Poultry Industry Meets in B.C.

Fantastic” is the only way to describe the first-ever B.C. Poultry Conference, held in Vancouver, March 9-11.

“We had no idea it was going to be such a big turnout in the first year,” said conference chair Dale Krahn.

As is already done in several other provinces, the conference combined the BC Broiler Hatching Egg Commission & Producers Association (BCBHEC), BC Chicken Growers Association (BCCGA), BC Egg Marketing Board (BCEMB) and BC Turkey Marketing Board (BCTMB) & Producer Association annual meetings into a single event. As a result, B.C.’s diversified poultry farmers, industry partners and government officials could attend all meetings in one place. The conference also included two keynote speakers, three networking receptions, a gala dinner and concurrent seminars on poultry diseases, animal welfare, the media and antibiotic-free production.

There were 541 total registrants for the annual meetings, including more than 200 growers and producers, 30 out-of-province industry guests and 70 sponsors.  

“We went 50 per cent over our sponsorship target,” Krahn said. He added that having so many stakeholders in one place gave participants “opportunities to network with each other and join forces to make our industry better.”

“There’s a lot of commonality of interest among the four sectors,” noted John Les, chair of the B.C. Farm Industry Review Board. His comments at the BCEMB annual meeting would have been just as appropriate at any of the other meetings. He complimented producers for “looking for new opportunities and new markets” and stressed the need for them to “maintain your social licence.” He suggested producers focus on public concern for food security as that “plays right into your hand.”

That’s just what 20 farmers did Friday morning, handing out 300 Triple O Sunny Start breakfast sandwiches as they told their story to passers-by.

Hatching egg
Canadian Hatching Egg Producers (CHEP) chair Jack Greydanus called biosecurity “job one” since avian influenza can devastate long-life hatching and table egg flocks.

He praised producers’ adoption of the Canadian Hatching Egg Quality (CHEQ) program, saying it has led to a 40 per cent drop in the number of cracked and/or dirty eggs arriving at hatcheries. He also complimented producers on being able to adapt after the use of antibiotics at the hatchery level was banned. He said he expects the ban on antibiotics to expand in future, as raised without antibiotics (RWA) becomes the new norm.

Late last year, CHEP reached a five-year agreement resolving complaints Ontario and Quebec hatching egg producers took to the Farm Products Council of Canada last summer. The agreement follows “many years” of meetings, discussions, analyses, proposals and reviews of the broiler hatching egg allocation system.

“We are now changing our internal policies to make [the agreement] happen,” Greydanus said.

He noted Nova Scotia and New Brunswick have not yet signed on to becoming members of CHEP but he expects that to change soon. “Nova Scotia producers are working on organizing themselves and getting recognition from their provincial government,” Greydanus said, adding that if Nova Scotia joins CHEP, he expects New Brunswick to follow. “Our goal is to represent all Canadian hatching egg producers.”

Chicken meeting
B.C. is one of the few holdouts to Chicken Farmers of Canada’s (CFC) new allocation agreement. The agreement has 14 of the required 19 signatures, which CFC chair Dave Janzen, a B.C. chicken grower, calls “a good start to this year’s chapter of our success story.” Even though the new allocation formula was created to address chronic underallocations in Alberta and Ontario, Janzen told the BCCGA annual meeting all provinces have grown “at least five per cent” since CFC began using it last September. That’s because Canadian per capita chicken consumption continues to increase and is now at a record 31.7 kg.

Unfortunately, B.C.’s three signatures are still missing. B.C. is holding out because its processors have appealed the agreement to the Farm Industry Review Board (FIRB), the province’s supervisory board. That doesn’t sit well with B.C.’s national director, Derek Janzen, who claims it includes factors “good for B.C. Our processors agree with more chicken for Alberta but not for Ontario. I don’t understand that. It’s time to get our national chicken industry back in order. If we want supply management, we need a national system.”

Even though demand is increasing, the recently completed Trans-Pacific Partnership (TPP) trade agreement means Canada will have to give some of that growth to other countries.

