Regulation - Other

Amendments to Regulation 402 (Chickens - Marketing) under the Farm Products Marketing Act.

Regulation Number(s):
R.R.O. 1990, Regulation 402
Instrument Type:
Regulation - Other
Bill or Act:
Farm Products Marketing Act
Summary of Decision:
At the request of the Chicken Farmers of Ontario (CFO) and the Association of Ontario Chicken Processors (AOCP), the Ontario Farm Products Marketing Commission (Commission) amended R.R.O. 1990, Reg. 402 (Chickens - Marketing).

The amendments update the Cost of Production Formula (COPF) framework from which the negotiating agency will determine the minimum live price of chicken in Ontario. Schedule 1 of the regulation, which prescribes annual adjustments to the minimum live price, has been eliminated.

The Regulation has been filed with the Registrar of Regulations and in now in effect.
Analysis of Regulatory Impact:
The amendments the Commission is making to Regulation 402 are informed by information submitted by CFO and AOCP and comments received through the Regulatory Registry posting.

The objective of the amendments is to provide the negotiating agency a more up to date COPF framework to determine the minimum live price of chickens. Therefore, there are no monetary impacts related to the amendments. There are also no associated compliance costs to business, producers or the government nor are there any cost savings to small business.

Further Information:
Proposal Number:
Posting Date:
October 22, 2020
Summary of Proposal:
The Chicken Farmers of Ontario (CFO) and the Association of Ontario Chicken Processors (AOCP) have requested that the Commission amend the cost of production formula (COPF) under Regulation 402 (Chickens - Marketing), which provides for the control and regulation of the producing and marketing of chickens in Ontario.

Regulation 402 provides for the establishment of a negotiating agency that may adopt or settle by agreement the minimum live price for chicken. In accordance with the regulation, members of the negotiating agency are appointed by CFO and licensed Ontario chicken processors. A final offer arbitration process is the dispute resolution mechanism that the regulation provides in the event that the negotiating agency does not arrive at an agreement.

The Commission last amended Regulation 402 to establish a COPF for the negotiating agency to negotiate the price of live chickens in January 2015. These amendments were made based on data and information submitted by the industry and through broad consultation.

Since the industry began using the COPF in quota period A-129 (January 2015), the negotiating agency has successfully reached a price agreement without the use of arbitration.

In the spring of 2018, CFO and AOCP began work on updating the COPF. Although the parties were able to work together to come to an agreement on almost 75 per cent of the updated COPF elements, they were unable to agree on the remaining elements. As such, CFO and AOCP have asked the Commission to propose amendments to Regulation 402.

The current formula is expressed as:
Minimum live price = (chick price + feed price + producer margin) - Annual Adjustments

The regulation provides the starting values for the chick price and feed price components, from which the negotiating agency negotiates adjustments every quota period.

The starting values of eleven components of the producer margin are listed in Table 1 of Regulation 402, eight of which may be adjusted by the negotiating agency annually, or more frequently if exceptional and unforeseen circumstances exist. The remaining three items are fixed and non-negotiable.

The mandatory annual adjustment calculations which prescribe efficiency adjustments are described in detail in Schedule A of the regulation.

The Commission is considering changes to all components of the current formula, including the items, values and designation in Table 1, and the potential elimination of annual adjustments.

The proposed amendments would not change the role of the current price negotiating agency or its authorities under the regulation.

The Commission has the authority to amend Regulation 402 under section 7(1) of the Farm Products Marketing Act.

The Commission continues to strongly encourage CFO and AOCP to work together to find an industry solution to the COPF up until any final amendments are made.
Contact Address:
Branch: Ontario Farm Products Marketing Commission
Address: 1 Stone Road West, Guelph, ON N1G 4Y2
Effective Date:
February 5, 2021