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More Flocking
Options
Making Space for New
Entrants and Alternative
Markets in Supply
Management
What is Supply Management?
A system that controls the supply (in the form
of quotas) that help ensure a fair return to the
producers of certain food commodities:
• Eggs
• Chicken
• Turkeys
• Dairy
History
 Large concentration in processors and retailers,
many individual farmers, lead to price pressures &
competition between farmers
 Farmers were going bankrupt because of market
swings
 Government agreed that we need farmers and
legislated the Supply management System
 All farmers were given a certain amount of ‘Quota’
 1965 for Dairy, 1970s for chicken
How it works today
 Commodities pooled
 Works well for large producers of 1
commodity (eg. chicken)
 Boards ensure quality and supply
 Boards take care of marketing for farmers and
in some cases distribution
 Negotiate prices based on cost of production
What are the challenges
 Does not allow or encourage new, small and diversified
producers
 Minimum quota holdings
 Cost of quota
 Control of marketing
 Does not allow for the connection between eater and
farmer
 Does not allow for differentiation
 Not serving the demands of emerging markets (eg.
pastured poultry)
Focus on Broiler Chickens
 Capital costs of a broiler production facility to hold
52,000 units of Quota: Approximately $4.6 million,
(of which $3.9 million is the cost of quota to
produce this quantity of chickens per year)
 Minimum holding 14,000 units (approx 90,000
birds/ year)
 Board has allowed a few small flock holdings, with
no policy or consistency to date
Alternative Production
 Mixed operations: economies of scope
 A lack of economies of size
 Different costs of production
 Greater marketing efforts and customer
interaction
 Higher market risk
 Spin-off enterprises
Options?
 Increasing quota exemptions
 Developing alternative markets that are not subject to quotas
 Decreasing minimum quota levels
 Establishing separate quotas for specialty products
 Offering exemptions for specialty products
 Offering exemptions for producers who sell through direct
marketing
 Setting aside a certain amount of processing capacity for
alternative producers
Examples in other Provinces:
 FIRB review in BC: New entrants and
specialty production
 Alberta: Introduction of specialty quota, and
2000 bird exemption
 Nova Scotia: 200 personal flock limit, free
range license for $25 to produce up to 10,800
birds / year
Supporting Flocking Options
 Visit our website (www.flockingoptions.ca)
 Send a message directly to the Farm
Products Marketing Commission
 Order postcards from our website.
 Hand them out at farmers’ markets.
 Collect postcards and send them
in batches to Sustain Ontario.
More information
 Mail postcards to:
Sustain Ontario
401 Richmond St. West, Suite 365
Toronto, ON
M5V 3A8
 Email flockingoptions@sustainontario.ca
 Connect with us on social media @flockingoptions
THANKS!

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Supply Management 101 (August 1, 2013)

  • 1. More Flocking Options Making Space for New Entrants and Alternative Markets in Supply Management
  • 2.
  • 3. What is Supply Management? A system that controls the supply (in the form of quotas) that help ensure a fair return to the producers of certain food commodities: • Eggs • Chicken • Turkeys • Dairy
  • 4. History  Large concentration in processors and retailers, many individual farmers, lead to price pressures & competition between farmers  Farmers were going bankrupt because of market swings  Government agreed that we need farmers and legislated the Supply management System  All farmers were given a certain amount of ‘Quota’  1965 for Dairy, 1970s for chicken
  • 5. How it works today  Commodities pooled  Works well for large producers of 1 commodity (eg. chicken)  Boards ensure quality and supply  Boards take care of marketing for farmers and in some cases distribution  Negotiate prices based on cost of production
  • 6. What are the challenges  Does not allow or encourage new, small and diversified producers  Minimum quota holdings  Cost of quota  Control of marketing  Does not allow for the connection between eater and farmer  Does not allow for differentiation  Not serving the demands of emerging markets (eg. pastured poultry)
  • 7. Focus on Broiler Chickens  Capital costs of a broiler production facility to hold 52,000 units of Quota: Approximately $4.6 million, (of which $3.9 million is the cost of quota to produce this quantity of chickens per year)  Minimum holding 14,000 units (approx 90,000 birds/ year)  Board has allowed a few small flock holdings, with no policy or consistency to date
  • 8. Alternative Production  Mixed operations: economies of scope  A lack of economies of size  Different costs of production  Greater marketing efforts and customer interaction  Higher market risk  Spin-off enterprises
  • 9. Options?  Increasing quota exemptions  Developing alternative markets that are not subject to quotas  Decreasing minimum quota levels  Establishing separate quotas for specialty products  Offering exemptions for specialty products  Offering exemptions for producers who sell through direct marketing  Setting aside a certain amount of processing capacity for alternative producers
  • 10. Examples in other Provinces:  FIRB review in BC: New entrants and specialty production  Alberta: Introduction of specialty quota, and 2000 bird exemption  Nova Scotia: 200 personal flock limit, free range license for $25 to produce up to 10,800 birds / year
  • 11.
  • 12. Supporting Flocking Options  Visit our website (www.flockingoptions.ca)  Send a message directly to the Farm Products Marketing Commission  Order postcards from our website.  Hand them out at farmers’ markets.  Collect postcards and send them in batches to Sustain Ontario.
  • 13. More information  Mail postcards to: Sustain Ontario 401 Richmond St. West, Suite 365 Toronto, ON M5V 3A8  Email flockingoptions@sustainontario.ca  Connect with us on social media @flockingoptions THANKS!