Tuesday, September 23, 2014

New Rules for Screwing Ontario Consumers

The Ontario Government is considering new rules on how to screw Ontario consumers for the chicken they buy.

The Government welcomes comments from Ontario citizens on how well they like the previous screwings, and how to make the screwing faster, and more effective.

What am I talking about?  They plan to change Ontario Reg 1990-402 under the Farm Products Marketing Act for setting the farm gate price of chicken.  You can read about it here then enter your own comments.

So as to prime the pump, here is what I submitted today.  The deadline to submit comments is Nov. 6, 2014, so don't delay.

The government will likely do whatever they planned to do, no matter what you write, but maybe, just maybe, if enough people give negative comments (or great ideas to make it better), they may toss us a cookie.

Here are my comments that I submitted today:

The current system is badly flawed.

If adequate protections and limitations are not included in the proposed changes, the new system will be easily manipulated so as to make it as bad, or possibly worse, than the current COP system.

It is obvious that over the last 50 years there has been significant integration and amalgamation within and proximate to the chicken SM system, as SM provides significant guarantees of higher profits and other benefits to all who are within and proximate to the chicken SM system.

This has resulted in a 33% premium price for SM animal feeds over similar non-SM feeds.  Since feed represents 60% of the total cost of production, these non-competitive, premium prices, directly and indirectly caused by SM, have a significant effect on chicken COP, and the affordability of chicken for consumers.

Excess carbohydrates in Western diets is causing or contributing to a multitude of disease epidemics, including obesity, diabetes, heart disease, cancer, Alzheimer's, etc.  Diabetes alone is projected to consume the entire health care budget by 2045 or sooner at its current rate of increase.  Note that health care currently consumes 42% of Ontario's budget.  If dietary carbohydrates are reduced, that pushes us to increase protein and fat.  Chicken could be an obvious solution to reducing dietary carbohydrates, however it isn't a solution due to the previous SM reg, and unless you are careful with how you change the reg, you will exclude chicken as a solution even more.

If an organization (and/or sister organizations) owns, controls, or passively/actively "co-operates" with hatcheries, feed mills, broiler growers, processors, and further processors, they can tweak the prices, terms, supply, and other factors for all the inputs and intermediary products and transfer so as to maximize their overall profits, other benefits, and minimize their risks.  How will the new Reg tease out the true price, or discover the best price, rather than the artificial price facade that has been constructed so as to take advantage of the regulation for private gain, while the public gets the costs and risks?

What protections will be inserted so that there is openness, transparency, and accountability in all aspects of the input data, random sampling methods, COP process, outputs, and their uses of the data?  Currently all is held in tight secrecy, and the local boards are exempt from Freedom of Information, etc., and refuse to disclose, or answer questions from the public.

Why are there no citizens, or consumer advocates on the Local Board who can help protect the best interests of the Ontario public?  The Local Boards receive a monopoly created by the public, but those Local Boards have stated that they have no duty whatsoever to the public beyond those that are expressly stated in the FPMA and regs; which are none.

The current COP has encouraged and permitted retail prices of chicken to rise far faster the the general rate of inflation.  Affordability of chicken for LICO (Low Income Cutoff, people living in poverty), minimum wage earners, and the average Ontario family has dropped by as much as 32% in the last 10 years.  Before the Local Board states what is "fair" for the farmer through COP, should they not consider what is "fair" for all of these Ontario consumers?  Does this regulation assume that the rights of 1,100 chicken farmers to a "reasonable return" supersede the rights of the 13.8 million Ontario citizens to affordable chicken that is safe and nutritious?  If so, expressly state this assumption or new government policy in the new regulation.

CFIA and University of Guelph studies have repeatedly shown that Ontario chicken is contaminated with deadly pathogens 30% to 80% of the time, and 50% of those pathogens are SuperBugs caused or contributed to by use of antibiotics in the feed and water.  Should the COP discount the value of farm gate chicken that is antibiotic resistant.

An informal survey of BC consumers recently showed that availability of free range chicken is the #1 issue for BC consumers.  Should these type of issues be used to discount or award demerits on the COP when the local board fails to adequately serve the consumer's needs?

If the chicken Board is charged with a duty to maximize the rate of continuous improvement in all aspects of the SM system (ie. retail price, nutrition, safety, biosecurity, availability, affordability, consumer satisfaction, etc.), miracles can be achieved.  Most organizations can achieve 4% per year.  What has the Local Chicken Board achieved over their 50 year history?  If the reg gives the farmers 50% of the savings/improvements achieved, passing on 50% of the savings to consumers, we suddenly are working for a shared goal.

The current way SM works, there is no requirement to improve by SM, so they become more and more fat, dumb, and happy every year.  For example, in the 1950's Canada's chicken farmers had one of the best FCR's available.  Today, the world's best is in New Zealand, with an FCR of 1.38 which is 31.8% better than Canadian chicken farmers.  How did this occur?  What is CFO doing about it?  Why isn't this top priority #1 for CFO?

Changing the regulations without considering the above is re-dealing the cards out of a stacked deck; the outcome is highly predictable, and it will be in favor of CFO and their members, and unfair to Ontario consumers.
A second problem arises from your plans to survey actual COP data.  You state that the COP should "establish a price that gives efficient producers a fair return over time."

If you use median data, 50% of the farmers will be above the median COP, 50% below.  The actual COP is likely a highly skewed statistic, so medians are more appropriate than averages.  The analogy for not using averages is the case of  the annual income of a billionaire and someone living at the poverty level, so the average is a millionaire income, which is somewhat removed from the person living in poverty.

If your COP sampling finds the median COP, those who are in the upper quartile of productivity and efficiency will likely have the lower quartile of COP.  If that tranche sub-group gains a reasonable return, all those who are less effective have a choice:  get more effective for their personal benefit as well as the greater good of all Ontario; or get out of the chicken business as they are negligent or incompetent or unable to compete.

This will help ensure the economic benefits of the SM chicken farmer are tied with the economic benefits of all consumers of chicken.

For the facts that back up all of these comments, contact me, or you can read the objective facts, research, and analysis on our Blog

No comments:

Post a Comment

Off-topic commercial spam that's posted so as to help sell your wares will be deleted.

On-topic comments, where you behave yourself and play nicely, will remain posted; whether they are pro or con. Everybody needs to fully understand all points of view so that we can find a solution that encompasses everybody's concerns. Give it your best shot.

If you decide to post, your posting becomes part of the public record, and SFPFC has full rights to use it (or not) in any reasonable manner or medium that suits our purposes.

Before posting, please proofread, and correct as necessary. If you subsequently discover a need to fix your previous posting, make an additional posting that refers to the original posting, then set the record straight.