HPAI Ban Impact on Broiler Chicken

Canada can, and should learn some lessons from the 2015 HPAI (Highly Pathogenic Avian Influenza) infection in the North American poultry industry.  Will we?  That remains a big, important question without a good answer.

What is the impact, on US and Canada, from HPAI and the resulting bans on US chicken by CFIA?

Numerous reports show a devastating impact on the US poultry industry.  One third of US egg layers were lost to HPAI, by either disease or culling to stop the spread of the disease.  Meatingplace reports that 5 major broiler chick hatcheries are breaking eggs (ie. destroying their eggs) rather than hatching them for a market that no longer exists.

At the height of the HPAI outbreak, 57% of US broiler production was banned from Canada due to HPAI.
As of Sept. 1st, 2015 CFIA updated its ban on all chicken associated with 8 remaining US States, removing California, Idaho, Oregon and Washington as being clear of HPAI (Highly Pathogenic Avian Influenza).  Today, 34.6% of the US broiler production remains banned from Canada.

It's not just Canada that has banned US chicken.

The export market for US broiler chickens has disappeared due to HPAI bans on US chicken exports.

JOC.com reports that 20% of the prior US broiler chicken export market has disappeared, mainly due to HPAI.  Global Meat News reports that this loss is worth $390 million per year.  Ouch!

Businesss Insider reports that total bans of US chicken (whether the State was HPAI infected or not) have been imposed by China, South Korea and Angola, whose markets were valued at nearly $700 million last year.  Double Ouch!

All it takes is one HPAI biohazardous-ignorant idiot to cause a total ban for the entire nation.  Triple Ouch!

Canada is part of that ban on US chicken.  Table 1 shows 2014 data for the US broiler industry, and the impact of the ongoing Canadian ban.

Table 1:  Broiler chicken production and processing by US States
under HPAI ban by CFIA.  Banned US States (red coloured)
represent 34.6% of US broiler production, 6.2% of US broiler chicken
processing, for a total impact of 9.1% of the US broiler industry.  The States
newly released from the CFIA ban (green coloured) had 23% of the US chicken
production and 4% of the US chicken processing, for a total of 27% of the
total US broiler chicken industry.  HPAI affected States (currently banned and
previously banned) had 57% of US broiler production, 10% of the broiler
processing, for a total of 36% of the total US broiler $ economic impact.  How
will the US broiler industry respond to this ongoing broiler ban by CFIA?

In Table 1, banned US States (red coloured) represent 34.6% of US broiler production, 6.2% of US broiler chicken processing, for a total impact of 9.1% of the US broiler industry total economic impact.  The States newly released from the CFIA ban (green coloured) had 23% of the US chicken production and 4% of the US chicken processing, for a total of 27% of the total US broiler chicken industry.  HPAI affected States (currently banned and previously banned) had 57% of US broiler production, 10% of the broiler processing, for a total of 36% of the total US broiler $ economic impact.

The CFIA ban includes eggs, live birds, meat, feathers, and all non-cooked or non-commercially sterilized chicken products that originate or are processed in the banned US States.  That's pretty comprehensive.  How will the US broiler industry respond to this ongoing US ban by CFIA?

Figure 1:   Map showing the CFIA ban on US chicken due to HPAI.  Green States have been removed
from ban as of 2015-09-01 as they are now HPAI-free.  The red States are still banned as of 2015-09-01.

 The infected States can't ship to non-infected States, and can't export out of the US, so they are left with the consumers and processors within their own State as their only available customers.  The non-banned States can export to Canada, but it's likely a longer way to the Canadian market (likely at a higher cost), but an opportunity to establish a relationship with Canadian customers who lost access to their normal chicken supplier due to the HPAI import ban.

NRDC reports that ten large companies, referred to as "Integrators" (eg. Tyson, Perdue, Pilgrim, etc.), produce more than 90 percent of the USA poultry.  The individual farmers enter into a contract with one Integrator to supply them full grown chickens ready for slaughter.  The Integrator supplies to each farmer the day old chicks, feed, medicine, and expertise; and audits the farmer's performance to ensure it meets the Integrator's contractual requirements.

This Blog previously reported that 85% of all HPAI infections in the USA occurred at CAFO chicken factories, in spite of the vast majority of chicken flocks being small non-CAFO producers (ie. Small Flockers).  I also previously reported that there are strong reasons to believe that CAFO chicken farmers are shooting themselves in the foot, causing or contributing to their HPAI infections due to poor biohazardous protocols by CAFO chicken factories.

Therefore I suggest the following lessons for Canada's Chicken Mafia:

1. Biohazardous risks have severe economic impacts that go way beyond just the few who become infected.  Everybody suffers, even the nation as a whole.
   
    
2. Canada's CAFO-based Chicken Mafia is its own worst enemy.  CAFO chicken factory technology is significantly flawed for biohazardous risks, and many other reasons.  CAFO needs to be abandoned, or dramatically improved.
   
