Canadian Chicken Prices: Fair is Fair

Chicken Farmers of Canada ("CFC") protests Barrie McKenna's article published in the Globe & Mail by submitting a Letter To the Editor.


Agri007 takes CFC to task for CFC's wacky, indefensible statements.  So shall I.

The article protested against appears to have been originally filed by Globe & Mail as "It’s time to ensure Canada’s food pricing formulas are transparent, fair" on Nov. 23, 2014 then re-filed under a different title Nothing to crow about: Why Canada's chicken pricing is unfair on Nov. 24, 2014.  This Blog had already discussed the Nov. 23rd version in "Smoke & Mirrors for Chicken Pricing & Provincial Allocations".

Now we shall discuss CFC's idiotic response.


So what great rhetorical arguments and objective evidence does CFC present so as to blow the Globe & Mail and its veteran reporter out of the water?

Not much.

CFC, through its paid shill Mr. Mike Dungate, Executive Director of CFC, states:

"Just look at the Consumer Price Index: In the past year, beef rose by 19.4 per cent, pork rose by 14.4 per cent and chicken rose by only 2.7 per cent. In the past two years, beef prices rose by 23.1 per cent, pork rose by 18.1 per cent, and chicken? Well, again, it only rose by 5.1 per cent. Chicken is consistently the best value in the meat counter."

 When we determine "best value in the meat counter", I suggest we need to look at the following:

1. The quality of the meat offered (eg. bacterial contamination, age, toughness, taste, organic, free range, grass fed, supplier, brand name, etc.)
2. The absolute prices, such as $/kg
3. The rate of increases in the absolute prices, such as %/yr increase
4. The justifiable price, based on relative or comparable pricing available elsewhere, or for substitute products

 It is agreed that chicken price increases have been significantly less than beef or pork.  I have already reported on this issue in our Blog posting Meat Price Mania.  If fact, I complemented the #ChickenMafia on not following the example of excessive price increases implemented for all the other meats tracked by Statistics Canada (eg. beef, pork, canned salmon, weiners, bacon, etc.).

Figure 1 (from Chicken Price Parity: Will it ever come?)

The #ChickenMafia has implemented a policy to steadily increase prices of retail chicken at 3.54%/yr (Jan. 1995 - Dec. 2012), which has recently been increased to 3.79%/yr (Sept. 2010 - Sept. 2014).  This is the "boiled frog" technique, which is insidious, stealthy, and highly effective for the sleepy consumer.  Of course, this can only be accomplished by an illegal cartel via price fixing, or Canada's Supply Management rules that exempt the #ChickenMafia from charges of price fixing rule that all other commodities and corporations must obey.

Figure 2 Chicken affordability under Ontario's Minimum Wage has
declined by 31.7% from 1995 - 2005
(see Unaffordable Chicken In Ontario )

CFC fails to mention the end result when you increase prices by 3.54%/yr for 17 years and 3.79% for 4 years.  The end result after 21 years are chicken prices that have been inflated by 653.3%.  Mentioning that sad fact must have slipped their mind.  I have discussed how those who live off Ontario's Minimum Wage have seen the affordability of chicken decline by 31.7% over the 10 year period of 1995 to 2005 see Blog posting Unaffordable Chicken In Ontario.  That must have slipped by CFC's attention as well. 

Beef, pork and all the others operate in a somewhat competitive, efficient market, complete with price discovery via natural market shortages or excesses.  For example, if everybody is doing BBQ in the summer, and the stocks of hamburger, ribs, steaks, etc. are being quickly depleted, then the prices quickly rises.  Similarly, when the meat is reaching its "Best Before..." date, the prices get slashed 33%, then 50% so as to help ensure quick sale before the meat expires and it must be thrown out at a total loss.

CFC asserts, and Globe and Mail assumes, that #ChickenMafia only sets farm gate live chicken prices, and all other prices are set "naturally".

