Supply squabble in New Brunswick

Dan Woolley
July 25, 2008
By Dan Woolley
The squabble between Nadeau Poultry Farms Inc., New Brunswick’s sole poultry processor and the province’s largest chicken producer, Group Westco over a continuing supply of chicken to Nadeau’s plant in St. Francois de Madawaska likely will continue until the end of this year.

Alain Bryar, director of communications for the New Brunswick Department of Agriculture and Aquaculture doesn’t expect the New Brunswick Farm Products Commission to release its ruling on Nadeau’s appeal for the granting of a plant supply allocation quota, similar to what exists in Ontario, until the end of August.

Bryar says the farm products commission appeal process is lengthy, requiring initially preparation of a transcript of the commission’s hearing held June 23 to 25, then the rendering of the decision, followed by the New Brunswick Department of Justice’s review of the commission’s decision.
Earlier in June the Agriculture and Aquaculture Minister Ronald Ouellette amended the Natural Products Act so he could issue a temporary order requiring that all chickens produced in New Brunswick mustbe processed in designated plants.

He did it to enforce a cooling-off period to give both sides more time to explore all their options according to his June 3 press release on the amendment.
 
The department press release stated Group Westco’s decision to temporarily ship their live birds to a Quebec processing plant, Olymel, as of July would deprive the province’s only chicken processing plant of most of its supply of New Brunswick chickens, some 15-million birds annually.  The press release contended the transfer of the Group Westco chicken supply to Olymel would compel Nadeau to downsize its operation and significantly reduce its 340-member workforce.The departmental statement noted the amendment is "a precautionary and temporary measure in case a solution is not reached through the appeal process."

The province’s agricultural federation, The Agriculture Alliance of New Brunswick, slammed the provincial government’s meddling with the poultry marketplace. AANB CEO, Charline Comeau said their concern is the amendment could set a precedent for other farm sectors and place restrictions on them.

On June 6, the AANB issued this response, stating, "there are some direct consequences in amending legislation that would force producers in the province to process their products solely in designated plants. The agricultural industry was not properly consulted before the decision was made to introduce this amendment."

The AANB also objected to the government, "mandating where a producer’s product must be processed even on a temporary basis and we are calling on government to hold an emergency meeting with the involved stakeholders to negotiate a satisfactory outcome."

Nadeau has also secured the intervention of the federal Competition Tribunal on the supply issue. On June 26 the Competition Tribunal granted an interim injunction to Nadeau prohibiting Group West from shipping chicken out of province. Earlier, on May 12 the Tribunal also directed Group West to accept Nadeau "as a customer and to supply live chickens to it on the usual trade terms and in the volumes previously provided."

The Tribunal will begin hearings on November 17 and conclude early in December on the Nadeau complaint against Group Westco under Section 75 of The Competition Act for refusing to supply chicken after July 1.

Nadeau initially appealed last February to Chicken Farmers of New Brunswick for a plant supply allocation after Group Westco told the processor it would be shifting its supply to Olymel until it and Olymel as its partner built a chicken processing plant in St. Francois de Madawaska.
Previously, Group Westco and Olymel had been in negotiations for several months with Maple Lodge, Nadeau’s parent company, to buy the Nadeau facility; but those talks broke off last January.
CFNB Secretary-Manager Louis Martin said his marketing board had to reject the Nadeau request because the marketing board cannot legally stop the interprovincial movement of poultry. "If a producer is in good standing with our board; we can’t stop him from shipping to Quebec, Nova Scotia or Ontario."

Martin stressed the CFNB "board is neutral in this. They (Nadeau) asked us to do something we cannot do."

Bob Goggin, New Brunswick Farm Products Commission general manager, observed it is a complex issue; but he also noted interprovincial trade falls under the jurisdiction of the Canadian constitution and, moreover, " under NAFTA you are not building walls; you are taking them down."

He said the issue between Nadeau and Group West, "doesn’t affect just New Brunswick; it impacts the entire industry across the country."

There is a very similar dispute in Quebec where a processor in that province is trying to stop a producer from shipping his product into Ontario, observed Goggin.

Because of the time it will take the federal Tribunal to deal with the Nadeau case, Martin felt it will mean Group Westco will not be able to ship any chickens out of New Brunswick, at least, until the end if this year.

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