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The Rural Voice, 1982-09, Page 18The fact finding inquiry into Egg Costing by Adrian Vos The Fact Finding Inquiry into Egg Costing, which began public hearings in June wound up in Ottawa on August 4th. The hearings have attracted all who feel strongly about supply management in the feather industry ranging from opponents like the Caradian Association of Con- sumers (CAC) to the various egg market- ing boards across the country, plus a number of individuals. Prior to the hearings, there were many vociferous critics of the egg marketing system. However. they failed to appear at the hearings to defend their statements leaving the CAC and Prof. J.D. Forbes, B.C. Fraser institute, to lead the attack. The whole inquiry started when the National Farm Products Marketing Council (NFPMC) wanted the Canadian Egg Marketing Agency (CEMA) to change the cost of production formula (COP) which would have resulted in a lower return to producers of 3c a dozen eggs. The CFPMC has no authority to order any change and CEMA refused to go along with the request. It was then that the CFPMC decided to apply the pressure and ordered public hearings. While CEMA holds that one pricing formula, adjusted for transportation costs is the best way to deal with COP, others think each region should have its own COP because costs differ. The CAD predictably argued that consumers are entitled to the lowest possible price and don't receive it because returns to producers are excessive. CEMA replied that profits, are not excessive since they are calculated on the actual cost of producing a dozen eggs with rather low labor rates at that. The Ontario brief stated even with the present COP, efficiency is not adequately rewarded and that the COP formula indeed must be changed, not down, but upward. They said every time the COP is adjusted, which is done periodically, the new formula is based on the average efficient producer. This means that after every update some of the increase in efficiency is taken away from good producers and given to consumers. This, they claim, leaves little incentive to improve ones operation. However, a spokesman for the federal Ministry of Consumers and Corporate Affairs demanded just the opposite, more frequent updates done by CFPMC instead of on order from CEMA. He also wanted quota values monitored at the same time to he part of the COP formula. If the quota value is high he wants it used as a thermometer and adjust the formula down. The egg boards, like virtually all marketing boards, have always promoted and protected the concept of the family farm as one of the mainstays of our society. In public pronouncements this concept has in the past always been supported by the CAC. At the hearings however, the CAC declared egg farms not to be farms in the true sense. Their brief stated that egg farms would be more efficiently located within city limits just like other factories. Small, medium or large? If the normal Canadian process takes place, we will see some minor changes in the COP formula. Possibly the return on labor will be increased because, as the Ontario board pointed out, $6.65 per hour is not so high for a business manager. The argument by the ministry of Consumer and Corporate Affairs and the CAC that the present production units may be too small for full efficiency, is shortsighted. If an egg factory is estab- lished in the city the labor unions will soon move in ana flours of work, breaks, and vacations will all have to be included in the COP formula. I doubt if this would give consumers a break. It is the outdated thinking from 10 to 20 years ago that a larger farm is more efficient and that farms must specialize. A mixed farm, where excess labor is used in a different segment of the farm can be just as efficient and is probably more so. Farmers have a major task ahead in educating consumers about real life on the farm. PG. 18 THE RURAL VOICE/SEPTEMBER 1982 The ministry spokesman said much the same thing when he questioned the size of operations of 10,000 — 50,000 birds as being efficient by reason of scale. He would like to see a study done to find out the optimum size for an efficient opera- tion and base the COP on that size. However, all egg boards argued exactly the opposite by claiming that the COP is too low. Unfairly so and the family farm is in serious jeopardy. The only point so far where supporters and opponents agreed to some extent was on the regional difference in prices. Some contended that the transportation factor should be replaced by actual costs. As expected, professor J.D. Forbes, of the B.C. Fraser Institute, had a lengthy brief in which his position, well known and unchanged for many years of criticism, was repeated. He said that quota values are a tax on future producers, cause too high a price for consumers, and are higher in some provinces than in others, causing differ- ences in income, and is a regressive tax on low income consumers. Not all academics shared his views. Professor Tom Scott, University of Saskatchewan, would like to see a daily record keeping system in place which could be used in price determination. He deplored the pressure unfairly put on producers "accused of making windfall profits, of not being efficient, and of ripping off the consumers." He called such accusations devastating to honest people, particularly when they often make no more than one dollar an hour. In summing, he said "1 admire the man and/or woman in our commercial pro- duction units. These people are hard working, very astute industry profession- als, and without them 1 doubt very sincerely we would have our present enviable standard of living." From everything appearing so far, it appears to be a stand-off. The only place where there is some faint agreement among some is in a need for regional differences in the COP formula. The tribunal which held public hearings across the country now must prepare its recommendations to the National Farm Products Marketing Council.