The Rural Voice, 1998-07, Page 21no interest in a joint venture," said
Buffinga.
Both Buffinga and Durst stress that
while the Manitoba co-op has talked
about going outside the marketing
board production and quota limits,
Newgeneregg Co-op has no intention
of doing the same.
"The system has been very good to
us," said Durst. "We want to stay
within the system. We see the co-op
as an extension of the board."
Staying within the system is
written into the co-op's mission
statement, which reads:
"To permit Ontario egg farmers,
working within their established
marketing systems, to share in the
profits and future growth of their
industry by participating in and
aiding the growth of the egg
processing and marketing sector."
Ontario egg producers are
seeing a decreased demand
for table eggs and an
increased demand for industrial egg
products like liquid, dried and frozen
egg. Eggs that are used for industrial
purposes sell for less. Money is made
when these products are then further
processed into different foods
including mayonnaise, noodles and
baked goods.
"By joining forces, we'll be able to
be part of the growing industrial egg
market, rather than sitting on the
sidelines and watching our margins
decline," said Durst.
Twenty percent of eggs in Canada
are being processed, but that number
is expected to grow. In recent years
the egg processing industry has
outpaced growth in the demand for
red meat.
"Farmers are looking at the risk of
not doing anything," said Durst.
They want to see added value to the
farm -gate price.
In 1996, the farm -gate value of
eggs for consumption in Canada was
$482.4 million. The value of 1996
sales from the entire Canadian egg
processing industry is estimated at
$77.9 million, excluding the value of
pharmaceuticals extracted.
According to the Canadian Egg
Marketing Agency (CEMA), annual
egg consumption in Canada has
dropped from 23 dozen per person in
1960 to 15 dozen in 1996 due to
changing dietary habits. A recent
survey done by CEMA indicated
there was as increase in table egg
consumption over the past two years.
However, processed egg
consumption has increased
dramatically since 1986.
While most producers don't feel
they are large enough to make an
impact on the market, they feel
collectively they can do a lot.
Forming a co-op is one way they feel
they can gain strength in numbers.
Newgeneregg Farmers Co-
operative is a new generation
co-operative which means
that unlike the old co-ops members'
investment in the co-op will be
proportionate to their quota. This
ensures that the co-op is accessible to
all egg producers in Ontario,
regardless of their size.
"In the old co-ops there was a fee
of $10-$15," said Durst. `These new
co-ops are more of a business."
While a complete business plan has
yet to be drawn, Durst said the co-op
will likely ask farmers to invest $3
per bird. The average flock size is
between 10,000-12,000 which would
mean an investment of $30,000-
$36,000 per producer.
"We want to have a high equity so
we can have a more stable business,"
said Durst.
George Alkalay, a consultant with
Northfield Ventures Ltd. agrees. "In
the old-style co-ops attracting
investors was difficult."
Alkalay was hired by Newgeneregg
co-op for his expertise in helping
farmers form co-operatives. Alkalay
assisted in the formation of Farm
Fresh Poultry Co-op (January edition
of The Rural Voice).
Alkalay is in the process of helping
Newgeneregg find a joint venture.
"It's a relatively small industry so
that helps," he said. "We're looking
at 12 players."
The co-op hopes to find a partner
within three to six months. Their first
choice is a joint venture where they
would team up with a company
already in the processing business.
That way they would benefit from
the company's knowledge and
marketing skills while the company
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JULY 1998 17