The Back Page: June 2013

The expression “location, location, location!” is well known in the real estate business, but in the chicken industry, allocation carries a similar weight.

Allocation means cutting a national pie into 10 (relatively unequal) provincial pieces. Slicing of this quota pie has been a serious challenge for decades because nobody ever seems willing to take a smaller piece, even if others are in desperate need of more. How to divvy up bigger pies in the future to reflect growing markets is a difficult problem to tackle.

But the need to address differential growth is critical because failing to sufficiently supply domestic chicken markets is unacceptable to government, as it should be.

In previous decades, several provinces have either left or threatened to leave the national agency.

The most recent example is Alberta, which served an official notice in a letter dated Nov. 22, 2012, stating it plans to withdraw from the national agency on Jan. 1, 2014. It is hard to imagine that Alberta wants to opt out, but the notice is a clear demonstration of that province’s frustration – and it sends an equally clear message to government. However, Alberta wasn’t the first province to want to opt out, and presently isn’t the only one to feel victimized by the allocation system. But it needs to be the last.

Under federal legislation, Alberta was allowed three months to withdraw its letter if it chose to do so, but since the three-month period lapsed in February, it can now only withdraw its notice with the consent of all signatories.

This whole process is reminiscent of the 1990s when Chicken Farmers of Ontario announced it was leaving the national agency because other provinces refused to let Ontario produce enough chicken for McDonald’s to introduce chicken fajitas in its restaurants. McDonald’s gave up on chicken and introduced a beef fajita instead. The mainstream urban media loved the story and chewed up supply management as if it were a fajita itself.

In fairness, this is not an easy problem to resolve because sharing production among all farmers in all provinces has been a cornerstone of supply management. But that philosophy is now viewed by many people as being more of a socio-economic arrangement than a business deal. My concern is that if supply management prevents domestic chicken markets from being adequately supplied, the system will collapse.

I don’t think that will happen, but on the other hand, no one can realistically expect the government to defend and promote supply management on the global stage if it isn’t working at home, especially when all of Canada’s key trading partners – present and future – want our federal government to kill it.

In April of this year, Laurent Pellerin, chair of the federal government’s Farm Products Council of Canada, which oversees national agencies in supply-managed industries, announced that the chicken industry had six months to solve the allocation problem before the Council imposed its own solution. In light of ongoing trade negotiations, it is easy to see why timing was so important – it is the same government that holds the future of supply management in its hands.

Chicken Farmers of Canada (CFC) executive director Mike Dungate says that he does not underestimate the difficulty the industry faces in resolving this problem, but he is optimistic because he believes everyone truly understands that changes are needed. “Pro rata is not part of the current Federal Provincial Agreement and there is a push for differential growth,” he said. When asked to simplify that statement, he added, “No farmer has the right to expand just because.”

Finding the best process for change is the greatest and most immediate challenge facing CFC and the industry, according to Dungate.

By the time this article is published, CFC will have met one on one with all of the provinces, and other important meetings will have taken place to devise a process that will lead the industry to a solution. Dungate believes an agreement is close, and has stated several times, “This is a very collaborative effort and everybody knows changes must be made.”

I hope he is right. But either way, we will know soon whether it is industry or government that will need to fix critical cracks in a system that must include differential growth to survive.