The Rural Voice, 1990-02, Page 141
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10 THE RURAL VOICE
SUPPLY MANAGEMENT:
THE NEXT GENERATION
Adrian Vos, from Huron County, has
contributed to The Rural Voice since
its inception in 1975.
Last September I wrote a column
on the advisability of basing cost of
production (COP) formulas in supply
management on a model farm, rather
than on averages, and I also said milk
boards should consider selling indus-
trial milk at more competitive prices.
Letters to the editor poured in. I
was one of the villains that would
abolish supply management. That I
did not suggest this, but offered what I
thought was constructive criticism,
was overlooked.
Some more constructive criticism
is reported in Canada Poultryman,
from the Canadian Poultry and Egg
Processors Convention. No less than
Penny Kelly, general manager of the
Manitoba egg board, ponders:
"In the long term, full COP on
all eggs produced must be carefully
weighed off against the impact of
product substitutes, the effect of price
on consumer buying behaviour, and
those factors which affect the markets
for processed product."
"Canadian producers may have to
ask themselves what markets they can
afford to be in. If the requirement for
full COP on all eggs is critical, then
perhaps we should be producing pri-
marily for the table market with only a
nominal over -run directed to domestic
processing. The balance of processor
demand might be supplied through
contractual arrangements with provin-
cial boards or individual producers."
She also suggests that price -
pooling of table and processor eggs be
considered because the consumption
of table eggs is declining and demand
for breaker eggs is growing. "A de-
clining market carrying a growth mar-
ket is not a wise long-term choice."
But pooling industrial and table
egg prices and still meeting the COP
means higher prices for table eggs.
Kelly worries this "will have a dam-
pening effect on consumer buying."
This is likely what Mazankowski's
discussion paper "Growing Together"
referred to when it mentioned a new
generation of supply management.
Kelly concluded that the survival
of CEMA is not guaranteed. And the
same can be said about the pricing of
milk and the survival of supply man-
agement in the dairy industry.
Another speaker at the same con-
vention, John Hoburg Lee, president
of the export packers association,
finds the COP formula obsolete. He
believes that averaging producer cost
to arrive at a price is all right, as long
as this averaging is based on North
American costs. "Canadian egg
producers are just as adept as their
American counterparts." He calls it
"absolutely ridiculous that the official
COP of a dozen eggs in Canada is
almost double what the actual COP is
in the U.S." Lee says a 20 per cent
difference would be acceptable.
"The processing industry is a
growing industry that represents real
opportunity for Canadian egg produ-
cers, but it [cannot] pay so-called 'full
cost of production' or table -egg prices
for its raw material."
Lee is not alone in this position.
And again, the arguments about break-
er eggs can also be applied to industri-
al milk. Price pooling may be part of
the solution, according to Kelly.
As Lee said, the processing indus-
try is a growing business. You neglect
it at your peril. Allow processors to
compete and everyone will benefit.
The other possibility Kelly men-
tions is to sever processing eggs from
supply management. Let processors
make individual deals with producers,
much like the vegetable processors try
to do. The egg board could negotiate
on the behalf of the producers.
There you have it, folks. Listen
and learn. Dig in your heels and get
emotional about ideas for change and
you may lose it all. Now you've heard
it from people in your own system.0
6