“We will need to bring in 26 million kg/year under TPP,” noted Mike Dungate, CFC general manager. He said that is the equivalent of 61 farms. Added to the 7.5 per cent already allowed in, that represents 9.6 per cent of Canadian chicken production.

Despite that, Janzen said Canada was able to maintain “the integrity of the [supply management] system” in the TPP agreement. As a result, growers “can invest in their future.”

When the Conservatives announced the TPP agreement last fall, they promised supply managed producers a multi-million dollar compensation package and pledged to tighten up border controls. Dungate said it’s essential the new Liberal government live up to those promises, particularly when it comes to border controls. He wants an end to use of the import-export relief program, which some poultry processors are using to bring in product one year, knowing they have up to four years to “re-export” it.

“Imports under that program have gone from two million kgs to 96 million kgs in the last two years,” he said.

He also wants mandatory certification of spent fowl imports and for the Canadian Border Services Agency to stop allowing importers to circumvent tariffs by bringing chicken in as part of a “mixed” product. Last year, they brought in 103 million kgs of so-called “spent fowl meat” – more than all the spent fowl breast meat the U.S. produced. They also brought in such “mixes” as chicken wings and pizza.

Dungate said the circumventions represent 20 per cent of the Canadian chicken market. If eliminated, it would more than offset any losses under TPP.

“It’s all being done by fraudulent marketers,” he insisted. “It won’t hurt any legitimate processor.”

B.C. may be growing more chicken, but the price growers are getting for it is “unsustainable,” said Ravi Bathe, BCCGA president.

“We have the lowest returns in nine years,” he said, claiming the cost of production is now higher than the price.

He blames Ontario’s new pricing formula, noting B.C.’s live price has dropped 4.95 cents/kg since it was introduced. A factor in the Ontario formula reduces the live price when allocations increase due to “efficiency increases.” Bathe said the same is not true in B.C. because of its lower barn densities.

A few years ago, FIRB ordered the BC Chicken Marketing Board to set its live price using a weighted average of the live price in Ontario, Manitoba, Saskatchewan and Alberta, which is why the B.C. live price drops every time the Ontario price drops.

Chair Robin Smith said the BCCMB will use its new cost of production study to compare B.C. grower returns with those of Ontario growers. It hopes to develop a formula acceptable to FIRB which gives growers an adequate return yet still ensures processor competitiveness.

Bathe insisted they are competitive, saying a BCCGA-commissioned study shows B.C. processors pay the same for chicken as their Ontario counterparts and less than these same processors pay in Alberta.

“Western processors are calling the price creep over the Ontario price unsustainable at a time when they are receiving record margins,” he charged.

Bathe admited changing B.C.’s pricing formula won’t be easy. “The last time this happened, we had to spend 10 days in front of FIRB in a supervisory review to try and solve the problem.”

Egg meeting
B.C. egg producers produced almost 71.5 million dozen eggs last year, over a million dozen more than in 2014, the BCEMB reported at its annual meeting.

All of the increase came in specialty eggs (free run, free range and organic), which were up over two million dozen and now represent over 19 per cent of eggs produced in B.C., far and away the highest percentage in the country. With B.C. leading the way, the demand for specialty eggs continues to increase across the country, said Peter Clarke, Egg Farmers of Canada chair.

To meet the increasing demand for eggs, EFC issued new quota last April, September and December (the BCEMB is still waiting for FIRB approval to issue the December increase to its producers). It also removed its 97 per cent quota utilization cap, adding another 661,000 birds to the national flock.

Despite the increases, B.C. remains notoriously short of eggs.

“14.4 per cent of our eggs come from across [provincial and national] borders,” Brad Bond, BCEMB chair, reported. He said the board hopes to address the shortage through a regionalization program.

