Wednesday, September 17, 2014

CFO's Specialty Chicken Scam

In bizarre (or manipulative) timing, CFO has suddenly switched policy direction on Ontario's Specialty Chicken.  Specialty Chicken is intended for the historically poorly served ethnic communities in Ontario who want chicken with the head and feet still on the bird, and similar specialty characteristics.

Chicken Farmers of Ontario ("CFO") announced on Sept. 11, 2014 the application process for specialty bird quota of at least 5,000 birds per grow period.

These specialty birds tend to grow slower than WhiteRock birds (up to 14 weeks vs. 8 weeks for WhiteRocks), and consume more feed (ie. a higher Feed Conversion Ratio "FCR").  However, if we assume 6.5 grow periods per year, that minimum quota is 32,500 birds per year.  At an average weight of 2.0 kg, per bird, that is 65,000 kg of live chicken per year, or at 0.686 kg eviscerated per kg live weight, that is 44,608 kg/yr of eviscerated raw chicken meat.  At an average Canadian consumption rate of 30.5 kg/person/yr, that eviscerated chicken will feed 1,462 people per year at the minimum Specialty Chicken flock size.

The first available application period has to be submitted to CFO on or before Sept. 16th, 2014; just 5 days after the announcement of this new policy.

The application will be assessed, prioritized, and approved based on the detailed business plan of the applicant.  I spent 25 years as a Management Consultant, helping hundreds of organizations do their Strategic Planning, project proposals, and build their business cases.

Doing a detailed plan in just 5 days is laughable.  Doing this application isn't the same as ordering a burger at a Drive-Through window.  Here's a typical scenario to meet a 5 day deadline:   CFO has my email address, but they didn't notify me of the launch, so nobody else was notified (if things are as fair as CFO insists).  Perhaps due to my dedication, I discover the CFO launch within 4 hrs after CFO posts the info.  If I am a competent manager, I likely have my next 2 weeks already planned, allowing perhaps 20% of the work as flexibly scheduled in case an emergency comes up.  I cancel everything for the next 5 days, causing total havoc for everybody who depended on my prior commitments.    In the next 4 hours of Day 1, I've read all of CFO's info on this opportunity, and formulate a plan to apply.  Since I am a competent manager, I have been doing extensive research in my spare time (ie. nights and weekends) on the specialty chicken market for the last 5 years, in preparation for this opportunity; so I get out my thick file of accumulated intelligence, as this is where I get to apply it.  On the evening of Day 1, I review my research file.  On Day 2, I email my prospective partners (grower, processor, further processor, custom processor, distributor, wholesaler, and retail) so they can start reading the CFO literature.  By the afternoon of Day 2, I schedule a preliminary telephone conference to discuss and hopefully form a team.  Not everybody will sign up, or they are too busy with their current plans, so I have to find a replacement, done in the late afternoon and evening hours, as I cancel my coaching of my son's team due to the emergency.  By the end of Day 2, we have a team.  On Day 3, I call my suppliers for Blue Sky cost estimates on everything that I will need.  I start a spreadsheet and fill it with numbers that look reasonable on capital, operating expense, marketing S-curve expansion over next 5 years, contact lists, project management schedule milestones and deadlines, price points, competitors, SWOT, risk assessment, sensitivity analysis, and cash flow.  By end of Day 4, the numbers from suppliers and partners start to roll in.  On Day 5, I start drafting paragraphs to cut and paste into CFO's application form, telling them why we should be first in line to receive their blessing for Specialty Chicken.  On or before 4:00 PM on Day 5, I click the send button on CFO's website with our application.

Did you notice a few assumptions?  Are you willing and able to implement that scenario without missing a beat?  Do you agree 5 days is ridiculous?

This can only result in half-baked plans that put the applicant (and everybody upstream and downstream of the applicant) at significant risk when that half-baked plan goes off the rails.

It is unclear as to CFO's reasons for the last minute announcement, but perhaps it is so CFO's "friends" can take unfair advantage of this opportunity.  Perhaps there are "friends" of CFO who were given a 3 month or a year advance warning of the planned legal maneuvering by CFO and AOCP, allowing them to start getting ready before the Unwashed Masses (ie. those with no inside info, as you're not a "special friend" of CFO) had a chance; thereby ensuring that the "friends of CFO" have significantly better proposals and applications.

Agri007 has reported on the ganging up of CFO (Chicken Farmers of Ontario) and AOCP (Association Ontario Chicken Processors) against OIPP (Ontario Independent Poultry Processors) and their OMAF Tribunal Appeal of CFO's Specialty Chicken Policy.

It appears that the lawyers of CFO and AOCP out-maneuvered and manipulated the appeal process by strategically timing the adding of parties to the OIPP appeal, requesting adjournments, using the excuse of "further negotiations" to derail or delay the appeal hearing, delaying the hearing dates, then withdrawing the old policy at the last second.  Suddenly, out of nowhere, CFO has a new Specialty Chicken policy, and gives everybody 5 days to respond.

The timing of pulling the old policy and substituting the new policy was obviously timed so as to screw OIPP out of their OMAF Tribunal appeal of CFO's old Specialty Chicken policy.

