The Back Page: October 2013
By Ronnie ConsFeatures Profiles Researchers Business/Policy Canada Poultry Production Production
The Poultry Farmer-Processor Relationship
As we are well aware, Canada’s chicken industry is regulated by a supply management system. It was established in Canada through federal and provincial legislation to make sure that farmers produce the right amount of safe, quality chicken meat to satisfy consumer demand.
It’s simple supply and demand: without supply management, when supply exceeds demand, the price drops to encourage the increased sale of chicken, which hurts the farmer as well as brings uncertainty to the marketplace.
On the other hand, when supply is too low, processors compete for supply, bringing prices up for the consumer. Thus supply management was implemented to help guarantee processors a consistent supply of chicken at stable prices – and protect the farmer.
Farmers, processors, and restaurant trade members from across Canada meet regularly in order to forecast market demand and set production levels, and each province receives a percentage of the total estimated production. Finally, the marketing board in every province distributes the quota among farmers and processors.
What this means is that the poultry processor needs and is dependent upon an expected quantity of chicken from their contracted poultry farmer suppliers, as well as a certain quality of chicken from the farm. Thus the processor expects and often demands that the farmer abide by certain consistent standards and practices so that the quality and the specifications of the delivered chickens meet their and the end consumers’ expectations. The processor does not want, nor can they afford, any surprises, as they are driven by their distributor accounts and the supply management system. Thus the distributor expects that certain standards and government regulations are followed concerning such issues as hatching of eggs, humane treatment of the chicks, feed quality and quantity, disease control, living environment of the chicks and transportation of the chickens to the processor. The more consistent the production methods used, the more consistent the quality and quantity supplied to the processor.
Of course, inspection of the supplied product will help maintain the quality of the product. But fear of losing business or a distributor is not the only means of maintaining quality. There are “soft” behavioural strategies that can be implemented to increase the consistency of the quality and quantity of the supply to the processor.
Channels of communication should be opened and maintained between the farmer and the processor. The farmer should be made to feel free to call and report any surprises or problems that may affect future quality or quantity. The processor should let the farmer know that he will not be penalized for doing so but will actually be rewarded with appreciation and possibly help to solve the problem.
Hence, any problems reported early to the processor will potentially help them to avoid costly supply or quality problems.
Hosting social events and contributing to similar charities and local needs will lead to a closer and more trusting partnership-oriented relationship that will encourage the supplier to maintain higher quality.
Finally, trust and appreciation must be enhanced. Farmers must be made to feel that the processor trusts them and appreciates their work in raising the chicks. By doing so, they will feel more like partners with the processor and be encouraged in their work. Positive reinforcement encourages better results for a whole farming operation, as no chicken farmer likes to feel like just one of 50 suppliers to a large processor. They want to feel important and considered.
In Canada, we see that thousands of family-run farms have supplier relationships with processors. This partly reflects the reality that a certain satisfactory level of trust and dependability of supply exists between the two sides. Yet, all is not perfect; thus, steps can and should be taken when possible to increase the level of trust, communication and respect between the supplier and the processor.
Ronnie P. Cons is executive VP of C&C Packing Inc., a leading Canadian meat and poultry distributor. He can be reached at email@example.com.
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