Processors’ concerns threaten to unravel national chicken allocation agreement

Provincial regulators asked to review the deal

A late appeal by western Canadian processors could jeopardize a landmark agreement aimed at settling a long-standing dispute among provinces over allocating broiler chicken quota.

Chicken processors in Manitoba, Saskatchewan and British Columbia are appealing a memorandum of understanding signed last summer by provincial chicken-marketing boards and Chicken Farmers of Canada for the allocation agreement.

The industry is in the final stages of drafting an amended operating agreement, which is part of the federal-provincial chicken plan, to allow the MOU to take effect.

Although the MOU has been signed by the chicken boards, provincial regulatory bodies must ratify the operating agreement to complete the deal.

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But processors are asking both regulators and chicken boards in Manitoba, Saskatchewan and B.C. to review the deal, claiming it gives Ontario an unfair market advantage.

“Some of our processing members do have concerns with the CFC agreement,” said Mike Terpstra, chicken sector manager with the Canadian Poultry and Egg Processors Council, in an email to the Manitoba Co-operator.

“CPEPC has communicated with the CFC on this matter recommending that a component for regional differential growth be incorporated in the new agreement while establishing checks and balances to ensure regional and national markets are supplied appropriately.”

Processors are not signatories to the national chicken agreement. But because they are key players in the industry, their voice carries some weight.

The western processors say a special arrangement in the MOU allocating extra kilograms to Ontario, Canada’s largest chicken producer, over 10 years is unfair to them.

Manitoba’s two chicken processors, Granny’s and Sunrise Farms, recently sent a letter to Manitoba Chicken Producers asking it to review its decision to sign the MOU. The processors subsequently withdrew the request, indicating they might have better traction in Saskatchewan, where a preliminary hearing by the provincial supervisory board is getting underway.

Supervisory boards are provincial regulatory bodies (such as the Manitoba Farm Products Marketing Council) which oversee agricultural sectors governed by provincial legislation. That includes the supply-managed egg, dairy and poultry sectors.

Industry officials worry the processors’ lobbying efforts could influence supervisory boards’ decisions on whether or not to sign the operating agreement, without which the allocation plan cannot go ahead.

“The danger is, if each supervisory board tried to renegotiate what the (chicken boards) did, then other supervisory boards would say, well, if you’re renegotiating something for your province, then we might do it for our province,” said Wayne Hiltz, Manitoba Chicken Producers executive director.

“And then we’re back to square one, except now it goes to a level of people who don’t necessarily have the same stake in the industry.”

Mike Dungate, CFC executive director, said there’s no room for further negotiations and the only thing left to do is complete the operating agreement.

“We’re trying to get the language finalized. We’re not trying to reopen the negotiations,” Dungate said by phone from Quebec City, where he was attending the Quebec chicken board’s annual meeting.

“And in our view, trying to add a regional component to what we’ve done is reopening the negotiations.”

The MOU, six years in the making, was finally signed last summer with support from the Farm Products Council of Canada, which was pushing chicken boards to reach an allocation agreement.

It allows for something called “differential growth,” which enables some provinces to get proportionally more chicken quota than others, based on their economic conditions.

Differential growth has long been a sticking point in allocating chicken quota for each of its eight-week rolling production periods throughout the year.

Provinces with rapidly growing populations, such as Alberta, complained the system was inflexible in matching supply with increased demand because it did not provide differential growth.

Alberta pulled out of CFC in late 2013 over the issue, triggering fresh negotiations for a new allocation agreement. After a number of delays and false starts, an MOU for the agreement, including a formula for differential growth, was finally hammered out last July, with CFC and all provincial chicken boards, including Alberta, signing on.

Dungate said the last-ditch efforts by processors could potentially scuttle the deal, even though they are not actually signatories to it.

“They could put it at risk,” he said.

Dungate said CFC will intervene at supervisory board hearings in Saskatchewan and B.C., saying the MOU already addresses processors’ concerns.

Despite processors’ efforts, he expressed confidence the agreement will be fully ratified later this year.

“Our goal is to get this thing across the finish line.”

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