Canadian Chicken At Risk?

They signed my petition, but added that they support having Canadian chicken to feed Canadians.  They were afraid that my actions threatened to open the flood gates of foreign chicken into Canada, sweeping away Canadian farmers.

Good question.

Legitimate fear?

Is there any substance to this potential risk?

I have previously explained that under WTO (World Trade Organization) Treaties, Canada is required to allow 7.5% of the previous year's domestically produced kilograms of chicken  to enter Canada at a reduced import tariff, which is called TRQ (Tariff Rate Quota).

I have also previously Blogged about IREP chicken that is imported for the alleged purpose of processing that chicken in Canada, then re-exporting it out of Canada as a value-added product.  I say alleged, because many tonnes of that chicken gets "misplaced", mysteriously disappearing inside Canada, and is never exported.  This is cheap, US chicken (or other cheap chicken) that disappears; chicken that's 300% cheaper than domestic chicken.  The oppression and abuse of monopoly-priced chicken enforced by the Chicken Mafia ensures there is a white hot market for cheap US chicken in Canada, just like smuggled cigarettes.

Cheap chicken is the same as cash, a fungible asset. It's almost as good as cash, and easily disappeared for quick, un-traceable cash, if you know the right people.

When you add up all the imported chicken, we consume about 75% domestic chicken, and about 25% imported chicken.

As chicken prices drop with the Federal government's lowering of the non-TRQ import tariff, consumption of chicken will increase.  If the price of chicken in Canada falls, perhaps the chicken farmers, or the producers no longer want to participate to the same degree as they previously did (ie. it's no longer worth their while to produce chicken). This may mean that the amount of domestic chicken produced will drop, and the resulting shortage in chicken available will stabilize prices.  In the short term, this may increase chicken prices more than before the non-TRQ tariff reduction occurred.

In the alternative, the Chicken Mafia may have a change in heart, and support the non-TRQ tariff drop.  As market prices of chicken drops, they make it up on quantity sold.

If the government doesn't get scared and stop, but continues to lower the tariff on a steady basis, eventually it will become of greater and greater interest to Canada's chicken farmers to produce more chicken to feed the lowers prices and the greater demand.  If Canada's Chicken Mafia refuse to step up and serve the need, eventually the import tariff will attract foreign chicken to come to Canada and serve the domestic need.

I would prefer that Canada's Chicken Mafia choose to continue in their full participation, but it's a free country.  They're big boys.  They can make up their own mind.

If Canada's Chicken Mafia attempt a "work to rule" approach to frustrate the dropping non-TRQ tariff rate, eventually foreign chicken suppliers will be able to significantly with increased imports into Canada.  As a foreign brand, they need to gain consumer confidence and market share.  The incumbent brands have the advantage, so foreign brands will likely drop their price below the current market price.  Chicken price wars have just started.

Let's take a monopolistic price gouging example

Soon after Dupont invented nylon in  Feb. 1935 it soon became the most profitable product in the history of the company, totally changing the company's focus.  Dupont tightly controlled the market for nylon, and the market price.  Many felt Dupont was price gouging its customers.  For the next 15 years of the patent, Dupont gained between 33% to 50% of its profits from just one product:  nylon.  When the patent ran out, competitors started manufacturing nylon substitutes, and the price dropped sharply.  Realizing that all of DuPont's competitors had built their own nylon manufacturing plant in preparation for the ending of the patent, DuPont finally dropped the market price for nylon in the last few months before the patent ended.  By that time, it was too late.  The competitor's plants were built and ready to go, no matter what DuPont did to fiddle with the price at the last second.  Most customers were upset at having been gouged for 15 years, and defected in drove's to DuPont's competitors.  DuPont's monopoly and unlimited power on the nylon market came to an end within hours after the patent expired.

Perhaps the Chicken Mafia can learn a lesson from DuPont.  Price gouging of consumers creates many long memories, ready for revenge when the chance comes.

Gouger and Gougee

CFC's data on Wholesale & Retail Prices in Canada
for chicken, 2010 - 2013

Who is the gouger, and who is the gougee for Canadian chicken?

Chicken Farmers of Canada supplies market data in their monthly Chicken Fax issued Sept. 6, 2013 that may help answer this question.  The two graphs on the right were extracted from there.

The top graph shows remarkable stability in wholesale prices for chicken during a 4 year period (2010 to 2013).  Wholesale prices occur between the slaughter plants and the grocery stores.

The bottom graph shows the Consumer Price Index for chicken, beef, and pork from Jan. 2008 to August 2013.  Here we see an almost constant upward trend in chicken prices.

Statistics Canada Table 326-0020 shows that the fresh or frozen whole chicken retail prices between Jan. 2010 and July 2013 went from a CPI of 133.7 to 147.0

Live chicken pricing at farm gate, 2010 - 2013

Over this 43 month period, retail chicken prices went up at an average inflation rate of 2.68% per year.  Meanwhile, wholesale prices are virtually flat, constant, always the same, more or less.

Note that it isn't just chicken, for beef and pork are up to the same tricks.  I'm not sure who is leading the dance, but they're all jiving to the same tune.

This graph shows the life chicken price paid at the farm gate.  There have been steady price increases, plus seasonal variations.  Most of the price increases were related to the increasing chicken feed prices that the Chicken Mafia fraudulently inflated even more so they could get additional unjust profits.  See Blog posting here where Ontario's government forced the Ontario wing of the Chicken Mafia to roll back the bogus FCR charges they had been making for the last 10 years; a cool $136.59 million per year previously being stolen by the Ontario branch of the Chicken Mafia.

There has been a knock down, drag out fight between chicken farmers and chicken processors over the quantity and price of chicken for a very long time.  The processors have complained the chicken farmers are protected by a guaranteed price minimum, while the producer takes all the risk on getting a price that is profitable and selling all the chicken before it goes rotten.

On this battle between chicken producers and processors, I have received a CD full of documents from the Federal Farm Products Council based on a Access to Information Act request.  More on these juicy disclosures as soon as I finish reading all 692 pages.

As bad as the farmers have been, the tail-end of the Chicken Mafia  (ie. the retail vendors & grocery stores) aren't much better.

I therefore conclude that the chicken farmers have been gouging the public for at least 10 years.  The retail grocery stores are now taking their turn at gouging the public between 2010 to 2013.

It warms my heart when everybody plays together nicely and take turns.

It's good that both gougers share and take turns screwing the public.