Price adjustment for Ontario's chicken farmers

Thursday, April 26, 2012

by SUSAN MANN

Adjustments to the producer margin section of Ontario chicken farmers’ live price continue until the middle of July.

The adjustments were implemented as a result of a study of producer costs completed jointly by Chicken Farmers of Ontario and the Association of Ontario Chicken Processors. The study was based on 2006 information. Mike Terpstra, executive director of the chicken processors association, says this was a new study because the one they were using was dated.

The previous producer margin component of the live price was 47.32 cents a kilogram. The study determined the new producer component should be 46.62 cents a kilogram. The new number was supposed to be implemented for the A-106 (Aug. 14, 2011 to Oct. 8, 2011) quota period but it wasn’t put in until A-109 (Jan. 29, 2012 to March 24) because the results of the study weren’t finalized for it to be included last August, Terpstra says.

Part of the change in the live price for quota period A-109 (Jan. 29 to March 24) reflects the results of the 2006 study of producer costs. The producer margin portion is .007 cents a kilogram lower as a result of the study, it says in the live price update on the Chicken Farmers of Ontario website.

The decrease of .007 cents a kilogram is the difference between the old and new producer margin component, Terpstra explains.

Terpstra says the producer margin component is updated once every six quota periods. They don’t redo the study every six quota periods but use Statistics Canada indices to update that portion of the live price.

A further .007 cents a kilogram decrease was implemented because three quota periods were missed when the new producer margin component should have been in place “so we had to double up basically,” Terpstra says. This decrease is only in effect for quota periods A-109, A-110 (March 25 to May 19) and A-111 (May 20 to July 14).

A revised producer margin component of the live price will be implemented for six quota periods starting with the A-112 (July 15 to Sept. 8) one. The revised number will be compared to the current number of 46.62 cents a kilogram, Terpstra says. If the producer margin component is higher that portion will be increased for those six quota periods whereas if it’s lower the component will be decreased.

The chicken live price is governed by regulation 402 under the Farm Products Marketing Act and includes costs for feed, chicks and the producer margin component. The live price is updated every quota period for feed and chick costs.

There are discussions about how to update the study of producer costs for the producer margin component. “We’d like to be doing them every four years so that we have more current information,” Terpstra says. BF