What a difference a year has made in the financial fortunes of the Canadian Egg Marketing Agency.
A combination of two levy increases for farmers in late 1995, an increase in table egg sales last year, some agency cost-cutting and a higher-than-expected price for eggs sold to food processors turned last year’s large deficit into a healthy surplus.
“It was only a year and a half ago that the deficit in our pooled income fund peaked at $7.8 million,” CEMA chair FŽlix Destrijker told the annual agency meeting March 25. “We were in the very difficult position of having to seek two levy increases only months apart.”
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federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
Yet by the end of 1996, the agency pooled income fund had a $7.8 million balance.
“That was a gain of about $15 million in just one and a half years,” he said. “So it has been a very good year indeed.”
Chief financial officer Greg Pearse told the meeting the agency’s surplus at the end of 1996 was unprecedented in its 24-year history.
Part of the turnaround came from a $11.6 million, 34 percent increase in levy revenue from farmers.
But a large part of it was an unexpected 19 cents per dozen increase in the price CEMA could charge food processors and other industrial users of surplus eggs last year. It brought in an additional $14.6 million.
CEMA bases its “breaker” price on the U.S. price, and in 1996, it rose to 73 cents (Cdn) per dozen.
The better balance sheet allowed the agency to reduce some levies late last year.
Domestically, there was a healthy 1.5 percent increase in retail demand for eggs. It meant that a larger portion of production went to the higher-priced table market and less had to be sold at a loss to the breaker trade.
It also has allowed national production to increase to record levels of 476 million dozen.
“That means we are producing more eggs than we ever have since the beginning of national supply management in eggs,” said Destrijker.
The new year brings its own challenges, however.
Production cost up
CEMA is expecting much lower breaker prices this year, which means an increase in costs of surplus removal.
It is trying to win National Farm Products Council approval for a levy increase for 1997 to keep agency reserves up and to reduce or eliminate the need to borrow money to meet the cost of removing surplus product from the market.
Neil Currie, CEMA chief executive officer, said there also will be an increasing industry emphasis on food safety.
He said egg producers are being educated about the potential for introducing Hazard Analysis Critical Control Points systems on their farms.
“It appears producers across the country are receptive to these ideas for change,” he said.
Destrijker said food safety issues present the egg industry with the “realities” that consumers want better food products while worrying more about food safety.
“If we are to capitalize on the trend towards increased egg consumption, we will have to manage these two realities carefully, very carefully,” he said.
