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Wednesday, February 5, 2014

Canadian Feed Mills

There was an interesting post on Better Farming's website yesterday:

Thank SM for the feed mills we have!

Lets face it, without Supply Management there wouldn't be near the number of feed mills we have.
They cater to the people that pay their bills, its that simple!

Sorry, but I couldn't let that stand without a response.  Here is my response:

If I understand your comments, you seem to feel there would be fewer feed mills if we didn't have SM (Supply Management). Please explain your logic in the greatest of details.
Based on research that I have done (most on chickens, some on eggs, a tiny bit on other SM commodities), which is fully described on SFPFC's Blog, Canada has only 1.4% of the international chicken market for OECD nations. The US exports about 18% of its chicken, but SM holds us back from exporting much of anything.
Our Canadian domestic prices for chicken are 2 to 3 times higher than prices in the international market. Virtually nobody would buy our Canadian chicken exports at the price that Canadians are forced to buy them at.
If Canadian SM producers were to drop their prices to match the prices of our international competitors, we could gain significant market share on the international markets. However selling internationally at prices that are half to one third of domestic prices is the definition of "dumping" which is illegal under NAFTA and WTO and GATT and other trade agreements.
If SM didn't exist, Canadians would likely pay a lot less for their SM products, as I doubt the rest of the world would suddenly start charging 3 times more so as to match crazy Canadian prices.
If we worked hard, we would eventually regain our competitiveness in SM products (ie. in the next 20 years, for we are close to invalids in SM products today, compared to the rest of the world).
Once we regained our competitiveness, continued hard work could eventually earn us up to 50% market share for SM products in OECD international markets.
With 50% OECD international market share, we would have to raise 5 times more chicken than what we currently raise in Canada today.
If we raised 5 times more chicken in Canada, I would assume there would be logic in having that huge extra demand for chicken feed produced in Canada, close to the source of the input crops, or close to the end user of the feed produced. That would mean a significant increase in operating capacity of current feed mills in Canada, or the building of many new feed mills, perhaps up to 5 times more than what exist today.
Therefore it would seem that SM has killed off up to 80% of the feed mills that would have been built (or continued to exist) than under a non-SM system.
Oilseed and grain farming is the largest farming income producer in Canada, about 32% of the total farming income for Canada. That's big GDP for Canada. I think these grain+oilseed farmers would welcome the opportunity to grow and sell 5 times more grain, if they could. Unfortunately, SM will never allow that opportunity to be realized. SM farmers have a death grip on the throats of most other farmers.
If you (or others) have other facts and logic to support your prior statement, please share it with all of us so we can learn and better understand.
If you don't supply your logic, I believe it is fair to assume that you accept the above data and logic, and have retracted your prior statement.
Glenn Black
Small Flock Poultry Farmers of Canada

We'll have to wait and see if we get any response, or additional facts that support alternative viewpoints.

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