Letter from EFO – Is There More to Come?

A letter sent from EFO (Egg Farmers of Ontario) to all quota holders/egg producers in Ontario:

Date:  November 24, 2011

To:  Ontario Egg and Pullet Farm Families

From:  Carolynne Griffith, Chair and Harry Pelissero, General Manager

Subject:  Commentary on recent media reports about supply management

Recently, Harry was asked by an egg farmer (who had emailed the Prime Minister) what all the media reports in the news will mean to the future of supply management.  The farmer wanted to know if they should buy more quota.  Below is Harry’s response to the question.

First, thank you for taking the time to email the Prime Minister.  If you have a Conservative MP, I suggest you send him/her a copy as well.  Second, the ramifications of any of the trade talks are twofold.

 First, increased market access.  Currently Canada, as a result of previous trade deals, has to allow in about 5% of Canadian demand through Global import permits.  If the system is unable to provide the product, then additional volume can come in through Supplemental Permits, currently running at about another 1-2% (by virtue of our EFP production Ontario has prevented another 3% of our market being filled by the imports).  So as part of any deal increased market access of another 3-5% would be sacrificed.  So there is the potential that between 10-12% of Canadian demand would be filled by imports.  This could result in a quota cut – removal of birds.

 Second, any trade deal could result in the lowering of our over quota tariffs.  An over quota tariff is applied when an importer wants to bring in product and does not have either a Global or Supplemental Permit.  Currently the over quota tariff is around 163%.  This means if the importer is able to obtain eggs for say $1.00 per dozen, then another $1.63 would have to be added to the price before they would be allowed to bring those eggs into Canada.  The $1.63 goes to the government not egg farmers.  On the table now in the WTO talks is a call for a reduction of at least 30% to the 163% figure.  In the past when the price has been low enough in the USA, then eggs were imported and the tariff paid and brought into Canada at a price lower than the Cost of Production (COP) for those same eggs if bought from a Canadian egg farmer.  Two things happen when this occurs, first the ability to price according to our COP would be threatened, second our ability to control production would be lost.  In both cases a quota cut will be required. 

 So you can see from the above that if either situation or both situations were to occur supply management as we know it would be threatened.  The government would not introduce an act to end supply management but all it has to do is sign a deal with increased market access and lower over quota tariffs as part of any deal.  The line would go something like this “we tried our best, but in the best interest of the Canadian economy we had no choice”.  To which my reply would be CHICKEN MANURE!!!  All countries have sectors within their economy they want to protect.  Supply management or our domestic food system is one that deserves protection.  Frank Pace former Chair of the International Egg Commission and the largest egg farmer in Australia put it best (they had supply management and lost it) – be sure to fight like hell to protect what you have because it gives the egg farmer the ability to set a price based on a cost of production verses (sic) taking what the retailers will give you for your eggs.  I could not agree more.

 I cannot or would not attempt to give you production/financial advice about what you should do on your own operation.  If you want to talk about it further please give me a call at 1-905-858-9790.  Again thanks for taking the time to email the PM.

 As your Chair, I will be travelling to Geneva for the next WTO Ministerial meeting on December 15-17.  Scott Graham EFO Vice Chair will be accompanying me on this trip.  Two sayings have always turned out to be true.  First, showing up is 90 percent of the success of any project.  Second, those who show up get to make the rules!  Egg Farmers of Ontario will always show up when supply management is discussed in a trade context.

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