British Columbia to Introduce Specialty Egg Quota

Organic, free-range and free-run production to be included, giving B.C. the highest specialty production in Canada

The British Columbia Egg Marketing Board (BCEMB) is rewriting its consolidated orders to introduce specialty quota, drastically revise the new entrant program and make other changes as directed by the B.C. Farm Industry Review Board (FIRB), the province’s supervisory board.

The changes conclude a two-year FIRB-ordered review of specialty production and new entrant programs. Although the review included all five supply managed commodities (eggs, hatching eggs, chicken, turkey and milk), it was caused largely by an on-going war between the BCEMB and a number of organic egg producers who were trying to operate outside the regulated system.

At the end of the day, “we pretty much got agreement without too much dispute,” said BCEMB chair David Taylor.

Although FIRB wanted only certified organic eggs designated as specialty for quota purposes, it agreed to a BCEMB request to also give free range and free runeggs specialty designation, provided a certification program is developed within three years.

“We felt it was necessary to incorporate free range and free run,” Taylor said, adding the board will help the BC Specialty Egg Producers Association develop a certification program under BC’s Food Choice and Disclosure Act. Graders consider anything other than a caged white layer egg to be specialty, he added. This gives B.C. the highest percentage of specialty production in the country.

“Free run, free range and organic represent about five percent of B.C. egg production. When you include all non-caged-white eggs, it represents over 25 percent,” Taylor states.

Operations manager Peter Whitlock says that reflects the BCEMB’s long-standing commitment to specialty production. “As a province we are short on eggs (i.e. B.C. consumption exceeds its national quota allocation). We can get caged white eggs from other provinces so we have focused on producing specialty eggs.”

That is not about to change. FIRB’s directives require any new quota allocations from the Canadian Egg Marketing Agency as well as any quota obtained from transfer assessments or quota cancellations be put into a Market Responsive Allocation Pool. The Egg Board must then provide for “differential allocation…to regular and specialty producers as determined by market need.”

“I don’t see any prorata allocations to existing producers anytime soon,” Taylor admits, but adds “I don’t see the market requirements to be solely with specialty forever. There’s presently a shortage of organic but not other specialty eggs.”

Under the new orders, existing TRLQ (Temporary Restricted Licence Quota) and special permit holders will have their production converted to quota, either specialty or mainstream, depending on their particular type of production. Producers will receive quota of up to 5,000 birds or their authorized production on Dec 31, 2004, whichever is greater. Initially, that represents about 12,650 birds under special permit and just over 50,000 birds in the TRLQ program but will increase if producers who currently have less than 5,000 birds choose to grow to that level. Discussion is still underway as to whether several “unauthorized” producers will also receive allocations.

While producers with less than 99 birds will remain exempt from quota requirements, the BCEMB has established a new Small Lot Program for producers with 99 to 399 birds. The Egg Board has established a pool of 10,000 birds, which small lot producers may access on a non-transferable permit basis. If demand exceeds the pool cap, FIRB has instructed the BCEMB to establish a waiting list putting a priority on small organic producers outside the Fraser Valley. FIRB also states it “may in the future discuss…increasing the allocation pool of 10,000.”

One of three B.C. signatories to the Federal-Provincial Agreement on eggs, FIRB also has a warning for the Canadian Egg Marketing Agency, saying the BCEMB must “ensure there is no double counting by CEMA when applying the permitted amounts,” noting it is “possible some small lot permittee production is already captured by CEMA” and used to set the net B.C. allocation.

Other changes include the quota exchange, transfer assessment and new entrant program. All quota must now be transferred through a quota exchange. The only exceptions are in-family transfers, business reorganizations and whole farm transfers where the production unit and quota are sold together and stay intact. Quota must first be offered twice on a specialty exchange before being offered on an open exchange.

All new quota issuances will be subject to the 10/10/10 rule and all quota transfers except selected family transfers and business reorganizations will be subject to a five percent transfer assessment.

Under the 10/10/10 rule, any quota issued to the TRLQ and special permit holders and any new quota issued to existing quota holders after Sep 1, 2005, is transferable subject to a declining transfer assessment. It is assessed at 100 percent in the first year (essentially non-transferable) with the assessment declining 10 percent/year until year 10 and following when it will be assessed at 10 percent on the first transfer.

Family exemptions from the transfer assessment include only spouses and children.

FIRB has also mandated a new priority-based new entrant program, saying new entrant invitations must be prioritized for “producers of specialty eggs, organic, free range and free run, outside the Lower Fraser Valley (where most of BC’s poultry production is concentrated).”

Although it used to be free to be on the BCEMB new entrant waiting list, there will now be a fee of $250 to get onto the list and a further fee of $100/year to stay there.

“We are now contacting everyone on the waiting list to see if they want to stay on the list, given the new fees and priorities,” Whitlock said.

The BCEMB is committed to at least two new entrants/year. Initially, new entrants will receive a total of 3,000 birds in a graduated allocation (1,000 birds immediately, 1,000 in years 3 to 5, and 1,000 in years 5 to 7).

“This fits the concept of growing a market,” Whitlock says.

FIRB isn’t quite so sure, stating it is “concerned that the graduated approach may…be economically unviable,” suggesting the board re-think the
program.