Amendment to Regulation 402 (Chickens - Marketing) under the Farm Products Marketing Act.
Regulation - Other
Bill or Act:
Farm Products Marketing Act
Summary of Decision:
The Commission approved amendments to Regulation 402 on January 8, 2015. The amendments took effect on January 14 and will be used to negotiate prices for every quota period beginning with quota period A129 that begins on February 22, 2015.
The minimum live prices for chickens will be negotiated each quota period using a cost of production formula (COPF) that is comprised of 13 cost elements directly related to the production of live chickens. Provisions provide for the regular updating of the individual elements to ensure the formula remains current and reflects reasonable return to efficient producers.
The COPF also includes three annual adjustments.
1. A volume adjustment that will adjust the minimum live prices up or down based on the measured increase or decrease in Ontario's authorized domestic production of chicken.
2. A feed efficiency adjustment applied each year to reflect the ongoing improvement in the amount of feed required to produce one kilogram of weight gain.
3. A producer efficiency adjustment that has the effect of removing 10% of the producers that have the highest costs from the producer cost survey. The total value of this third adjustment will be transitioned in over four years.
September 22, 2014
Summary of Proposal:
Regulation 402 (Chickens - Marketing) provides for the control and regulation in any or all respects of the producing and marketing of chickens within Ontario.
The regulation is being amended to change the method used to determine the minimum live prices for chickens that Ontario producers are paid. The proposed amendments will involve changes to the formula to determine the minimum live price for chickens in the Schedule to Regulation 402, as well as other consequential amendments to the regulation.
The current method used to determine the minimum live price has been in place since 2002. The minimum price is determined by summing three factors (chick cost, feed price and producer margin). The chick cost and feed price are updated each quota period and the producer margin is updated annually. The minimum price is determined from these three proxies factors and not based on an actual cost of production study.
Regulation 402 is now being amended so that the minimum price for chickens will be based on a cost of production that was determined both by surveying producer costs in additional to using a model farm for elements not covered in the survey. The intent of the cost of production formula is to establish a price that gives efficient producers a fair return over time. Feed and chick components will be updated each quota period with the remaining elements updated annually based on publicly available indices.
Ontario Farm Products Marketing Commission
1 Stone Road West, Guelph ON N1G 4Y2
Phone: 519 826 3222
January 14, 2015