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.

Chicken Mafia causes another disaster

There is a full-blown crisis in the Canadian chicken industry.  Sound the alarms.  This crisis threatens the loss of 56,000 Canadian jobs, and $6.5 Billion GDP.

Spent fowl imports to Canada are probably being used to defraud Canadians, and destroy the Canadian chicken industry.

Spent fowl are female chickens that have spent an entire year laying eggs, are getting worn out, egg production is dropping, and are then only commercially suitable for making chicken soup, pet food, compost fertilizer, or similar fates such as defrauding Canadian consumers.

Fraudulent spent fowl imports are being used to escape paying the 285% import tariffs for broiler chicken at the Canadian border.

Source: http://chickenfarmers.ca/upload/Documents/Spent_Fowl_Imports_webBooklet.pdf

If the current trend of fraudulent spent fowl imports continues, these imports are forecast to double again from the current 16.9% of the domestic broiler production, to 33.76% in just 5.3 years from now, and will reach 50% of Canada's domestic broiler production in just 7 years from now, and 100% of domestic chicken production on or before June 18, 2023 (9.68 years from today).

The data shows a double exponential rate of increase (ie. an exponential of an exponential rate of growth), with a correlation coefficient of 90.48% (ie. the double exponential equation explains 90.48% of the year-to-year variation in the data, with just 9.52% random error).

That means that Canada's entire domestic chicken industry will be wiped out as of 2023, as all the needed chicken will be fraudulently imported into Canada, right under the noses of Chicken Farmers of Canada ("CFC"), the organization who is supposed to be in charge of chicken for all of Canada .

Of course, the Canadian industry for growing and processing chicken, and the growing of grains and making chicken feed for those domestic chickens will likely collapse long before those doomsday dates are reached, due to massive loss of both market share and cash flow.

Note that this dangerous trend is likely created by cannibalism from within the Chicken Mafia (ie. all those who support, use, and benefit from the monopolistic chicken supply management system).  Pure greed likely means that some members of the Chicken Mafia aren't satisfied with a mere 300% markup on chicken in Canada that consumers are forced to pay.  The Chicken Mafia wants more and more profits.  It is likely more than one Chicken Mafia members who are eating Canada's chicken supply management system alive from the inside out, just like in the movie Alien.

Alien monster emerging from inside Astronaut Kane (played by John Hurt) in the 1979 move "Alien"


If something isn't done soon, Canada's entire value-added chicken industry will suffer a similar fate to that of Astronaut Kane, as shown in the above video clip; a sudden, scary, violent, painful, and gruesome death.

Will CFC attack its own members of the Chicken Mafia, so as to save the overall system?  So far, CFC has allowed it to continue.

While Small Flockers don't like the tyranny and oppression of the current chicken supply management system, and we call for dramatic changes, this current crisis isn't our doing, is not what we had in mind, and we do not support letting the current crisis trend to continue.

Somebody needs to do something, and quick.  Perhaps the decades of oppression by the Chicken Mafia has found an outlet, and it is already too late to make amends.

Unfortunately, CFC now wrings their hands in worry and makes pretty brochures about the crisis they created by delay and indifference.

The above graph is taken from a CFC brochure they published as of Sept. 16, 2013.  In a previous Blog posting, I showed how this emerging crisis was detectable back in 2003, but CFC was asleep at the switch, and only realized the trend existed in 2010; which is 7 years behind the times.

Google Internet Search terms for Canada (see graph above) show no interest whatsoever in this topic between 2004 and today.  Shocking and sad!

So that's it? For ten years the problem is allowed to fester, and all CFC can do is produce a 6 page pamphlet on this crisis; a crisis that can and will destroy the entire Canadian chicken industry?

Rip Van Winkle wasn't asleep that long.  Incompetence and negligence by CFC needs to be investigated on this issue.

Perhaps CFC should be taking specific action.  If they don't know what to do, perhaps they should ask somebody who does know.  It appears that all they have done is complain to Minister Ritz, then sit back and wait for a solution from the government.

I find CFC's inaction or glacial pace to be hard to understand.  Talk about fiddling while Rome burns!

