by JIM ALGIE
Kellogg Company’s plans to close a long-standing cereal processing plant in southwestern Ontario comes on the heels of a similar announcement in November by H. J. Heinz Co. of Pittsburgh, Pa. about tomato processing in Leamington.
It has farmers and politicians puzzling over a growing trend as major food processors pull up stakes.
“We’ve lost quite a few processors already and here’s another one,” Grain Farmers of Ontario director Leo Guilbeault said in an interview from his Essex County farm. “It’s another blow to the agriculture industry in Ontario,” Guilbeault said.
Michigan-based Kellogg has operated the London plant since 1924. The company announced today it will close London operations in late 2014 among other “supply chain infrastructure changes.”
The company maintains a smaller, newer plant in Belleville, Ont. In response to an emailed query about how the London closing will affect grain procurement in Ontario, company spokeswoman Kris Charles issued an emailed statement.
“We are still making assessments but anticipate very little impact to local growers,” Charles’s statement said.
The London shutdown ends work for more than 500 employees, many of them members of the Bakery, Tobacco, Confection and Grain Millers Union. It’s part of a previously-announced, four-year “efficiency and effectiveness program,” identified in corporate statements as “Project K.”
The closing of a snack food plant in Australia and expanded cereal and snacks production in Thailand were part of the same announcement. Company moves respond to “a compelling business need to better align our assets with market place trends and customer requirements,” Kellogg President and CEO John Bryant said in a statement.
Traditionally, Kellogg has provided a premium market for corn growers near London. Despite company claims about grain procurement, Guilbeault predicts any Kellogg premiums and procurement will follow the company’s cereal processing activity.
“Traditionally they’ve always paid a bit of a premium for the quality of the corn and because they demanded certain varieties,” Guilbeault said. “But you can only draw raw product from a certain distance because after that the trucking costs kill you,” he said.
Ontario Progressive Conservative agriculture critic and Oxford riding MPP Ernie Hardeman, whose constituents include both Kellogg suppliers and workers, described today’s announcement as “a real shock” and an important signal to the province.
“One of the biggest challenges in the agriculture and food industry is that we need to build our processing sector,” Hardeman said in an interview from Queen’s Park.
“It’s a real concern when they decide that Ontario is not the right location,” Hardeman said of Kellogg’s decision. “It’s not because we’re not producing the grain so it must be because of the environment to operate as a business in Ontario.”
London-based, agricultural marketing professor David Sparling of Western University’s Ivey School of Business cited the age of London facilities and relatively high cost labour, particularly when compared with those in Thailand where Kellogg is expanding. In an emailed comment from Ireland, where he is teaching at the moment, Sparling said the London plant was last upgraded in 1984 and needed new investment.
“We need to take a long hard look at how we stack up in Ontario and act where we can,” Sparling said.
Adjustments in government policy on water and utility costs and other incentives may help convince companies “to continue investing in making their plants globally competitive,” Sparling said. “Otherwise we will keep reading announcements like this,” he said of the Kellogg plan. BF
Update Tues. Dec. 10, 2013 9:03 p.m.
In a statement issued Tuesday night, Ontario Premier Kathleen Wynne said she was disappointed by Kellogg’s decision to close the London plant and that the provincial government will “make sure this community receives the resources they need at this challenging time and will deploy specific programs, such as the Rapid Re-employment and Training Service, as required.”
Wynne also noted there have been several recent investments in food processing in the province.
“Since 2003, companies in the food processing sector have invested more than $7.6 billion in their businesses and now provide jobs for almost 96,000 people,” she stated. “In recent times we have seen significant investments from companies like Dr Oetker and Natra in London, Royal Canin in Puslinch, and Ferrero and Aryzta in Brantford. I am confident there will be more of these types of investments in the future.” BF
Comments
And yet again we have more businesses leaving Ontario . Surely it is not because of bad or poor Liberal policy ? Could it be that hydro rates here are the biggest reason ? Union wages also will not help the cause . Did any one really drill down as to why EMC pulled up stakes ?
These companies were all located where natural gas is , Yet we have an ag rep group saying we need gas in rural Ontario which will be at a higher rate than current gas prices and to think that companies or businesses are going to set up out in rural Ontario . Any one who is going to set up shop will go where three fase hydro and the gas already is be it for a farm dryer system , a chicken barn or a business . Plus with new gas finding technology we are going to have more gas than is needed just like the current hydro situation . If you think people are gong to be willing to buy higher priced bio gas from farms when they can locate where cheaper natural gas is located you need to give your head a shake . people are in conservation mode not waste use mode ! Even at that we conserve hydro which drives rates even higher because there is not enough money for the cost to operate the system .