Some of those eggs will continue to come across the U.S. border. Clarke pointed out Canada has agreed to greater tariff-free import access for eggs under the recently-completed TPP agreement. If the agreement is ratified – and the pending election and growing protectionist sentiment in the U.S. make that a big if, Greydanus said – Canada will have to allow another 19 million dozen eggs/year by year 18.

Even though avian influenza has become “the new normal” for producers, Clarke noted Canada was able to escape most of last year’s AI outbreak, which saw U.S. farmers lose 36 million birds.

Both he and Bond credit the smaller size of Canadian poultry and egg farms. U.S. egg farms average a million birds while Canadian producers average 22,000 birds. B.C.’s largest egg farm has about 119,000 birds, while Cal-Main Foods, the largest U.S. egg producer, has 32 million birds.

“We have a greater sense of social licence,” Bond said.

The size of U.S. farms discourages new entrants but the opposite is true in Canada. B.C. has started 26 new entrants since 2010, each receiving a 3,000 bird quota to produce specialty eggs.

Add producers who buy existing quota and/or farms to enter the industry and new entrants represent “19 per cent of our producers,” Bond stated.

He said supply management provides the stability for producers to convert to new housing systems. While U.S. egg farmers believe only about 51 per cent of their birds will be housed in cage-free or enriched systems, he noted 22 per cent of B.C.’s layers are already out of cages. Bond also praised B.C.’s biosecurity and Start Clean Stay Clean programs, saying they result in a healthier egg supply.

“In Canada, only one in a million eggs tests positive for SE. In the U.S., one in 20,000 eggs is SE-positive,” Bond said.

Bond insisted supply management does not drive up the price of eggs, pointing out the Canadian wholesale egg price at the end of February was lower than in the U.S., Australia and New Zealand. The retail price of a dozen eggs was about a dime less in Vancouver than the price in Seattle (converted to Canadian dollars) and almost $2.00/dozen less than in San Francisco.

 “We have to tell this story,” Bond said. “We do a disservice to ourselves when we don’t.”

Turkey Meeting
To keep its processors competitive, the B.C. live price is now just 0.5 cents/kg higher than Ontario’s price for broiler turkeys and hens while toms are only five cents/kg higher.

Since the price of corn, which forms the basis of turkey rations in Ontario, has dropped while the price of wheat used in B.C. turkey feed has remained stable, B.C. growers’ margins have dropped along with the price.

But that could change, said Michel Benoit, BCTMB general manager. He told growers at the BCTMB and BC Turkey Association annual meeting he expects prices to rise enough to restore their previous margins.  

To help, the BCTMB has decided not to pass the increase in the Turkey Farmers of Canada levy on to its growers, noting the board has enough cash reserves to absorb the increase. New BCTMB chair Phil Hochstein said he was “impressed by the [industry’s] commitment to biosecurity” based on his initial visits to B.C. turkey farms, processors and feed suppliers. “British Columbians should take great comfort in the care and attention paid to ensuring food safety.”

Although he will continue as BCTMB vice-chair, Shawn Heppell is stepping down as B.C.’s national rep after 16 years. TFC executive director Phil Boyd credited Heppell for engineering the TFC’s current quota allocation policy.

Heppell noted overproduction in Ontario from 2010 to 2014 “tested” TFC over the past 18 months but has now been resolved with a binding arbitration panel ruling. The panel upheld TFC’s $1.7 million overproduction penalty against Ontario and approved a 2.3 million kg cutback in Ontario’s production.

While that issue has been resolved, a new issue is emerging. That is the TPP agreement, which will increase turkey imports from 3.7 to 6.4 per cent of current consumption by the end of the 20-year agreement.

While it means turkey growers “are giving away our growth,” TFC chair Mark Davies said it “could have been much worse. I think our negotiators did the best job they could.”

Although the code of practice the now-mandatory TFC Flock Care program is based on is being revised, Benoit believes the changes “will not cause hardship.”

Davies noted a “shift in our culture” means more people consider themselves “actively involved” in the industry, making the program essential. “It’s the new reality we’re living in. We have to prove we take good care of our birds.”