Wednesday, June 12, 2013

Spent Chicken = Cheating Chicken

Discussions about "spent chicken" or "spent fowl" have always been a hot topic in the chicken coops of Canada.  Now however, it's also a hot topic to the "Johnny Come Lately" Chicken Farmers of Canada ("CFC"), and Chicken Farmers of Ontario ("CFO").

For wannabe farmers, "spent chicken" includes old egg laying chickens who are past their prime, or old hens and roosters from egg hatcheries.  Due to the limited alternatives, they are often sold for close to nothing, so the cost is just the trucking expenses to the slaughter plant.  The alternative to to kill them on-site and landfill them.

I did an advanced Google search of CFC's website.  It is first mentioned in the CFC's 2010 Annual Report about "spent fowl" imports, declaring  it as a critical priority for 2011.

For CFO, a similar Google advanced search turned up the following in their April 10, 2013 News Insight

"However, we are now faced with an unexpected, unprecedented, and potentially catastrophic level of spent fowl imports which undermines the principles of the alignment initiative."
Sounds pretty serious.

But unexpected?  If CFC had it as critical priority in their 2010 Annual Report released on Mar. 18, 2011 why is it such a shock and surprise to CFO 2 years later?  Do these guys at CFC and CFO talk to each other?

When did this really become an issue?

Let's look at the data from Statistics Canada.

The graph above shows data from StatsCan CANSIM Table 002-0010 (Add/Remove data to suit).  There appears to be "business as usual" for 1999 to 2002, but a statistically significant dip, with a correlation coefficient of 74.7% is plainly visible as of 2003 (see yellow line in graph above).  That should have been their first clue.  Rarely is there a statistically significant change without a reason.  After 2003, the spent chicken imports start to rise, and rise rapidly at an exponential rate of increase.

The leaders of this "spent chicken solution" become more emboldened.  The leaders gain followers.  Soon, the majority of the players in the SM system are doing it.  Once it starts to rise, it goes up exponentially, at a rate of 10.79% per year increase.

That means the imports of spent chicken are doubling every 6.5 years (70/10.79%/yr= 6.5 years).

It is obvious that the change started in 2003, and could have been noticed then.  CFC, CFO, the government, and all others in the SM system should have been aware as of 2003.  However, CFC goes on the public record about this issue in 2010, and CFO officially noticed it in April 2013.

CFC and CFO, the Rip Van Winkles of the chicken industry, asleep at the switch for 7 and 10 years respectfully, finally comes out of their comas.  Some of you may have thought that CFC's and CFO's catatonic comas made them permanent vegetables, but you were wrong.  They came back to life, and finally noticed the world around them.

Of course, they would jump right to it, and get this spent chicken problem resolved, right?  Not so fast.  We're not talking about Flash, the Superhero, we're talking about CFC and CFO.

For CFC, its been 3 years since they noticed the trend, and they are still wringing their hands in worry and desperation.

CFC says there is no way to tell at the border if it's an old layer or a young broiler.   I beg to differ.  Check out the Canadian Border Services Agency document which defines a "spent fowl":

MEMORANDUM D10-18-4 August 14, 2009


25.(e) “spent fowl” means a mature bird of the species Gallus Domesticus that does not have a flexible cartilage at the posterior end of the sternum and does not have tender meat or soft skin of smooth texture. Only the older birds develop a bony sternum, also referred to as a breast or keel bone, as opposed to the young birds that have a youthful cartilaginous sternum. The primary purpose of these fowls is not for meat production but for other purposes, for example, hens for laying. Once these fowls are no longer productive, they are considered “spent” and, at that point, are destined for slaughter. “Spent fowl” are also referred to as stewing hens, boiling fowls, pot roasting hens, mature chickens, or old roosters (see tariff items 0105.92.10, 0105.93.10, 0207.11.10, 0207.12.10, 0207.13.10, 0207.14.10, 1601.00.23, 1602.32.11, and 1602.32.92).
Whole chicken can be inspected for the skin and breastbone condition.  I can tell the difference between an old layer and a young broiler, so I think a CBSA officer can too.  For non-breast and skinless products, it's a little more difficult, and this may require a certificate from a USDA inspector who witnessed the processing of the birds.

Why are we still waiting 3 years since coma time, or the 10 years elapsed from when it was first discoverable?

These are the same guys who love crushing Small Flockers like a bug, but they can't take action about processors and others who have invented a method to get around the Supply Management ("SM") rules that everybody loves to hate.

I happen to disagree, but CFC and CFO are supposed to love SM, and think its the greatest system and solution.  Why don't they defend their false god with their lives when it is threatened like this?

Why are CFC and CFO standing in the middle of the road, frozen with fear in the headlights of the approaching car?  If they think that SM is the savior of Canada, and SM is under attack, why won't they act?  Does CFC and CFO have friends in high places with the importers?

Have they been bought off?  Is this willful blindness by CFC, CFO, and others?

Assuming that the 1999-2006 baseline of 47.29 Million kg per year is legitimate spent fowl, then the current level of imports of 107.2 Million kg contains 59.91 Million Kg of Cheating Chicken, contrary to SM's rules.  CFC tells us that about 49% of that spent chicken is arriving as Boneless breast meat, a Canadian favorite.

If this 59.91 Million kg of Cheating Chicken wasn't imported, somebody in Canada would be growing it.  Notice that quota in Canada has been close to flat during this period.  CFC reports in 2012 that per capita chicken consumption is flat.  They also report a total production of 1091 Million kg. eviscerated for Quota Periods A-108 to A-114, or an average of 155.86 Million kg. eviscerated per quota period.  Therefore this Cheating Chicken is 5.49% of 2012's production.  If you are reading this, please be sure not tell tell any of the quota-holding mega farmers, as they may get upset with CFC and CFO as to why they are cut back while the Cheating Chicken continues for more than 10 years at the farmer's expense.

At a doubling every 6.5 years for Cheating Chicken, we only have to wait another 37.5 years for Cheating Chicken to become the entire chicken supply for all of Canada.  Supply Management for chicken will finally be a dead dinosaur in just another 37.5 years at current rates.  Mark your calendars for Year 2050, the Wicked Witch of Chicken Supply Management will finally be dead.

The 2013 Canadian average retail price of whole chicken is $5.51 per kg., and the boneless, skinless breast is $11.27 per kg., so we have a weighted average price of $8.39 per kg.  At 59.91 Million kg per year of Cheating Chicken, that's a total $502.65 Million per year in Cheating Chicken.  Not a bad source of extra cash for the importers.

As bad as it is for quota-holding producers, it's worse for the Canadian consumer.  Remember, it's the Canadian consumers who pay the high price of these windfall profits gained by the importers.

Will the gouging, disrespect, and persecution of the Canadian consumer never end at the hands of the SM Mafia?

If the importers of this chicken had to pay the proper import tariff, it would have been 238% or at least $1.67/kg under Tariff Code 0207.11, 0207.12, 0207.13, or 0207.14 (see CBSA's Tariffs current version as of July 1, 2015).  This is lost revenue to the Canadian government, money that will now have to be taken out of the wallets of Canadians.

When will the suffering and abuse be stopped?

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