was created. If we as young farmers want to get into these areas of agriculture this is not the way. What we should do is not apply and force some changes. I don't know anyone who can afford to work 10 to 20 years for the bank. The Young Farmer.
I will agree with you that things with SM need to change . No way can any one start with out being bank rolled by dad or an offshore investor . Why does some one who has things paid for need to make an over abundance of dollars that really just makes it harder for the next generation . As time goes on those who have been in the system should be scaled back on what they get . More should go to the younger generation trying to start .
I will disagree with you on your thinking or attitude when it come to working for the bank for 10 or 20 years . What in hell do you want A Gift !! ?? Get with the times and realize that Santa died many years ago . This is one of the biggest problems with young people today . They think they are intitled to a free ride . Many farmers have paid for 30 years on mortages . Young people need to get their head out of the sand and realize what it took for thier parents to get to where they are today .
You can keep whinning about not being able to start farming but no one is listening with good reason .
I agree that there are too many of today's youth think they should have a handout and not a hand up , and I don,t think it has changed much over the years. When I started farming kids that figured they should have the farm handed to them and their parents should take a back seat. I saw farms that were handed and lost and places where they paid for it and they work like heck to survive and they do and do great. I like some of the talk where they should get a break so they can get into farming and I agree but not have every thing handed over to them.
Young Farmers best realize that any gift they are going to get will come from their parents . Not Gov. . Some might say tough love but there are so many problems with spending that cuts that bleed are they only way .
I will also say that any farmer who is over extending them self will need not expect me to listen and back their cause for gov. help either .
This scheme forces farmers to go big in order to make enough money to pay back the loan. New entry systems should encourage more humane and sustainable farming!
I'm selling my eggs either way! Nobody wants store bought when they can get farm fresh direct. This system is so wrong that it stops me from having a good living on a family farm.
I bet you claim the income on your income taxes don't you . Same as you claim every expense you can .
Buy Local is a farce . Gov knows it but is waiting till it grows some more then they will get every cheater . It was all a vote for me election ploy because children can sing the good things grow jingle .
O indeed, its Rather funny how the baby boomer generation of farmers many of which where given their family farms for free or at a fraction of the true market value, think its not proper to do the same for the next generation, these are likely the same people who think they are wholly entitled to all of the free quota that is handed out each year by the marketing boards to their members. I find it so funny trying to follow the logic of a generation who have had more subsidies then any other farming generation in history, but still have little or not interest in helping build the next generation of young farmers. When i go to farm meeting all over Ontario, i hear middle aged to senior white as snow men talking about how hard done by they are, really if farming sucks that bad then sell out, because at much more exciting meeting i go to i hear older alternative and young farmers talking about all the opportunities that they see and want to build and be a part of, but most older farmers only want to talk like a broken record of how hard and how horrible farming is yet they continue to do and they continue to advocate for more government hand outs, shame on you... But i also know a lot of older farmers who love farming and live with in their means and are happy being a farmer and living a great lifestyle and they are the older farmers who take the time to talk to younger people and share their knowledge rather then their anger of how hard done by they are, If people are always negative they will never get out of that rut, because they have made them self's into a victim. Why be a door mat when you can be a door prize, I think every older farmer should at some time take a little time and share their history and happiness of farming with the next generation, you will be surprised how much younger farmers will be thank full for you time and your interest.
Sean McGivern
PFO
I for one did not have the farm handed over and did not buy it at a fraction of the market value. It took over 25 years of mortgage and lots of high interest to pay off my first and second mortgage off . Like I said before the ones that have to pay are more likely to keep the farm than the ones that has it handed for free. Its not anger that I write for its the fact that people like you that blames the older farmers and not society as a whole that keeps land and every other things keep on going up in price. I for one thinks it great when a farm is sold to a young guy or girl or even older person or persons so they can get started in farming and not to some big farmer that walks around like he,s the king and thinks they should own everything. People that write racist remarks about being white must have a big problem or writing about being a middle age or older farmer that is classified as discrimination period. Where should the middle and older farmer should be in your opinion in the retirement home? How many of the farmers out there go to the meetings that you go to are older than you, I was to busy to spend my time going to meetings had bills to pay. So the next time you have time to write you should take the time to look around and think before you write.
I am always amazed by how many farmers are just far to busy to have time to go to meetings, to either re-skill them selfs or learn new ideas or be a part of trying to find solutions that can lead to positive change. I can not believe that there is any one individual farmer out there that is so busy that they do not have time to stop and think about what they are doing, because when a farmer does not make time to network and educate then self's, they will for sure be the farmer begging for government subsidies. Just today i helped to host an event for farmers in my area, and guess what it was only attended by farmers under 45, they were the only one's who had time to come to a meeting and hear a speaker talk about commodity marketing. Far to often, farmers like to consider, cutting fire wood, blowing their snow and cutting their grass, as farming and it's not, All those people who work a 40 hour week in town all have to do those same things to do. More and more when i talk to younger farmers who are farming full time and on a scale that is viable, which seems to be 1,000 plus acres, they all love what they do and do not see them self's as victims, but rather think they have the cat by the tail, flexible lifestyle, no boss breathing down their neck and they all love that they have the opportunity to be able to farm.
farming is changing and their seems to only be 3 types of farmers who can survive, those who have quota, those who have a specialty product or farm model and those who have an economy of scale, the days of the mid size farm are numbered, smaller conventional farmers can not compete with larger farms that are well managed and well positioned, unless they adapt to postive change. Modern technolgy has simply allowed farmers to farm a lot of ground with very little physcial labor, regardless if it is the best thing for rural society or not, its happening and we can not change progress, but we each as indivduals can make a choice to either embrace it or find a way to take a different approach by finding smaller scale well paying opportunities that work for you and your farm farm .
knowledge is power, and if your going to be serious about making a living from farming you need to continue to seek for new knowledge that will create positive opportunities for your farm operation.
