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A Change in Direction

Why supply management was formed


November 30, 1999
By Jim Knisley


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Forty years ago, Ontario’s Progressive Conservative Agriculture Minister William (Bill) Stewart saw that Ontario’s and Canada’s egg industries were heading for disaster. The only option was to change and the only sensible course was supply management.

Speaking at the London Poultry Conference in June 1972, Stewart said: “Anyone who has had anything to do with egg production in the last few months, yes, in the last few years, will know that it has been on a disaster course.”

Stewart said the Ontario government’s decision to give up on a failing system of laissez-faire wasn’t popular with consumer groups, some economists, and many corporate interests, but it was necessary.

“I recognized it was not popular,” he said. “I took (it) because I could see no other way to bring about some order out of what was definitely a chaotic situation.”

The chaotic situation in Ontario in 1971 was caused by a massive oversupply of eggs that resulted in low prices and an estimated $6 million in lost income. Harvey Beaty, chairman of the then almost powerless Egg and Fowl Producers Marketing Board, said: “We are now in an entirely new ball game with a new set of rules. The old rules of supply and demand no longer work.”

He added that voluntary efforts to cut production weren’t working, lower prices were accomplishing little and “bankruptcies don’t seem to solve the problem either.”

Ontario was far from alone. Nova Scotia set up a fund to offset losses by commercial egg farmers in 1970 and 1971 and was asking for federal assistance.

But the drive to supply management as a solution to the need for subsidies and an end to the chaos, as noted by Stewart, was far from unanimous.

The Canadian Poultry and Egg Council’s brief to the House of Commons Standing Committee on Agriculture on January 12, 1971 strongly opposed Bill C-176, which would allow, with provincial and producer support, the formation of national marketing agencies.

The council, which represented the egg ad poultry processing industry, said marketing boards and national supply management would deny consumers “their right to the best value for their dollar, which can be achieved only through freedom and competition in the market place.”

Agriculture policy “should not be used as a vehicle for a social welfare program,” the council’s brief stated, adding: “A policy of regional balkanization, quotas and price fixing is not in the best interests of our nation or its citizens.”

John Enns, a member of the Ontario Broiler Chicken Producers’ Marketing Board, said “industry people” are selling politicians a bill of goods by saying “that any power granted to farmers or farm organizations is detrimental to the overall Canadian economy.”

What was detrimental to the economy was the chaos that sprang from a “loosely organized egg industry in Manitoba and Ontario” that overproduced.

That overproduction formed part of the Chicken and Egg War. Former Canadian Poultry (then known as Canada Poultryman) editor Fred Beeson summed up the war in a June 1971 editorial:

“Producers in some provinces have, through self-discipline, regulated their supply to fit the available market while other provinces, with no regulations in force, have consistently overproduced and dumped their products into regulated areas, many times at below cost.”

Quebec had no controls on broilers and was, Beeson said, “overproducing” broilers and shipping them into Ontario and as far west as B.C. Meanwhile, Quebec did control its egg production but Ontario and Manitoba did not and they poured eggs into Quebec and Alberta. In response, the provinces decided to try to control product coming from other provinces.

That was unconstitutional. The power to regulate inter-provincial trade lay with the federal government.
“All industries need some regulation today and the poultry industry is no exception,” wrote Beeson.”

Without regulation, we continually face a market collapse.”

The annual meeting of the Canadian Egg Producers’ Council in August 1971 was filled with gloom tempered with a sliver of hope.

The gloom came from province after province reporting weak to terrible prices. As an example, Nova Scotia producer John Fisher said farmers in his province were experiencing the worst prices ever. Henry Law of New Brunswick also told of a disastrous year. Saskatchewan reported low prices because it is next door to Manitoba’s unmanageable surplus. Peter Dyck from Manitoba said the production was the result of a heavy grain crop and poor grain markets.

Harold Crossman of Saskatchewan said he was tired of listening to Manitoba’s grain excuse. “Let me tell you that Saskatchewan produces four times as much grain as Manitoba and if you want a fight, we’ll compete with your producers any day,” he said.” But if it comes to that, you won’t make money and neither will we so let’s be sensible about this.”

Meanwhile, A.D. Davey, director of the poultry division at the federal agriculture department, said: “Last year has shown what havoc results from a lack of planning.”

