Canada’s chicken industry leaders will vote this week on new national rules designed to end interprovincial rivalries and overproduction which have threatened to destroy the marketing system.
On Oct. 17, directors of Chicken Farmers of Canada will decide on a complex, delicately balanced plan which aims to stabilize producer prices and satisfy complaints from Ontario and Quebec producers while allowing the prairie industry to expand faster than the national average.
“I’m very confidant all provinces and stakeholders will sign on,” chicken farmers chair John Kolk of Alberta said Oct. 9. “I think with this one, we’ve got it down. I think there is a balance which gives us room to push growth but avoid the me-too attitudes that in the past have hurt us.”
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If it is approved, each province will make the necessary changes and a national signing is expected by mid-November.
Under way in April
The first two-month production allocation under the new system would be made in January, to take effect April 12, 1998.
If it works, it will end Quebec’s threat to leave the system and to quit paying national levies.
Under the proposed new system, production levels would continue to be set provincially, based on processor demand. Prices would be set the same way, rather than though a cost-of-production formula.
But there would be controls:
- An annual five percent limit to chicken production growth would apply nationally and regionally. The country would be divided into three regions (the four western provinces, the four Atlantic provinces and the two central provinces) and within each region, maintaining the cap would be worked out between the member provinces, with no province allowed more than an eight percent increase.
- If production growth in Ontario and Quebec is less than one percent during a two-month period, other regions would not be able to expand production by more than 2.5 percent. It is meant to answer Ontario and Quebec complaints that when they restrain production, smaller provinces try to expand to fill the gap.
- A 1.5 percent additional production allocation can be assigned to any region that wants it, although Kolk said it usually will benefit the Prairies.
“The prairie argument during the past year has been that since the loss of the Crow rate, there is some feed grain price advantages on the Prairies,” he said. “The governments and provincial boards and processors think it is opportune now to use that additional pool to grow their markets a bit.”
Kolk said the deal will be backed up by a bond posted by provincial boards, which can be taken as a penalty if there is a violation of the production limits.
He said the new system, with tighter controls on production, should help stabilize prices.
“It will not raise prices but I hope it stabilizes the market somewhat so you don’t have swings of 10 cents up or 13 cents down,” he said. “I think prices won’t be as volatile. Some of the pricing volatility has been a power struggle on top of feed prices which have produced price movements that are really destabilizing for the market.”