The Dr. Oetker plant cited by the Premier as an agricultural processing success story, makes frozen pizza, and as such, is able to buy milk at a price significantly less than what fresh pizza makers pay, and anyone other than someone making fresh or frozen pizza pays about 87% more than Dr. Oetker pays.
Or, in other words, the only way the Dr. Oetker plant happened in the first place was because dairy farmers are forced to sell the company milk for significantly-less than their "cost of production".
Furthermore, it is telling, again by omission, that the Chobani plant never got built at all, but might have, if Chobani, like frozen pizza makers, was able to buy milk at a significant discount to the price charged by the "robber-barons" at DFO.
The Premier, and farm groups, instead of one-sided wailing about plant closures, should focus, instead, on plants which, like Dr. Oetker and Chobani, were built, or could have been built, when/if our restrictive farm gate pricing policies were scrapped.
Stephen Thompson, Clinton ON
Let us closes some more factories we need to be taught a lesson on globalism and free trade
Companies leaving Ontario , there is nothing new in this article. The government of Canada and the province of Ontario have their head so far up their A??? that they can only see their paycheck and pensions. We are heading to a major have not country and province , I guess there is some workers that will have a pension and a lump sum in their bank account and the rest will be out an the street corner begging for food and a place to sleep. Hydro is going green and who can afford the price for it , are the Countries like China going green and rising their price of hydro. You read where the price of doing business in Canada is huge yet we have everything that is needed to make things yet the government thinks that they can suck everyone dry and keep this country running.
There's enough blame for thinking that "they can suck everyone dry and keep this country running", to go all the way around the table.
For example, the "suck everyone dry" principle is the basis on which supply management operates - therefore, it makes no sense for farmers to blame government for not being able to see that our economy and society are becoming "hollowed-out", when we are just as guilty as anyone for believing in, and doing, exactly the same thing.
Stephen Thompson, Clinton ON
Hmm don,t we elect the government people so that they help the country out by keeping companies here and get us a reasonable life style . I guess I,m to blame too I farm to make a living and maybe I should be working for nothing so others can make a great life of siting at their desk or traveling the world looking for places with cheap everything so they can make even more. Well do you tell your clients that they don,t have to pay you because you are doing your part so others can have fun in the sun. I,m sorry for no rolling over and playing dead but I like to get paid for my work and I,m not an SM farmer or has a office job, just a farmer.
Most income tax preparers charge poor people less than we normally would, and sometimes we charge nothing at all. The "proof" that we are doing a good job is that nobody has yet opened offices in US border cities specializing in preparing Canadian income tax returns. I've pointed out before that when Canadians start going to the US to get their income tax returns prepared, and stop going to the US to buy dairy and poultry products, then Canadian farmers can start pointing fingers at other people.
Stephen Thompson, Clinton ON
In today's London Free Press, Mike Moffatt, professor of marketing at my alma mater, the Ivey Business School at the University of Western Ontario, noted that food processing in Ontario is being down-sized because the population growth in the US is in the south, and west, rather than in the north and east - thereby making the growth sector in the US market too far for us to be able to transport products from here, and still make money.
Moffat suggested that an emphasis on food processing in the London area was "betting on the wrong horse" because the important consideration wasn't the local supply of inputs, but the distance to growing markets in the southern, and western, parts of the US.
Moffat's comments would also appear to drive another well-deserved nail into the coffin of the local-food movement - jobs, real jobs, and real incomes, are always going to come not from supplying food for the local market, but from supplying food to the much-larger, and far-distant markets.
Stephen Thompson, Clinton ON
Unfortunately larger and farther markets means fighting it out with more populous and wealthy countries than our own.When you're a Canadian producer trying to undercut subsidized farmers from the US and EU in gaining some sort of foreign market foothold....well, l think everyone should be able to see why the local food movement is very much alive.
When it comes to Kellogg's, efficiency with many of these US parent companies means simply how to produce a product with the least number of employees and that is especially true in a Country like Canada with our high standard of living.The exact opposite can be said of Mexico and Thailand, favorable destinations for more"efficient" newer plants.It would not surprise me in the least if some of the shutdown Londons Kellogg's machinery found it was to South Asia, as was the case of some of Niagara's shutdown canning machinery being bought by China.
