The Rural Voice, 1990-05, Page 43As an entrepreneur, however,
Vanderhaar says he always has his eye
on the bottom line. It is no fun buying
grain cheap, he says, and it is hard to
see neighbourhood farms falling apart,
but tough decisions must be made in
any business, even when other farmers
are not getting a fair price.
Because Vanderhaar prepares his
own feed, he can control this variable,
rather than depend on a feed company.
His crops include corn and soybeans
for his poultry feed as well as a wheat
harvest.
But he hasn't the same control over
the price he receives for his product,
live chickens. In 1987, when the price
the chicken board offered dropped 4
cents a kilogram for live chicken,
Vanderhaar suffered severe financial
losses — at times an incredible 11
cents below the cost of production.
He decided it was time to appeal.
Chicken producers lobbied as a group
with Vanderhaar and others as spokes-
men, and got their cost of production
from the chicken board. They had to
maintain the pressure on the board in
order to survive, Vanderhaar says.
"When I appealed in 1987, I had
no use for them (the board)," he adds.
"Management was stagnating and they
were afraid to make a decision. But
since 1987 there has been new man-
agement. There has been a 180 -
degree change. When an issue comes
up, they go after it rather than avoid it.
We get newsletters and have meetings.
Before, we didn't know what was
going on."
Today, Vanderhaar says, a chicken
producer is locked in with his proces-
sor, which has its own drawbacks.
Sometimes a processor doesn't take a
producer's birds when they are ready
to be processed, which affects weight
gain and grading level. And producers
no longer receive premium incentives
from processors, a result of the Archer
Commission, a provincial initiative
which looked into the issues of prem-
iums and pricing in the industry.
Ninety per cent of live chicken is
processed for restaurants and special-
ized products; only 10 per cent is sold
fresh in supermarkets, a reduction
from the 14 per cent market share in
1987. Prices in general are lower,
about 30 per cent in real terms since
the late 1970s, whereas there has been
a reduction of only about 10 per cent
in retail prices, indicating an increased
farm to retail price spread. But at the
same time the consumer appetite for
chicken has increased dramatically.
Where does this leave the pro-
ducer? At a legal disadvantage in
terms of selling his product, particu-
larly when the General Agreement
on Tariffs and Trade (GATT) talks
are considered. Vanderhaar says he
knows the GATT talks could mean
an end to his business, but as a busi-
nessman he is also optimistic, main-
taining that there is always a way
around a problem.
Farmers, Vanderhaar says, have
never before thought about legal is-
sues. Now they have to if they are to
survive. Supply -managed producers
could have their power severely
reduced, and stabilization payments,
a stop -gap measure to keep farmers
working on the land, will eventually
disappear over the next 10 years as
tariffs are removed.
"If farmers are upset, they have
every reason to be," Vanderhaar says.
"Terms such as `hanging together' and
`growing together' do not mean much
unless you have legal clout. In fact,
they are harmful because they produce
a sense of security which does not
exist. Stabilization payments produce
a sense of farming viability which
may not exist."
"Americans are increasing pro-
duction and are determined to increase
export," Vanderhaar adds. "As long
as Article XI stays in place, chicken
producers will be fine. Right now, we
are a net importer of about 6.7 per cent
of chicken. If the processors need it,
they get it."
"If processors could get a cheaper
price for live chicken, they would do
it," Vanderhaar adds. "But since
Mazankowski made his speech sup-
porting Article XI, farmers have been
less upset, and continue to run their
operation as they have been."
Free trade is another concern. The
tariffs will be gone in 10 years, says
Vanderhaar. "So far, it has not hurt
too much. We have lost about one to
two per cent market share over it."
"Since the Free Trade Agreement
was signed," he adds, "the value of
quota has dropped about 10 per cent.
I can now sell or buy quota if I want
to. Before, I would have to sell the
farm. Or I would have to buy a farm
with quota on it, if I wanted quota. I
think that quota has now stabilized
and has started to head back up."
But Vanderhaar says he has no in-
tention of expanding for the next five
years, even though he has consolida-
ted his position. "Eventually," he
says, "I would like to buy another
piece of property right beside us and
put quota on it."
In the meantime, he says, "I will
sell extra land. I will stay away from
growing com. I will just purchase.
One whole farm will be hay just to
build it up. Until the Americans and
the EEC quit fighting, there won't be
any change in cash cropping."
"Our family has been in the chick-
en business since 1956. We used to
put the feed in and take the chickens
out. The last three years have been
unbelievable, in a business sense."0
FACTS ABOUT GATT
The Uruguay Round of the GATT is
scheduled to end this year. The results of
these negotiations to reduce barriers to
trade will affect world trading patterns into
the 21st century.
At present, Article XI of GATT gives
countries like Canada that have supply
managed programs the right to supply their
own market and restrict imports of agri-
cultural or fisheries products.
But Article XI is being challenged.
In November of 1989, Canada refused
to endorse any paper that called for the
elimination of the right to control imports.
Canada will be under pressure to change
this position.
In order to fulfil GATT requirements,
Canada could find itself severely restrict-
ing the power of supply management sys-
tems. The U.S. has also proposed "tariffi-
cation" — all non -tariff import restrictions
would be converted to tariffs based on
price differentials and eventually reduced
to zero over a period of about 10 years.
GATT talks on Article XI are the
burning issue facing chicken farmers
today, says Roy Maxwell, communications
officer for the Ontario Chicken Producers
Marketing Board. If Article XI is watered
down, he says, not only chicken producers
but turkey producers, egg producers, and
hatcheries will be affected drastically.0
MAY 1990 39