    
3. Since Canada's Chicken Mafia is content to rape the Canadian public on an ongoing basis, and mostly ignores world export opportunities, the impact of HPAI infections today is mostly limited to the farms that become HPAI infected.  If Canada, through TPP or otherwise, starts to export considerable quantities of chicken, the risk exposure for Provinces (or all of Canada) dramatically increases due to the resulting export ban for an entire region, Province, or Canada-wide.
   
    
4. .Biohazard risks (ie. HPAI infections and all similar incidents) cause an entire industry to be no better than its weakest link.  That means Canadian governments (both Federal and Provincial) and the Chicken Mafia SM bureaucracy need to focus their efforts first and foremost on the weakest links, identifying them, helping them improve, or mitigating their threats to the entire industry by weeding them out of the industry.
5. Spent chicken importers who cheat on the SM system (ie. pretend it's spent fowl when they're really broilers, to save the 285% import duties) don't play by the rules, they are motivated by the almighty dollar.  If they are willing to mis-label chicken as spent fowl, they are likely willing to mis-label as to the State of origin or processing; thereby bypassing CFIA's HPAI ban. If a producer is in a banned area, they may be willing to take a significant price cut if someone is able to spirit away his banned chicken in the middle of the night; thereby adding additional economic incentive to the Chicken Cheater.  This cheating puts everybody at risk, but Canada's Chicken Mafia and their friends are not concerned about the risk, as the profits are too great, and their personal risk exposure is significantly compensated by the Federal Government, the Chicken Mafia, and/or others.  We can therefore expect to see some significant movements and possibly some significant "incidents" on spent fowl and IREP (Import for Re-Export) chicken while this CFIA ban is in place for US chicken from these 8 remaining States.

Please leave your comments on my five points of learning, and any additional learning points that you think are important.

Empathy or Hypocrisy ?

It is the best of times.  It is the worst of times.  The point of view for CAFO Chicken Farmers depends on whether you are North, or South, of the Canadian-USA border.  Does Canada's Chicken Mafia have any empathy for their US counterparts, or just callous indifference, or perhaps hypocrisy?

When Charles Dickens wrote "It is the best of times.  It is the worst of times." in A Tale of Two Cities, he was speaking about Paris France and London England during the French Revolution.  Today, we are at a similar crisis in chickens on both sides of the US-Canadian border.

Both Canada and the USA started with virtually the same systems for chicken, small independent farms run by a family.  CAFO chicken farms for meat only began in the 1940's.  Both of those systems have spiraled out of control to form two different systems of oppression and tyranny.  The main difference in these two dysfunctional systems is the identity of the victim.  In the US, the victim is the chicken farmer.  In Canada, the victims are the consumers and the small flock farmers.

These two dysfunctional systems of chicken meat production use similar technologies (eg. hatcheries, breeds, feed, barns, medicines, etc.).  These two national and proximate systems for chicken also share similar types of tyranny, oppression, and abuse inflicted on the weak by the hands of rich, omnipotent corporations and individuals.

In the USA around the 1950, 95% of U.S. broiler production was by independent farmers. Just 10 years later, 90 percent of the US industry was under contracts for national or state-wide "integrators". Today in the USA, the Integrators run the show (eg. Pilgrim's, Tyson, Sanderson Farms, Perdue, etc.).  In the US, 97% of US chickens raised in 2001 are done under contract farming.  Any remaining chickens are raised on farms owned and operated by the processors, or by smaller independents providing chicken to local markets.

In Canada, the rich and powerful Local Boards of the Chicken Supply Management System (ie. the Chicken Mafia) who run the show (eg. Chicken Farmers of Ontario, and their counterpart in each of the 10 Provinces).

Do the Canadian Chicken Mafia realize how good they have it with the government's gift of monopoly?  Are the multi-millionaire Canadian Chicken Farmers aware of the plight of the poor, indebted, and abused US chicken farmers?  Do the Canadian CAFO chicken farmers have any empathy for the plight suffered by their US counterparts?

The situation for US chicken farmers has gotten so bad, John Oliver, a comedian who does a weekly comedy show Last Week Tonight with John Oliver on news and current affairs has taken up their cause by his satirical look at the  bad situation, titled Chickens.

John Oliver shows clips from a number of documentaries:

• The Sharecroppers (2010)
• Under Contract (2015)
• Farmageddon   The truth about the food & dairy industry
• Farmaggedon   The True Cost of Cheap Meat, Compassion in World Farming 
• The True Cost of Cheap Food   Food Inc.
   
• Cock Fight (2015),   Cock Fight Act 1:   One Man's Battle Against The Chicken Industry
  Act 2,  Act 3,  Act 4,  Act 5,  Act 6. 

and to which we add:

• Under Contract:   Farmers in Fine Print
• The Serfs of Arkansas
• Rural Advancement Foundation International-USA ("RAFI") Contract Agriculture Reform
• The Meat Racket and The Chain, introduced by an excellent video

I sympathize with the plight with the plight of the US chicken farmer.  Being an oppressed and victimized small flock farmer in Canada helps you to see and feel for the plight of the US chicken farmer.  It appears to me that Big Ag. uses their powers and market might to take advantage of these US  farmers, to oppress them for more Big. Ag. corporate profits.

