Wednesday, March 20, 2013

CFO's District Balance

Chicken farmers are represented by their elected Director at CFO.  Is there balance between the power and influence by all 9 Districts in Ontario?

Let's take a look.

Chart 8 is from CFO's 2012 Annual Report, and gives the number of premises in each District, and the basic quota held by those premises.  On first look, it seems balanced.

When we do some additional analysis, we get the following table:

Here, we see that there is a CV% (Coefficient of Variation) of 31.68% on the number of premises in the various Districts.  That is somewhat large variability.  Similar comment on the Basic Quota in those Districts (32.85%).

The average quota per premise however, has a very small variability, a CV% of just 3.83%.  Therefore, all the Districts seem to have great consistency in the size of the various farms.

Next, we calculate the District's HHI (Herfindahl-Hirschman Index).  It is typically used to measure market share (see the Blog Post Why are there Gorillas in Ontario Chicken Coops? for more info on HHI).  Here, we see a CV% of 34.48%.  The largest influence is felt in DIstrict 3 with 18.35% of the quota-based HHI.  Usually, something within 2 Standard Deviations would be seen as normal and acceptable variation, and District 3's HHI is within 1.89 Std. Deviations of the all-District mean.

Above is the HHI data in histogram format, showing a distribution of HHI that is close to a normal bell-shaped curve, which is what we want.

So CFO has Districts that are more or less balanced.  Way to go CFO!  You got another thing right.

As farmers come and go (ie. retire or new farmers start up), this balance between Districts could shift.  Re-drawing District maps is not easy and it can cause difficulties for the farmers to get jerked from one District to a different one, so re-drawing should be minimized.

I hope that CFO does this type of analysis every year to keep tabs on the district-to-district balance.  This ensures that all farmers have an equal voice, and no District has an unfair advantage or undue voice at the Board of Director's table of CFO.

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