Sean McGivern
I have time to get my education on the internet . So you sit and wonder why no middle or older farmer show up at your meeting ? I guess they might be afraid of being bash at showing up where the head is all for squashing them for the young farmers or want-a-be. I can learn more from my internet than at a meeting that doesn,t want anything to do with you. How many city dwellers cut wood ,blow snow and cut grass, guess they have lots of tree to cut in their woods and there is no landscape businesses in this country. Come on you got to do better than that , there is still farmers out there that cannot afford all the big machines to do the work and have to do manual labor. If there is young farmers out there has more than 1000 acres bet your booties that they had a hand getting it. Last few meetings I went too all there was , was hot air and nothing worth while listening to. If you farm you still have rules and laws you have to farm by so you are not free to do whatever unless you like the law on you.
I would like to suggest that maybe there was good reason for no older persons attending like the fact that they were too busy with other things or the fact that YOU were involved in the meeting . As for those who you speak of who are happy farming their 1000 + acres and having the cat by the tail are not the ones who want to be married to a dairy barn 24 / 7 / 365 . They could really hold down a full time job and farm that many acres if they were smart about it . But yet they will be the first ones to cry foul when the dollars fall out of the market and times get tough .
Knowledge is Power but seriously now ..... As for technology and education and self betterment , I really wish you would use the technology of today to either improve your English language and writing skills . Since you are a want to be farm leader you should really take that time . Your grammar and spelling mistakes are hideous .
I would hazard a guess that the young persons who were there did not tell their parents what meeting they were going to .
Some times the truth is harsh .
Once again some cheap shots from a grumpy hard done by dairy farm who has to milk his cows 24-7, awe poor muffin. Same old tactics, attack the person, because your not skilled enough to debate the issues, very sad that the big issues facing farmers today can not be dated in a reasonable way. It tells a lot about a person who comes on here to take cheap shots at people when they won't even give their name, your comments have not credibility, when you can't even be man enough to state your name. When people come on here and make nameless rude comments, i just assume its some office jockey from one of the marketing boards.
Sean McGivern
i don't want to be the one to Burst your Bubble but ....young farmers are considered under 30 years for most programs. Certainly not approaching 35 with talk of many years of farming experience. Also most surveys say that a small scale farm is less than 500 acres not 1000-2200 acres.
In the past and in most cultures "older grey haired people" were considered a source of experience/common sense and knowledge not "the ones to bash!!"
These new entrant programs are complete nonsense. From a business perspective I would not recommend this to anyone. Does not matter if you are 20, 40, or 60 years of age. These are just put out there to make it look like sm is enterable. Even if you had the equity and income from other sources, why would you want to take profits from those to make this work. All the while wondering if quota will even have value or be there in the future. Sounds like alot of sleepless nights. Public relations BS in the highest form. Raube Beuerman, Dublin, ON
Amazing how some one can comment from a business perspective when he does not even own the hogs in his barn and is a custom feeder . Truth is you are no more than a hired hand with a barn . Those who own the pigs in your barn are the business people of the operation/loop you feed for . SM farmers own the livestock in their barns . When you give up the ownwership of livestock you give up a huge part of your or any farm business .
Mr. Beurerman is entirely correct about the accounting and business quackery in the new entrant programs - if you can't find anything to say about the issue he addresses, either say nothing, or identify yourself, so that we can all know who you are.
Stephen Thompson, Clinton, ON
Comment modified by editor
Isn,t it amazing that the mighty 3 when one is criticized the other 2 are ready to pounce on him or her. Why would someone sign their name you 3 would be all over him or her like birds at a feeder, pecking like crazy. Mr. B. is correct that the new entrant is a quack , its just to put on a show for everyone to think they really want new farmers in the clan. As far as accounting ,there is lots of accountants out there too that is Quackery and should not have a licence to practice. I for one don,t want yous standing on my doorstep , telling me I,m doing farming wrong and hand over my land to a young person.
The reason so many younger, non-supply managed farmers stay quiet about their abhorence of supply management, is because every supply managed farmer, and the organizations which pander to them, would be all over them like a cheap suit. We're simply standing up to the bullies in supply management on behalf of an entire generation too-intimidated to do so.
Stephen Thompson, Clinton ON
it needs many changes if it is going to last long term but Quota prices are no worst than todays land prices many farmers are carrying much higher % debt than me and i think they are very lucky interest rates are so low today for well postioned farmers many other farmers are paying 6% to 10% today for money today most youg farmer not in sm stephen webster thanks to F.C.C. changed lending madate from changes in the last 40 years stephen webster
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