You should also be aware of the increasing danger in the Canadian system for supply management of chicken from other sources.  It appears to be approaching the breaking point in multiple area, from stressor originating from multiple sources (see http://canadiansmallflockers.blogspot.com/2013/10/quota-based-chicken-farmer-speaks-out.html )

Today, when a truck of chicken arrives at the US-Canada border, Canadian Border Services Agency ("CBSA") cannot take action on a truck that contains 51% spent chicken that is mixed in with 49% broilers unless they have a scientifically sound, objective method for determining what is a spent fowl and what is a plump young broiler.  I suggest the following 5 step action plan can be in place within 6 months or less if we get somebody competent on the job (ie. not Chicken Farmers of Canada):

1. Secretly purchase a truckload of 100% verified and certified USA spent chicken , and a truckload of verified and certified USA broilers ( in parts, whole fresh, and frozen).  Statistical analysis of the meat is done to characterize it, and identify the factor(s) that provide the maximum confidence interval for differentiating between spent fowl and plump broilers (eg. weight, density, conductivity, skin/meat durometer, pH, water activity, etc.).  I guess that the weight differential should be adequate, but the other data can act as an insurance policy.
   
2. Repeat the purchase and testing from different suppliers and different processing plants so as to build a sufficient database.
3. The database and testing method is verified for repeatability, reproducibility, precision, accuracy, and predictability through a double blind test of the draft method, data is statistically analyzed for prediction efficiency.
   
4. CBSA personnel are trained on the certified testing method.  Method is implemented at all borders.
5. Random samples are taken by CBSA for all trucks of alleged spent chicken imports into Canada.  Based on these samples, the % spent chicken in the shipment is estimated, and CBSA applies the TRQ or other tariff to the balance of the shipment.  If the importer is able to present sufficient objective evidence to prove a different % spent is in the shipment, then this other data will be considered by CBSA prior to assessing the duty owed.
   

What changed first, SM or the Tariff?

Last June, Susan Mann of Better Farming wrote about Al Mussell's published report (Sr. Research Associate at George Morris Centre in Guelph ON) suggesting that Supply Management ("SM") didn't need to be scrapped, we just need to allow greater access to the Canadian markets to satisfy our trade partners under WTO (World Trade Organization) and/or TPP (Trans-Pacific Partnership).

The article says that foreign commodity producers want access to Canadian markets, the second largest in the TPP negotiations.  I agree.  However importers don't have access to all of Canada's market.

For chicken as an example, foreign chicken can enter Canada at an import tariff cost of 0% (NAFTA) or 5% (WTO) under TRQ. TRQ quantities are limited to just 7.5% of the total kg consumed in Canada.  After that miniscule market access is exceeded, importer must pay a 285% import tariff cost.

100% of the 2nd largest market is significant, and worth going after under TPP and WTO.  7.5% of the second largest market is more trouble than its worth, for you need bilingual labels, learn all of the intricacies of the Canadian market, form a Canadian supply chain, etc.

All of the above keeps Canadians paying for the most expensive chicken meat prices in the world.

The farmers get some of that gravy as COP (Cost of Production), but the vast majority of those price gouging profits go to others up & down the food chain (ie. chicken feed companies, processors, supplementary processors, distributors, retail, etc.).  Gravy train for everybody, except the consumer, who pays for it all.

If the 285% import tariff was reduced, more foreign chicken would soon enter Canada, and everybody would take a hit to their gravy train.  Eventually, as everybody in the chicken supply chain got hungrier, retail prices would drop.  Anybody working under the arcane rules of SM would be at a considerable disadvantage, and they'd start to drop like flies, or be bought up by foreign suppliers for pennies on the $, because an asset caught in SM's web of fossilized bureaucracy is close to worthless as the import tariffs drop farther & farther.

Dropping import tariffs without first removing SM is a good way to kill the entire domestic chicken production system.

I think we need food security first & foremost, which means we want to ensure we can feed ourselves, even when imported chicken is no longer available.



Same logic applies to all other SM commodities.

That means we must keep the 285% import tariffs on chicken until something else is changed first.  I wonder what that something else will be?  Do you think it might be SM?