The Big Question

So where do Canadian chicken farmers stand on the plight of their American brothers?

Does CFO, CFC, or any of the other provincial bodies take a stand, and speak out on behalf of their US peers?  I haven't heard a peep out of them on this important issue.  I wonder why?

If any of you are aware of any Canadian chicken farmer or organization who has directly supported or aided US chicken farmer(s) in either word or deed, please post the details below so we can correct the record.  If there are no comments to the contrary, it seems reasonable to assume that none exist until proven otherwise.

Mark Twain write about the "silent lie" or lie of omission, and how it ensured the continuation of slavery in the US for almost 100 years.  Is that similar silent lie at work by Canadian chicken farmers, against the US chicken farmers?

Is it because the Canadian chicken farmers are callously indifferent to the terrible conditions their US counterparts suffer through each day?  Perhaps the Canadian farmers are too busy counting their money.

Perhaps the Canadian chicken farmers, their trade associations (CFO, CFC and the others) are too busy plotting their next scheme to make even more money off the backs of Canadians.

Perhaps some are narcissistic psychopaths who only care about themselves, and enjoy watching the suffering of others.

The Plight of Canadian Consumers & Small Flockers

If the Chicken Mafia cannot bother speaking out or supporting their American peers, is their any hope in appealing to their sense of fair play, or empathy for the plight of Canadian consumers or Small Flockers?

I think not.

Any empathy that the Chicken Mafia show towards the US chicken farmers would expose their hypocrisy to the suffering they directly inflict on Canadian consumers and Small Flockers.

The Chicken Supply Management System will therefore require changes imposed upon the Chicken Mafia, likely requiring riding rough shod over the dead, cold, rotting corpse of the Canadian Supply Management System.

Chicken Price Parity: Will it Ever Come?

Canadians needs to be patient. Our chicken prices will be on par with US retail prices in just 22.7 more years.  Here is the price trend for Canadian chicken at Canadian retail stores.

You might wonder how I figured we only have to wait for one more generation before we have affordable chicken in Canada.

Here's the chicken pricing for good 'ol USA.

 Data Source: http://www.ers.usda.gov/data-products/meat-price-spreads.aspx

For more than 22 years, the US broiler chicken composite markup between wholesale and retail prices (ie. the green line in the above graph) has run at a steady 40.2% (ie. WholesalePrice/RetailPrice= 0.402). This 40.2% is the profit & expenses of wholesale distributors. Composite price is a weighted price based on relative fraction of weight sold for the various cuts or whole chicken.

Chicken prices in USA for both retail (red line) and wholesale (blue line) have been trending up at the same average inflation rate of 5.4% per year from 1990 to 2012.

On the Canadian side of the border, we get something totally different. Today, our Canadian average wholesale chicken prices in Canada are approximately twice the US wholesale price, and climbing.

Ouch!

 Source: http://www.cfo.on.ca/_pdfs/CFO-SM-Brochure-03.pdf

2014/10/06:   The above link was found broken.  CFO removed the incriminating evidence from their website.  Fortunately, I saved a copy which is still available here

The rate of wholesale price increase in Canada is approximately 2.6% per year vs. the 5.4% in the US. Canada.  With a higher chicken starting price but a lower chicken inflation rate in Canada,  this means the US prices will eventually match Canadian prices.

 If my math is correct, the US-Canada price gap will close around Feb. 8, 2035 (ie. 22.7 years from now).

Hold on, Canada, chicken price relief is coming. The day of chicken price parity with the USA will soon be here (in another 22.7 years).

The retail price increases for chicken seem out of control.  Below is the CFO's Chicken Consumer Price Index, showing rapid inflation of chicken at the retail grocery store (Ref: CFO-SM-Brochure-03.pdf, pg. 4)

Fortunately, Canadians are a very patient people. In the mean time (ie. the rest of my natural life), Canadians will have to do cross-border shopping if they want a good deal on chicken. Hopefully, the Canadian poor will be able to hitchhike to the US grocery stores and return with their affordable chicken.

Sooner or later, Canadians will have had their fill with price gouging on chicken.

 Source: http://www.georgemorris.org/uploads/userfiles/files/ccmr-july-2012.pdf

George Morris' data for May 2010 - May 2012 shows a steep collapse of chicken sales from Sept. 2011 to Mar. 2012, interpreted to mean that Canadian consumers were disgusted with excessive chicken prices, and closed their wallets. The sudden leap in sales for April 2012 was US chicken wings imported by retailers at excellent prices, so as to better serve Canadians.

This demonstrate that Canadians don't hold a grudge, as they are willing to quickly respond to reasonably priced chicken.