In today's Farmers Forum, columnist Ian Cumming notes that EU farm subsidies are highly over-rated by supply management supporters and others who adhere to protectionist principles.
In particular, Cumming points out that his friend in England milks 80 cows and that from 2006 to 2009, he received minus $107 in subsidies for those four years, and opted out of the system.
The point Cumming makes is "If 40% of EU farm income is a subsidy", why would his friend have opted out?
And, by way of comparison, the producer subsidy equivalents received by supply managed farmers probably come far-closer to 40% than not.
Stephen Thompson, Clinton ON
Mr.Cumming's disdain for the Canadian Dairy industry is well documented so that 1st must be taken into consideration.He has a friend in England,what about the other 27 countries that make up the EU.
From what l have read on recent developments the plan was to spend 65 Billion (dollars) annually on EU Agriculture in 2014-2020.The BBC states that makes up to 40% of their long term budget. Some Large farms will lose up to 30% on payments but small farmers will gain.
The 40% figure which even you use, represents, according to Cumming, "millions of dollars from EU rural development funds were spent on the "less favoured area" to return land to the wilds and other environmental schemes", and, therefore, mis-represents the amount of production subsidy money actually going to farmers.
Therefore, the 65 billion dollars you cite to be spent annually on EU agriculture isn't so much a production subsidy, but a cash version of our scheme of avoided cost benefits - such as being able to file income tax on a cash basis, property tax discounts, capital gains and estate tax exemptions, and so on, and so forth.
As for "cherry-picking" his data from only one farmer, and in only one country, Cumming reports that all across the EU, "the 2012 average payout was $9,891" which, as Cumming noted for 2010 when the average payment per recipient all across Europe was $19,514, - "That's not an average of 40% of a EU farmer's income, and we all know it."
The upshot of Cumming's article is to skewer the haste with which Canadian dairy farmers, and Canadian dairy farm organizations, will jump on the bandwagon to incorrectly claim that all EU dairy farmers averaged 40% of their farm income in the form of subsidies, and that therefore, by inference, supply management's ability to charge some mozzarella cheese makers almost 87% more for milk than others, is somehow quite-wonderful by comparison.
Stephen Thompson, Clinton ON
As the BBC story stated "its a complexed issue", subsidies always will be and that's because Government's never want to admit to giving taxpayers money to a portion of farmers considered well off!
Mr.Cummin is quoting his English friend as not recieving much money but Ironically its the wealthy UK and Germany landowners that have fought against any cap on single farm payout subsidies, preferring to be paid on the land one owns or rents,with much of the English landscape owned by the rich.
Whether its production,input,"greening" its still a subsidy and according to the BBC it still costs the average household in Europe 400lbs/652 US dollars to subsidise farmers.l certainly agree that their Government's are trying to lessen the payments to farmers in light of higher commodity prices and a higher world demand for food but that should be a no-brainer!
The BBC is, I suggest, considering the entire budget for rural EU spending, whether it be to farmers, who may, or may not, be landowners, to offset production costs, or for environmental enhancement activities which are, by definition, targeted to landowners regardless of what they produce, and/or regardless if they are even farmers at all.
The point Cumming was trying to make, but which, as always, gets drowned out by supply management advocates who are trying to confuse the issue for their own benefit, is that European farmers don't receive nearly as much in subsidies as the leaders of our dairy industry would try to lead people to believe in their attempt to demonize the recent CETA agreement.
Furthermore, when it comes to the subject of "greening", the extravagant payments made to farmers who have solar panels, or even wind towers, is something which we typically never include in the "subsidy" income received by Canadian farmers, and we should.
At least, if my understanding is correct, the EU is phasing out quotas, and that is a great advancement for both economic and public policy - we could take a lesson from that, instead of grasping at straws in our misguided attempt to defend the indefensible here.
Stephen Thompson, Clinton ON
EU is phasing out dairy quota's by 2015 but they just started them in 84.They call it a "soft landing" time for producers filled with giveaway's. I guess its always easy to end milk quota when world prices are very high we shall see how producers feel when prices are rock bottom like they were in 2009 and have the Government bail them out like the US did at that time.One thing will be certain, the era of the average 50 cow dairy farm will soon be gone.
Reminds me of when Australia deregulated their dairy Industry and promptly went into several years of dought to the point they couldn't fill their own domestic market let alone export anything as they had hoped.Dairy leaders were estimating they were losing a farm a day going out of business.
