Canada’s chicken industry has a one-year deal aimed at better controlling production growth and improving farmer prices.
“We have come together to approve a system that will work for the year,” Chicken Farmers of Canada president John Kolk, of Alberta said in a May 14 interview.
Directors of CFC met in Hull, Que. last week and agreed that during the next 11 months, provincial chicken marketing boards will continue to negotiate production levels with processors, as they have since 1995.
However, growth will be capped at three percent per marketing period. The former agreement allowed growth up to eight percent.
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Critics complained that it led to surplus production, growing processor inventories and lower prices for farmers.
Last week’s agreement came after producer complaints that the 1995 reforms gave processors too much bargaining power, producers too little money and CFC too little control over national production levels.
Quebec had threatened to quit paying levies if better controls were not implemented. That threat has now been withdrawn.
Last week’s agreement was supported by chicken producers from the 10 provinces but opposed by four processing and further-processing representatives.
Kolk said the three percent limit on expansion should be tight enough to allow processor stock inventories to decline. “In the last few years, average growth has been 3.9 percent so this is slightly lower than the 10 year average.”
Winter also tends to be a period of lower demand.
The CFC president said prospect of tighter controls and lower inventories has started to raise chicken prices by between seven and 10 cents per kilogram.
“It has already started in Ontario,” he said. “It will be felt across the country.”
Last week’s agreement is to last until April 1998 but can be reviewed at the beginning of next year if there is a demand.
In April 1998, a new national allocation and pricing system is supposed to take effect. Industry leaders will work this year to develop rules to keep closer controls on production and guarantee producers adequate prices.
Kolk said meetings will be held throughout the summer and autumn.
“There will be a great deal of consultation with people who are not at the table.”