But planning in the egg industry was difficult. In Ontario, broiler producers had approved a marketing board that could regulate production and imports but the Ontario Egg and Fowl Marketing Board “is really only a step above a social club. The board has only been given the power to promote its products and do research into the market,” the Toronto Star reported in early 1971.

As the war raged, Ontario egg producers balked at adopting a provincial board similar to the one for broilers. Brian Ellsworth, secretary manager of the Ontario board, told the Toronto Star (in an article reprinted in Canada Poultryman) that: “The pressure now is for a quota and price system, but it doesn’t appear that Ontario producers will agree to it.” However, Ellsworth said he believed producers would accept quotas under a national scheme, but not a provincial plan.

But the national plan met stiff opposition. The Toronto Star reported that not only were consumer and industry groups aligned against it, they were joined by the Progressive Conservatives and Creditistes in Parliament. S.J. Korchinski, Conservative member from Saskatchewan, said Bill C-176 was the most “damnable” legislation he had ever seen. He claimed the legislation would allow the government to tell farmers what to do, where they are to do it, how much they are to produce and at what price. Quebec Creditiste MP said the legislation would turn the Canadian farmer into a “government employee with no freedom whatever as to his production.”

Federal agriculture minister Bud Olson said the authority contained in Bill C-176 was not new and the federal legislation simply allowed farmers to co-ordinate on a national level.

“This bill provides an opportunity for the agriculture industry to work together when it is in their interest to co-ordinate their efforts more effectively on a national basis,” he said.

It was “completely erroneous” to say the legislation would give government the power to take over an agriculture industry. “This legislation only provides for control over inter-provincial and export marketing, and gives the government no authority whatever to control marketing or production within a province,” Olson said.

After Bill C-176 was passed, Olson said in a memo to farmers that, “for the first time, farmers will be able to co-ordinate the programs of provincial marketing boards into a more effective national marketing plan.”

The legislation set the stage for the creation of the first national agency in the poultry industry, the Canadian Egg Marketing Agency (CEMA) – now known as the Egg Farmers of Canada – which was established in 1972 by the following proclamation:

“Know You that We, by and with the advice of Our Privy Council for Canada, do by this Our Proclamation establish an agency to be known as the Canadian Egg Marketing Agency, consisting of fifteen members appointed in the manner and for the terms set out in the schedule hereto.

And Know You Further that We are pleased to specify that the farm product in relation to which the Canadian Egg Marketing Agency may exercise its powers is eggs from domestic hens, and such powers may be exercised in relation to eggs produced anywhere in Canada.”

A look back: 40 years later
For Eugene Whelan, supply management was a singular achievement: it brought order out of chaos and was a major step on the road to replacing rural poverty with prosperity.
In a recent interview with Canadian Poultry Magazine, Whelan said if he could travel back in time, he would continue to push for supply management because it was the best and only solution to the problems confronting farmers.

“I knew what we were doing. We’ve got a good system,” he said.

Before supply management, the insecurity on the farm ripped through the supply chain with feed mills never knowing how much they would sell, or, in some cases, if they would get paid, he said.

As for the recent debate on whether supply management should be abolished, he finds it lacks substance. “The writers don’t know a thing about agriculture.”

Comparing beef to dairy or grain with perishable commodities is just wrong, he said.

Looking back at the debate and discussions that took place 40 years ago and comparing it to what passes for debate today, he said when it comes to agriculture and agriculture policy, people are “less knowledgeable today than they were then.”

Establishing supply management was far from easy, according to Ralph Ferguson, charter member of the National Farm Products Council and former federal agriculture minister. Even before he was elected to Parliament in 1980, Ferguson was active at the grassroots level and played a large role in ensuring that supply management was accepted as part of the policy platform of the Liberal Party.

In addition to the Liberal Party, Whelan said that Ferguson also played a major role in ensuring supply management was accepted in the countryside.

This wasn’t easy, Ferguson said. But by the end of a raucus debate at the Liberal Party convention, rural party members and rural MPs had carried the day, making national supply management official party policy.

An egg producer himself, Ferguson knew the problems on the farm. You’d order supplies months in advance and never know the price you would get for the eggs. “After supply management, we were able to establish a stable price,” he said.