Stop all the hand-wringing about rock-bottom prices and bail-outs if and/or when supply management gets eliminated. If AgriStability and AgriInvest are good enough for the rest of us, these programs will be good enough for dairy producers too. At least we will be "all in it together" because we will have finally eliminated our rural aristocracy.
Stephen Thompson, Clinton ON
Premier & Ag Minister Wynne announced a few months ago that she wants a doubling of agri-food exports before 2020. Now that Heinz and Kellogg's are leaving us,
She is miles behind the starting point she had a few months ago.
Whatever will she do? Here is a suggestion:
Canada’s Supply Management, quota-enabled chicken factory farmers ("SM-CHicken Farmers") have only 1.4% market share of exported chicken for OECD nations; a mere insignificant blip. Canada is in last place, last out of the 7 OECD nations for chicken exports.
Canada is an exporting nation. Canada could export chicken too. Theoretically, Canada could, if we worked hard, gain up to 50% market share for OECD exported chicken. It would take a while to achieve, but if we did this, Canada would need to grow 5 times more chicken than what we do today. That means 5 times more jobs, 5 times bigger markets for Canada’s grains, 5 times the spin-offs for feed mills, farm machinery, etc.
Chicken Farmers of Ontario (“CFO”) recently announced that Ontario’s SM-CHicken Farmers produce $2.7 Billion per year of economic activity in Ontario. Since Ontario is about 1/3 of all chicken in Canada, we can project that all of Canada has $8.1 Billion of SM-CHicken Farmers impact. Taking this to 5 times current activity for OECD chicken exports, that’s $40.5 Billion for Canada, and Ontario’s share would be 1/3 of that, which would be $13.5 Billion.
Would Premier Wynne be happy to get an additional $10.8 Billion per year (13.5 – 2.7= 10.8) of economic activity and exports for Ontario’s agri-foods sector? I think so.
There’s only one problem: Supply Management for chicken.
Right now, the SM-CHicken Farmers have 99.97% market share for chicken in Canada, at a price which is 300% higher than the world price, thanks to their Supply Management monopoly. The SM-CHicken Farmers prefer to suck the blood of Canadians at 300% price gouging, rather than the challenges of exporting chicken onto the world market. If others could get a sweetheart deal like the SM-CHicken Farmers monopoly, they’d likely do the same, so let's not be too quick to blame the SM-CHicken Farmers. It was the government who freely gave them, and continues to support them with this monopoly.
Perhaps we can encourage the SM-CHicken Farmers to come out of their shell, spread their wings, and compete on the international chicken markets, if not for themselves, then as their patriotic duty to help their fellow Canadians [pause until laughter subsides, then continue].
There is just one problem. Nobody else in the world is stupid enough, if given a choice, to pay 300% more for their chicken. Therefore, it's a non-starter for Canada's SM-CHicken Farmers to try exporting chicken at Canadian domestic prices. If the SM-CHicken Farmers wants to export chicken, it will have to be at the world price for chicken.
With WTO (World Trade Organization) rules, SM-CHicken Farmers can’t export chicken for sale at world prices, because that is the definition of “dumping” (ie. selling internationally at prices lower than domestic prices). As soon as Canada’s SM-CHicken Farmers started exporting at world chicken prices, and if they were to gain significant market share, they would soon be slapped with dozens of WTO complaints for dumping, and the trade wars begin.
Darn! Another great idea hits a brick wall. If only we didn’t have 100% commitment to Supply Management and the price gouging that the SM-CHicken Farmers gets to do to Canadians. That extra $10.8 Billion per year of agri-exports from Ontario sure looked appealing.
Oh well, there’s always Ontario Works. Let somebody else worry about it. Let the “Power That Be” come up with a better idea that actually has a hope of being implemented.
Glenn Black, President
Small Flock Poultry Farmers of Canada
Though your math makes sense to the way you are looking at it your math will not be correct when the marbles are on the table .
If there are say 1500 SM chicken producers in Ontario you will not see 5 times that number . You might see double of that because many will just increase their size .
Equipment sales might increase for lawn mowers since that is what is used to clean out their barns .
If chicken is so sought after in the world don't forget that other countries can and will produce it at a lower cost because of environment . So it will be a race to see who is willing to be the lowest cost producer . Will chicken then need their cut of the RMP capped dollars ?
