Supply Management 101 (August 1, 2013)

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An introduction to the supply management framework in Ontario and a discussion of the quota system, agricultural markets, lessons from other municipalities, and ways forward to creating a more flexible poultry sector in Ontario. Presented by Sustain Ontario, the Alliance for Healthy Food and Farming, Christie Young of FarmStart, and Anne Freeman, the manager of the Dufferin Grove Farmers' Market.

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Supply Management 101 (August 1, 2013)

  1. 1. More Flocking Options Making Space for New Entrants and Alternative Markets in Supply Management
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. 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)
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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.
  11. 11. 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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