Supply and Demand

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Today, the Canadian supply management system for chicken, a system with roots dating back to 1948, provides some vital benefits to the Canadian economy, government, food processors and farmers, but some of its dated practices create unique obstacles for each party. Some Canadians argue that the chicken supply management system should remain unchanged, some argue for its complete abolishment, while others believe it can be revised.

A true national supply management system was first implemented in 1979 in order to protect Canadian farmers from times of economic instability. “The Canadian dairy sector opted to operate under a system of supply management in the early 1970s to address unstable prices, uncertain supplies and fluctuating producer and processor revenues, which were common in the 1950s and 1960s,” Patrick Girard, senior media relations officer at Agriculture and Agri-Food Canada, explains to Food in Canada.

The way that the supply management system works is by determining prices that consumers and food processors pay for the raw goods. Since prices may be different from international standards, there is also protection against excessive foreign competition; there is a set amount of foreign product that can be purchased before the government introduces high tariffs. On the other hand, to protect processors from being forced by farmers to buy more stock than they can sell, the supply management board sets production quotas, which no farmer is permitted to exceed.

Some politicians, such as Martha Hall Findlay, a former Liberal MP for Toronto, are proponents of dismantling the supply management system. Findlay believes that Canadian consumers are paying unreasonably higher prices for farmed goods compared to non-supply-managed countries. The higher prices, Findlay argues, are due to the strict limitations that a supply management system places on all sectors of the industry.

Robin Horel, president and CEO of the Ottawa-based Canadian Poultry and Egg Processors council, supports supply management but argues that improvements need to be made to address the needs of every sector. In his own sector, Horel believes that suppliers should have a say in how much chicken they can buy. Currently, the board, which he argues is largely comprised of farmers, has the final say in how much can be produced each year. “It’s in [farmers’] best interest to produce as much as possible,” Horel explains to Food in Canada. “And the folks who have to deal with that in the marketplace are my members, who have to buy whatever is produced, and then somehow sell it into the marketplace. And if there’s too much production, my guys still have to pay the full price — because that’s one of the other pillars of supply management — and then they can’t get their costs recovered in the market.”

Despite the advantages Horel points out that supply management has for farmers, there are producers who are being harmed by that very same system. Andrew Macdonald, a Burlington, Ont. Farmer, complains that he had to give up on selling chicken meat from his farm after three years of battling with the supply management system.

Macdonald needed to raise 1000 chickens per year in order to be profitable in the poultry business. Ontario’s supply management system, however, limits small-flock farmers like him to 300 birds per year. Macdonald, who wants to provide his small town with farm-raised, cage-free chickens, is at a stark disadvantage to large-scale chicken producers from central Ontario — if a producer wants to surpass the 300-bird limit, it must purchase a quota, which consists of a minimum of 14,000 production units — equivalent to approximately 90,000 chickens per year — at an estimated cost of $1.75 million. This doesn’t take into consideration the cost of labour, land, feed and buildings.

So, despite having a strong customer base of health-conscious and environmentally responsible Canadians interested in purchasing farm-raised chickens, Macdonald had to abandon the poultry production business. Regardless of where each sector stands, the entire industry agrees that some solution is needed within the supply management system to address the needs of small-scale farmers, food processors, and the Canadian economy without compromising consumer demand for responsibly raised chickens. Though no one has found the right answer yet, agricultural research groups like the George Morris Centre are conducting studies to determine viable solutions to current supply management woes.

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