If that is the case, how does CFC explain the constant rate of increase in retail chicken prices over a 19 year period (or longer)?  If it isn't CFC who tweaks the retail price dial, then exactly who is it?

After 3 years of investigating this mysterious control mechanism, I have no proof, I have no rumor.  It is all a secret blackbox system hidden from view.  If anybody wants to hint or disclose, post a comments, anonymours or otherwise, or send me an email.

However, the Federal and Provincial governments have given sweeping powers to Supply Management.  Under the various pieces of legislation, regulation, and MOU's (Memorandums of Understanding), Supply Management is responsible for and has the duty, powers, and authority to control sales, marketing, shipping, storage, distribution, and pricing of their respective commodities, as well as all processed products that are made, in whole or part, from their commodities (eg. frozen chicken fingers in a cardboard box, chicken TV dinners, etc.).

For CFC to insist that they only control farm gate live chicken prices is disingenuous and misleading.

If CFC chooses to not exercize its powers for whatever reason, they cannot turn around and say they are not responsible for the resulting chaos when they fail to monitor, command, or control as they should.  To be responsible and then fail to act is either incompetence, or negligence, or corruption.

Next, CFC states:

 "live price of chicken has declined 1.6 per cent and over the past two years it is down a huge 9.9 per cent."

 We agree, but CFC fails to mention why.

Ontario Farm Products Marketing Commission ("OFPMC") ordered Chicken Farmers of Ontario ("CFO") to reduce their Feed Conversion Ratio ("FCR") by 16.3% (see Blog Posting It's Alive!).  Through false and fraudulent FCR's, CFO collected windfall, unearned, and fraudulently gouged income from Ontario consumers for up to 10 years for an aggregate total ill gotten gain of about $10 Billion.

When OFPMC ordered a proper FCR, I predicted farm gate prices should drop by 9.78% in Aug. 21, 2013.  CFC now claims prices actually dropped by 9.9%.  Funny coincidence, 9.7% vs. 9.9%, seem pretty close to me.

I agree, and believe CFC will agree too, that Ontario chicken prices tend to set the standard throughout Canada.  When Ontario chicken prices move up or down, the prices throughout Canada tend to follow Ontario's lead.  That is why when CFO was ordered to lower Ontario prices, the rest of Canada soon followed, and Statistics Canada reports a 9.9% drop as the Canadian average.

CFC then uses a unique equation.  Farm gate prices going down while retail prices go up is somehow equated to be objective, iron clad proof that farm gate prices received by the chicken farmers is fair.  What?  Back up a little.  I missed the logic.  Go slower and explain each step in complete detail.  Where did you get that logic from?  Obviously we have smoke & mirrors and slight of hand.  A logical non sequitur.

CFC claims that dismantling Supply Management will only threaten the small farmer with no benefits.

I, and others claim, that SM can be significantly changed, or totally dismantled in a careful manner so that damage or chaos are avoided or minimized, and unmitigated losses that do occur can be financially compensated.  If nothing can be changed because there is the slightest risk to 1 or more people on the planet, then this is reason enough to stop all change, whether the changes are good or bad.  Obviously, CFC cannot justify that extreme position.

Finally, CFC claims:

"The biggest determinant of consumer price is where and when you shop."

It is agreed that when and where someone shops for chicken can have a significant effect on the prices paid.  However, Statistics Canada data which I have quoted in the Blog postings referenced above, is Canada-wide, for big and small retail stores, in big and small cities.  The data trend is clear.  Somebody is controlling Canadian retail chicken prices for more than 19 years.  This "boiled frog" steady inflationary price increase for retail chicken explains 97.46% of all variation in retail chicken prices.  I would therefore suggest that when and where you shop is less than 2.6% of the overall price influence.

As usual, CFC is all wet.  It appears CFC wishes to spew out its false propaganda to protect their cushy, high paid jobs, and their multi-millionaire friends.