Browsing through this weekends U.S. flyers I came upon the following advertisement for eggs at Albertsons. Sometimes just telling you about the difference in prices is not enough so I thought that it was time for some additional research and an explanation as to why we pay $1.50 – $3.00 more for eggs that our U.S. neighbors. (I’ll talk about butter another time).
12/22/13
Ontario’s supply management system restricts the number of chickens and hens that farmers can keep. The quota system was brought in to protect farmers but decades later, new farmers complain it’s turned into a cartel that protects those who got in early and makes it nearly impossible for newcomers to make money. Currently, only 324 farms hold all the quota for laying hens in Ontario. They keep 8.3 million hens and produce 96 per cent of the province’s eggs. Supply management limits the number of egg-laying hens in the province and sets egg prices in order to keep the business profitable for farmers. The Egg Farmers of Ontario (EFO), an organization made up of quota-holding producers, sets egg prices, levies a fee off every carton sold in the province and lobbies government on behalf of egg farmers.
In Ontario, egg farmers can keep as many as 100 laying hens before they’re required to buy quota. The average flock of 25,000 hens costs $7.5 million in quota alone and that’s before the farmer feeds them or sells a single egg. “Even in Communist China, you can have as many laying hens as you want.” Says one farmer.
Canada is an outlier among developed countries, which have all phased out their agricultural supply management, says Ian Lee, a professor of management at Carleton University’s Sprott School of Business.
So there you have it! we pay more for eggs today because of a quota system that was first distributed in the 1960s and ’70s that now prevents Ontario farmers from owning more than 100 laying hens unless they have the money to “buy” quota from farmers who where originally given the quotas for free. Makes sense?
“It’s an antiquated scheme that keeps imports out and lets producers set prices,” says Ian Lee. “Normally this would be called price collusion.”
Source: Toronto Star Staff reporter Marco Chown Oved. http://www.thestar.com/news/gta/2013/10/07/egg_fight_quotas_holding_back_organic_farmers.html