Does this all add up to abuse of the appeal process by CFO and AOCP?

But why the 5 days to file the application for the Dec. 31 2014 start?  Was CFO under some undercover threat by CFC (Chicken Farmers of Canada) to "use it or lose it" before the end of 2014 on the Specialty Chicken quota that was made available for Ontario?

Ontario and CFO have been complaining forever about being short of chicken, and differential quota allocations.  On Sept. 9th, 2014 Agri007 reported that CFC and all the provinces finally reaching a deal on an extra 22 Million kg of chicken quota gifted by CFC to Alberta and Ontario over the next 10 years. What link is there between this deal and the sudden shift in CFO Specialty Chicken policy and the short application deadline?

With CFO secrecy, we'll never know.

The opportunity may be so good, perhaps in spite of the stacked deck, the Unwashed Masses may need to react immediately, in spite of the unfair notice period.  There are subsequent deadlines for Specialty Chicken applications, but I suggest that this is such a good opportunity for a chosen few, it will likely be over-subscribed, and CFO might likely cancel the subsequent deadlines before they arrive, meaning that the Unwashed Masses likely need to apply now, or miss out forever on this golden opportunity.

Sean McGivern of Practical Farmers first raised the issue (subsequently investigated and reported on in detail by Better Farming) that at least one Silkie farmer received a surprise visit from the #ChickenMafia around April 2014 who suggested that he immediately pay $100 to make application for a Silkie special license, did so, got the license, and has shown a copy of that license to Sean.  What's up with that?  CFO and CFC have some explaining to do!

As usual, the hidden agenda and jockeying for position behind the curtain by CFO is legendary.

Frey's is the only source for Frey's Special Dual Purpose birds, that are specifically included in this new Specialty Chicken program.  There are many other hatcheries, in both Ontario and across Canada.  How is it that only Frey's is the lucky recipient of all this additional business?
CFO's Specialty Chicken deal requires the birds to be sold with head and feet on.  Once sold, a quick snip with a pair of poultry scissors can convert the bird to a "normal" chicken, a reasonable work-around the politics so we can get affordable chicken for the people of Manitoulin.  This isn't specifically banned by CFO's policy.  Is this a planned  (or unplanned) loophole created by CFO?  CFO insists they will have many Chicken Police across Ontario to ensure the rules are followed.

Does CFO mean the same Chicken Police and sleep walking CFO that consistently turn a blind eye while some renegade farmers buy multiple lots of 300 chickens under the name of their spouse, kids, dog, neighbours, or fictitious people and addresses so as to get around the oppressive Small Flock Exemption regulation of CFO?  The same Chicken Police who turn a blind eye to significant violations of CFO's mandatory rules by the chicken factory quota-bearing millionaire CFO members; thereby raising and selling chicken of questionable quality that puts Ontario consumers at significant risk?

CFO has a levy of just $0.0213/kg plus a $100/yr license fee, which is very reasonable, and highly affordable.  How does CFO justify that when regular quota requires multi-million dollar investments?

When you submit your application, CFO's Internet system takes it, says thank-you, but you get no receipt #, nor do you get a copy of the application as filed for the applicant's records.  Virtually every other website does this as standard business practice.  Not CFO, they're different.  Is the applicant sure that the application was received by CFO?  Can they prove what was submitted, in case of a dispute?  Could an application "disappear without a trace" due to some "accident" or mis-filing of applications within CFO?  This is a recipe for abuse and possible loss of trust, and lawsuits.

In business, it is standard to construct a Chinese Wall (also see here and here which explains the term came into use shortly after the 1929 Stock Market Crash, where insider info was used in conflict of interest, causing or contributing to the Crash), Boards meeting in camera, or have a special training session with a signed confidentiality agreement when staff or board members are dealing with confidential plans that could give unfair advantage to some if they get prior, inside knowledge.

Did CFO construct an adequate Chinese Wall, train those on the Specialty Chicken project team, verify their comprehension by an objective test, then have them sign a confidentiality agreement?  If not, why not?  If they did, how did CFO ensure all of that was effective and leak proof?  If CFO cannot objectively prove that they did all this, then we must assume CFO missed one or more key steps, and there was likely insider info that leaked out, and one or more individuals or groups took advantage of that insider info on CFO's new Specialty Chicken Policy.

I would prefer to have also seen the following, as a fictitious, but recommended, example:
CFO Board considered Application #'s 1 through 231 on a blind basis (ie. identifying info on all applications was stripped off so the judges couldn't tell who submitted the application), graded anonymously, selected anonymously, then the winning code numbers matched up with the name of the winner.

If your application was numbered 232, you obviously weren't considered by CFO's Board as they only considered Applications # 1 to 231 in the above fictional scenario, and you can ask why CFO didn't consider your Application #232.  The way CFO has it structured, you are forced to trust CFO.  Is there no foreseeable benefit of a fully open, transparent, and accountable system?  Where does OFPMC (Ontario Farm Products Marketing Commission, CFO's boss and alleged Supervisor) stand on local boards practicing fully open, transparent, and accountable systems when there are millions of $ at stake?

This whole scene stinks worse than the millions of kg. of chicken manure that are produced by CFO's members.

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