Ferguson said he and other rural party members “saw that something had to change.” The situation was bad and getting worse with unstable prices and increasing corporate control of farming. Marketing boards and supply management allowed farmers to work together and “take control of their own destiny,” he said.

The current attacks on supply management are nothing new, he said. “It sounds like the old debate.”

Carolynne Griffith, chair of the Egg Farmers of Ontario, said there was chaos in the marketing of eggs and poultry 40 years ago and most farmers recognized that order had to be restored. Most of the provinces already had marketing boards but national co-operation required national action.

“As I recall, pricing powers and border controls (tariffs) would only be granted to commodities that had a national organization, and so that was the incentive to organize nationally.

“Without the power to price eggs and control the amount of imports into Canada, we would be right back where we started from,” she said.

The Canadian Egg Marketing Agency (CEMA) indirectly provided some security and allowed farmers to make their payments on the new barns and the new technology that came in in the late 1960s and early 1970s because of a cost of production formula.

As to the current debate, it is almost an annual event.

“Each year, when the dairy commission begins the process of setting the price for milk for the coming year, we see this volley of anti-supply rhetoric appearing in the national papers,” Griffith said. “They forget to say many things such as the price of milk to farmers will hold for the year regardless of what costs do in the meantime.”

In eggs, the price is set well before Christmas and it usually holds until after Easter. The result is “the retailers know their cost of doing business with us – no surprises,” she said.

“The alternative to supply management is the chaos of the free market from which we have evolved,” she said. Supply management is a choice for farmers. “There is no one in supply management that hasn’t chosen to be there.”

“It is not a government imposed regulation that some critics lead consumers to believe that it is. How so much misinformation gets to the national press is truly remarkable,” she said.

Linda Boxall, past chair of the Saskatchewan Egg Producers, former vice chair of the National Farm Products Council and previously Saskatchewan’s representative at CEMA (now known as the Egg Farmers of Canada), said that in the 1960s, a lot of farms in Saskatchewan had small flocks of laying hens and none knew the price the eggs would fetch when sold.

“It could cost more to produce the eggs than the price we got, she said.”

When supply management came in, prices stabilized and the cost of production formula ensured that an efficient producer wouldn’t lose money on eggs.

As to the current attack on supply management in the press, she isn’t surprised. Every time trade negotiations come up, whether it was the North American free trade deal or talks under the WTO or discussions with Europe or the Asian Pacific group, supply management is raised in the media as a potential barrier to success.

In the past, supply management has had to adapt but it survived. This time, as in the past, the outcome will depend upon the strength of the negotiators, she said.

Leading the Charge
During the debate over provincial marketing boards and the eventual creation of supply management for the poultry and egg industries, the editorial position of Canada Poultryman was crystal clear – it was in favour.

Not only was the long-time editor of the magazine, Fred Beeson, in favour, he was leading the charge. He first wrote of the need for supply management in 1948. In 1964, when the industry was again in turmoil and provincial marketing boards were being proposed, debated and emotions were at their peak, he pulled no rhetorical punches.

Beeson’s position was never clearer than in a November 1964 editorial.”Hoping the other fellow will go broke is a poor way of evaluating the profit prospects of a business,” he wrote. “That’s the present state of affairs, let’s face it.

“Don’t let us waste time pointing fingers at one another. (It’s) far better to face the fact we are not living in a period of scarcity anymore. We can, in any one season, quite easily double our production across Canada. In fact, that’s the way we have been heading for several years; not making it because too many grow broke each year.

“It may well seem that we harp on this problem of overproduction and consequent low prices eternally in these editorials. We don’t apologize because this is the No. 1 problem of the industry.”

Within months of the establishment of the board, “here we were with no surplus broilers in B.C., none in the neighbouring provinces and a rising price.”

In April 1964, Beeson argued the industry needed more than the marketing control allowed under some provincial laws. “One cannot help but feel that that it is not marketing control that is needed but production control,” he wrote. “Our feeling is that it is this form of control that all other poultry groups need to ensure a continuing healthy marketing setup.

“If an industry has a surplus,” he continued, “there is no known method of maintaining a satisfactory price with or without a board short of destroying the surplus.”