Leaders of Canada’s half billion-dollar egg industry will be in Ottawa April 28 to try to resolve the prolonged dispute with Saskatchewan over what share of national production the province should have.
The dispute has delayed for more than a year the signing of a new federal-provincial agreement to govern the egg supply management system, including the always-touchy issue of how to distribute production quota.
British Columbia also has had objections.
Saskatchewan wants to take the Canadian Egg Marketing Agency to court this spring to argue that CEMA has failed to live up to the terms of the last national agreement by not giving Saskatchewan’s competitive advantage enough weight in the distribution formula.
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CEMA chair Laurent Souligny, an eastern Ontario producer, said March 24 after the agency’s annual meeting that the heads of provincial egg producers’ groups and provincial supervisory agencies will be called to Ottawa to try to reach agreement. Federal and provincial governments, also signatories to the agreement, will not be involved yet.
“I hope the signatories can resolve this before it goes to court,” he said. “We would just like to move on.”
But Souligny said it will not be a simple matter of agreeing to Saskatchewan’s demand for more quota. He insisted CEMA did adhere to its requirements under the national agreement.
Saskatchewan’s claim for more quota is based in large part on its lower feed costs, reduced since the Crow rate grain transportation subsidy was ended a decade ago.
“But feed costs are just part of it,” said Souligny. “Producers in other provinces can claim to being closer to processing plants or population centres or markets as their competitive advantage.”
In fact, Saskatchewan’s share of national production has declined over the almost three decades that the national marketing scheme has operated.
In 2003, the province was allocated 2.8 million dozen in production quota out of a federal total of almost 523 million dozen. The projection for 2005 is that the province will receive quota for 2.88 million dozen out of national production of almost 541 million dozen.
The CEMA chair said when the system was created in the mid-1970s, the province held 4.7 percent of production.
Despite the impasse over a new national agreement, Souligny said the agency continues to operate effectively. It generated $565 million in 2003 farm cash receipts, acting as the base of a $1.5 billion industry that creates 12,000 jobs and supplies an expanding market with eggs.
However, the CEMA annual report says the industry continues to confront problems.
The incidence of avian flu in British Columbia last year led to the destruction of 1.4 million layer hens and a sharp reduction in egg production. Egg production is expected to return to normal by December 2005, said the CEMA annual report published last week.
The industry also is trying to come to grips with the fact that quota prices discourage new farmers from entering the system.
“There is an increasing realization that it will be necessary to pave the way for new entrants into the supply management system,” said the CEMA report.
Souligny said provinces are considering various schemes, including distribution of some free or reduced-value quota each year to new entrants.
He said in Ontario, quota for one layer costs approximately $160 and a flock of 10,000 or more is needed for a viable operation.
“If you are from within the industry and your parents have quota, it is possible, but for someone from the city trying to get into the industry, that ($1.6 million) quota cost is obviously a big barrier.”
