With a bit of compromise, some concessions to the Prairies and a healthy dose of optimism about 1998 production, leaders of Canada’s chicken industry are most of the way to a new system for allocating national production.
Eight provinces signed on during a meeting of Chicken Farmers of Canada in Ottawa last week. And Ontario and British Columbia have given “strong indications” they will sign on within the next three weeks, said CFC chair John Kolk in a Feb. 2 interview.
The new deal sets regional and national limits on how much processors can demand that production grow.
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It also sets bullish goals for increases this year, assuming a base of three percent above last year’s production and then allowing increases as high as eight percent in the West if demand is evident.
“We are optimistic about demand this year,” said Kolk.
And he is optimistic that after more than a year of negotiations, a new production allocation system will be in place in time to start working April 12.
“Until signatures are on paper, I’ll hold back on the statement (that a new system has emerged) but everybody seems to want to put this issue to bed,” said Kolk, a farmer from Picture Butte, Alta.
When the meeting began last week, the room had many “doubters” that a deal would be reached, he said.
Manitoba agriculture minister Harry Enns had threatened to veto any agreement if wording was not changed to indicate that weak demand in central Canada would lead to an “automatic” reduction in allocation to the West.
The wording was changed to trigger a review of regional production, rather than an automatic reduction.
“We agreed that Ontario and Quebec should not explicitly dictate production elsewhere but if the market is oversupplied so that the growth rate across the country is weak, then we have a market problem,” he said.
The process for a province to give a one-year notice of quitting the system also has been spelled out to give comfort to those uneasy about the rules, said Kolk.
Meanwhile, even as CFC directors were debating and signing the deal in Ottawa, an analyst at the Guelph-based George Morris Centre was blasting it as a retreat from free market principles.
“If this agreement is in fact signed, it will be another in a series of backward moves towards the bad old days of more centralized control and less reliance on market forces,” Kevin Grier wrote.
He urged the industry to stick with rules created in 1994, which gave processors the power to set growth patterns.
But after it became clear the processor-driven system was producing stockpiles of surplus chicken and volatile farmgate prices, negotiations began to reimpose a bit more discipline.
In an analysis published by the George Morris Centre, Grier accused the chicken industry of retreating from the market.
“Over the longer term, supply restrictions will make the industry far less ready to take on an increasing competition,” he wrote. “If the producers and processors really think there is a future for this industry, then the new system should be abandoned and the true bottom-up approach should be re-instituted.”
But Kolk accused him of preaching a free market theology which does not work.
The chicken industry continues to be demand driven, he said.