You should be working for the gov with your mindset . Maybe OPA , OEB , the MOE , or energy ministry is looking to hire . You seem to have their mindset . Just like last week on the radio some one said we need to increase hydro rates 35% so they can give more free incentives . Who in hell do they think is paying for these supposed FREE incentives ?
You would fit right in .
Hello .
Can anyone see that its the non SM processors leaving Ontario or Canada?
The SM does charge more some times but at least there is still businesses here, where is the rest heading for not here.
Greek yogourt maker, Chobani, fled Canada because it simply couldn't deal with supply management. Frozen pizza maker, Dr. Oetker, is here only because DFO is forced to sell it milk at substantially below the "cost-of-production", as if supply management didn't exist at all - in both cases supply management definitely is the problem.
In addition, Canadian dairy processing companies like Saputo are expanding everywhere but in Canada - they'd be expanding here too if, thanks to bandit-level pricing of milk at the farm gate, retail demand wasn't stagnant.
It's bad public policy to expect consumers to prop up dairy and poultry processors operating at less than full economies of scale, because of a conscious decision to forgo exports, and to gouge domestic customers.
Stephen Thompson, Clinton ON
Canada Post is a net-negative sector.
Its a monopoly that loses billions.
How many other monopolies lose money? We pay for a service and then pay again through taxes.
Any thing gov gets their dirty little fingers into ends up being a net negative . I am not sure that many of them could ever successfully run a private business . Same goes for beastycrats , many of them also need to loose their jobs if they can't perform any better . Pretty easy to run some thing when all you do is take from Peter to pay Paul , increase taxes and oh yes ask for a raise .
Canada Post is deemed to be an essential public service, like the military and police, like our education system, llike our health care system, and other things which we, as a society, deem to be essential, and for the good of us all.
Alternatives exist to supply management, alternatives which are clearly better from the first principles of economics, and from any reasonable interpretation of sound public policy.
For farmers to grasp at straws by claiming supply management's net-negativity is somehow less-odious because of inappropriate conparisons to essential public services, is all the more reason why supply management is not well-liked, and will not be missed.
Stephen Thompson, Clinton ON
Canada Post has a monopoly on door to door delivery. Its essential but that dont mean the government has to do it. Supply managed door to door mail delivery can be done by private enterprise. Milk production is a essential service but you dont think it should be done by a quasi-government agency. Education is not a monopoly either. Your arugement is nonsense.
You've mangled and mis-stated so many logic and economic principles to know even where to start pointing them out, so I'm going to restrict my response to only a few items.
Firstly, milk production is not an essential service, and never will be - many people get by quite-nicely without milk at all. In addition, milk production, like the production of orange juice, is not something which has to be essentially-Canadian at all. When one considers the orange juice example, your proposition that milk is an essential service, is ludicrous.
Secondly, I have absolutely no idea what you mean by "supply managed door to door mail delivery", especially when, in the past few days, Canada Post announced it was reducing and/or eliminating door-to-door delivery services in a number of municipalities.
There is a lesson for supply management to learn from Canada Post, and that is changes in the way people live and work are never easy for monopolies to understand and address. Supply management is living in the days when gold was fixed at $35 US per ounce, and when fixed exchange rates were the order of the day. Canada Post is living in the days when the internet and electronic commerce didn't exist.
Therefore supply management and Canada Post are dinosaurs from another age, and another time - at least Canada Post has the ability to recognize that their target market has been fragmented and decimated, supply management never will.
Stephen Thompson, Clinton ON
What does the price of gold have anything to do with supply management? Canada Post has a door to door mail delivery monopoly. The only thing the government has recognized is the fact that this monopoly will lose a $1B. So how do they fix that? Cut service and double the price of that door to door service. Granny doesn't need a stamp anymore, she's on Facebook. Canada Post might stop door to door service but it will not give up their monopoly on mail. That is supply management monopoly style.
Canada Post doesn't have anything to do with supply management in the dairy and poultry industries, yet supply management advocates can't stop making any sort of tenuous connection they can dream up to try to claim that supply management isn't a complete economic and public policy perversion.
In addition, the gold standard ended in the early 1970s, right at the time supply management should have been denounced as also being bad economic and public policy options.
The only connection is that Canada Post, like supply management, is a victim of changing markets - the disconnect is that dairy and poultry farmers refuse to admit that the world has changed and they haven't changed with it.
