Wednesday, December 11, 2013

First Heinz, now Kellogg's, Who's Next?

Heinz's closure will take away 740 direct, and possibly another 500 indirect jobs.  Kellogg's closure is 500 direct jobs, and likely another 500 indirect jobs; for a grand total of 2,240 jobs leaving Ontario's agri-foods sector.

Premier & Ag Minister Wynne announced a few months ago that she wants a doubling of agri-food exports before 2020.  Now that Heinz and Kellogg's are leaving us, she is miles behind the starting point she had a few months ago.

Whatever will she do?  Here is a suggestion:

As posted on this Blog on Mar. 13, 2013 Why Not Export Canadian Chicken? Canada’s #ChickenMafia has only 1.4% market share of exported chicken for OECD nations; a mere insignificant blip.  Canada is in last place, last out of the 7 OECD nations for chicken exports.

Canada is an exporting nation.  Canada could export chicken too.  Theoretically, Canada could, if we worked hard, gain up to 50% market share for OECD exported chicken.  It would take a while to achieve, but if we did this, Canada would need to grow 5 times more chicken than what we do today.  That means 5 times more jobs, 5 times bigger markets for Canada’s grains, 5 times the spin-offs for feed mills, farm machinery, etc.

Chicken Farmers of Ontario (“CFO”) recently announced that Ontario’s #ChickenMafia produce $2.7 Billion per year of economic activity in Ontario.  Since Ontario is about 1/3 of all chicken in Canada, we can project that all of Canada has $8.1 Billion of #ChickenMafia impact.  Taking this to 5 times current activity for OECD chicken exports, that’s $40.5 Billion for Canada, and Ontario’s share would be 1/3 of that, which would be $13.5 Billion.

Would Premier Wynne be happy to get an additional $10.8 Billion per year (13.5 – 2.7= 10.8) of economic activity and exports for Ontario’s agri-foods sector?

I think so.

There’s only one problem:   Supply Management for chicken.

Right now, the #ChickenMafia have 99.97% market share for chicken in Canada, at a price which is 300% higher than the world price, thanks to their Supply Management monopoly.  The #ChickenMafia prefer to suck the blood of Canadians at 300% price gouging, rather than the challenges of exporting chicken onto the world market.

If others could get a sweetheart deal like the #ChickenMafia monopoly, they’d likely do the same, so let's not be too quick to blame the #ChickenMafia.  It was the government who freely gave them, and continues to support them with this monopoly.

Perhaps we can encourage the #ChickenMafia to come out of their shell, spread their wings, and compete on the international chicken markets, if not for themselves, then as their patriotic duty to help their fellow Canadians [pause until laughter subsides, then continue].

There is just one problem.  Nobody else in the world is stupid enough, if given a choice, to pay 300% more for their chicken.  Therefore, it's a non-starter for Canada's #ChickenMafia to try exporting chicken at Canadian domestic prices.  If the #ChickenMafia wants to export chicken, it will have to be at the world price for chicken.

With WTO (World Trade Organization) rules, #ChickenMafia can’t export chicken for sale at world prices, because that is the definition of “dumping” (ie. selling internationally at prices lower than domestic prices).  As soon as Canada’s #ChickenMafia started exporting at world chicken prices, and if they were to gain significant market share, they would soon be slapped with dozens of WTO complaints for dumping, and the trade wars begin.

Darn!  Another great idea hits a brick wall.  If only we didn’t have 100% commitment to Supply Management and the price gouging that the #ChickenMafia gets to do to Canadians.  That extra $10.8 Billion per year of agri-exports from Ontario sure looked appealing.

Oh well, there’s always Ontario Works (ie. welfare, government dole).  Let somebody else worry about it.  Let the “Power That Be” come up with a better idea that actually has a hope of being implemented.

What do I know?  I’m just an unemployed bum after decades of working at Heinz or Kellogg’s or elsewhere.


  1. 300%? really? Explain please when Tesco in UK is selling chicken breasts at 350 g for 4GBP. That works out to be about 11.43GBP/kg or $19.87CAD. Loblaws is selling 'Free From' Chicken breasts (all boneless, skinless) at 22.02/kg. Considering this is a 'premium' chicken breast product, I would say the prices are pretty equal for regular chicken breast. Unless you are talking about some other part of the world?

  2. Thank-you for your comment, and the data on UK chicken prices. Small Flockers' retail chicken price research Dept. (me) will add that info to our database. Obviously, I'm not aware of all pricing of chicken on a world-wide basis. A lot of crazy things occur. Perhaps UK has similar challenges to those in Canada. I don't know.

    Chicken Farmers of Canada 2013 Databook ( ) reports on page 12 that the top exporters of TRQ (Tariff Rate Quota, ie WTO forced imports) chicken into Canada are USA, Brazil, Thailand, Chile, and Israel. I don't think there is significant UK chicken coming into Canada.

    Our price comparisons is to US chicken, which is the leading country of origin for imported chicken. The 300% higher pricing of Canadian domestic chicken comes from a comment we received on 2013/3/1 here:

    I subsequently responded there, as well as hereL

    Other US-Canadian chicken price data is here:

    Chicken is sometime used as a "loss leader", to attract customers to a grocery store; complicating price comparisons. It appears that a 200% to as much as a 300% price differential exists when similar conditions are used.

    I suggest that the premium priced products with maximum processing (eg. skinless, boneless) will have maximum price point on a $/kg basis, and therefore have significantly reduced market share due to a limited number of consumers who are willing and able to afford it.

    The plain, ordinary whole chicken will have the lowest price on a $/kg basis, and the greatest price ratio between US and Canada, as this is where there are the least restrictions on the price markup that suppliers can achieve.

    If you have data to the contrary, I'd be very interested in receiving your objective, independent data so as to add to our knowledge.


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