Stephen Thompson, Clinton ON
Maybe we could start eating virtual food , fill our virtual belly , drink virtual beer and for those who indulge smoke their virtual weed !!
Now wouldn't that be the future !!
Back in the 70's a guy on my bowling team worked as a driver for the Post Office,never worked past 1:00pm, some days he said he was done at 11 but got paid the same as if he finished at 4:00pm.
If that's what you mean the "world has changed" then l would hope so.The Post Office has wasted taxpayers money for decades.
We were told last year by the person that delivered our mail is an employee of Canada post now , which before they were under contract . Now ben. pack and pension besides.
The sad reality is that there will be more companies exiting Ontario for greener pastures else where in Canada and the world . Cost's here are too high . Green energy ( as one ) has pushed us out of the realm of being a possible place for companies to set up . Yes it is a nice gester for Ontario to be the north american poster child but I will ask when the filter went up on the border to make sure that the coal emissions and smog from across the border to make the difference here in Ontario ? Every one else in the world is fighting to lower their costs but we here have a gov. that is trying to force us into bankruptcy and driving our jobs out of the province . Low cost energy is essential for a thriving growing economy . Why do the Liberals and their supporters not see it and refuse to get their heads out of the sand ?
Glenn , There is so much more to the economy than small flock chicken , farming , food or food production . Food is not important to people because they have never gone with out . Food is in abundant supply and is always there . The rich always eat what they want no matter what the cost . The rest of us are more so allowed to be here to serve them as long as we don't bother them .
So you small flock chicken guys are all willing to sell your chicken for 300% less than what SM chicken sells for . I will believe that when I see it . You are fools if you do .
Any chicken I have ever bought from a small producer always cost me a premium compared to store bought .
The true fools are supply managed farmers who think they are perpetually going to be able to hide behind 200% tariff barriers, and by doing so, screw consumers and other farmers who don't, and won't ever, have this advantage.
Being in a position of legislated advantage and calling others who don't have this advantage, "fools", is a guaranteed way to have your head, and certain other parts of your anatomy, handed to you on a plate.
Stephen Thompson, Clinton ON
Yes its nice to see the non SM processors move to other countries to set up shop and send the end produce back to us . Got to be something loose in the upstair department if they think its alright to close up shop hear and bring it here with the only money being made is the trucking and store selling it. the trucking wages are on a slide and the stores pay their workers enough to get to work and back.
The non-TRQ seems to be the main controlling and enabling factor for all prices of chicken in Canada. The second factor is the inflated chicken feed prices, which quota-bearing chicken farmers allowed to increase 33.3% above reasonable market prices, as the quota-boys received extra profits for themselves every time the feed mill raised prices (due to CFO's bogus inflated FCR, which they were ordered to reduce by 16.3% in Aug. 2013). Inflated feed prices cause inflated farm gate live chicken prices, inflated wholesale, and inflated retail prices. Since each step uses a % markup, the penalty to consumers increases as the chicken passes through each step along the way, so the 33.3% premium for chicken feed becomes a 19.98% premium for live chicken, a 67.97% premium for eviscerated chicken at wholesale, and a 235.16% premium at retail grocery store meat counters. See http://canadiansmallflockers.blogspot.ca/2013/05/chicken-feed-price-cons...
As a small flocker, I currently pay $18 per 25 kg bag, which is $720 per metric tonne of feed. I believe the Supply Management quota-owning factory chicken operation currently pays around $388.375 per tonne (quota period A-121), which means small flockers pay 85.4% more for their feed. Assuming feed costs are 60% of the total costs, and the other 40% of costs are similar for both small flockers and quota-boys, then small flocker farm gate chicken meat prices should be 11.23% higher than the factory farm prices (1.854 * 0.6= 1.1123 or 11.23% premium).
Now that the bogus FCR has been ordered to be fixed, there is neither a negative nor positive effect on the chicken factory farmer when a feed mill raises their prices, as the farmer automatically gets 100% reimbursed for all feed price changes, whether an increase or decrease. Since the feed mills have over 10 years of bad habits for rapid price increases above market rates, why would they change their ways now? Who will object when the feed mills raise their prices again and again?
What this means is that feed prices will continue to inflate, and import tariffs will continue to enable 200% to 300% over-charging for chicken.
The only ones who pay for all these excesses and price gouging is the Canadian consumer, so the Supply Management system couldn't care less. Therefore, the chicken price abuse will continue until the consumer revolts, or the government reins in the Supply Management system.
Post new comment