Friday, February 28, 2014

Happy Birthday, Small Flockers

birthday cake with 1 candle for 1st birthday of SFPFC (Small Flock Poultry Farmers of Canada)
Happy Birthday SFPFC !
Today is our first birthday since the formation of Small Flock Poultry Farmers of Canada.

It has been a lot of work over the past year.  I find it impossible to believe that it has been a full year.

So much has been accomplished. So little has been achieved.  Too much still remains to be done.

We've had 43,170 pageviews for this Blog so far, from all around the globe.

Visitors' Country of Origin
World map showing SFPFC's visitors from 2013/10/27 to 2014/2/28 for a
total of 6,371 pageviews from everywhere in the world. This map shows
only the last 14.75% of our Blog traffic, as there were 22,278 pageviews
(85.25% of our total) which occurred before starting this mapping.
It was hopeful and reassuring that Canadians are the ones with the greatest interest in this Blog.  We'd be in big trouble if all the world was interested in the Small Flocker's plight, but Canadians were not.

The United States is #2, which is understandable, for they are our neighbour, have many shared business interests, especially among the Supply Management Mafia.

Having China as #3 is most curious.  We welcome our Chinese visitors.  However, we understand that the business ties between Canada and China are generally weak.  For what reason is  China so interested in this Blog about Small Flockers, the Supply Management Mafia, and having affordable food for Canadians?

China has a lot of low cost chicken they'd like to sell to people in North America.  China is also interested in importing live birds from N. America, processing them into poultry cuts (eg. skinless, boneless breast meat, wings, legs, chicken strips, etc.), then shipping the meat back to consumers in N. America.

As a research department for the Chinese to quickly and easily learn about the issues and facts in the N. American poultry market, this is the best place to come.  Of course, they read carefully, but never let on that they're interested.  I can only image their private thoughts about the Canadian government and the crazy relationship that consumers have with the Supply Management Mafia.

I encourage one and all to leave us some birthday greetings in the comments below, as well as telling everybody what they like the best about this Blog, and what needs to be changed or improved for the better.

Again, Happy Birthday, Small Flockers everywhere.  This Blog wouldn't exist without you, our faithful readers.

Hope for the Mega Meat Manufacturers?

Abuse of human rights can occur anywhere, even next door.  Unfortunately, this appears to be true for Canada's next door neighbour, the USA and the Mega Meat Manufacturers.

The Mega Meat Manufacturers are the Supply Management Mafia in Canada for poultry, and the US mega corps like Tyson. Perdue, etc.

Human Rights Watch Inc. ("HRW") is a 30 year old NGO (Non-Governmental Organization) charity that is based in United States and around the world.  Instead of focusing their efforts outwards around the world at social justice hotspots in the Third World, in 2004 HRW had to focus their attention on the US meat processing industry, resulting in their 184 page report:

BLOOD, SWEAT, AND FEAR: Workers’ Rights in U.S. Meat and Poultry Plants.

HRW's 2004 report can be compared to a similar publication back in 1906, just 98 years earlier.

The Jungle (also available as a free pdf or Ebook) was written in 1906 by Upton Sinclair.  This is a novel solidly based on facts about recent immigrants to the US who were working and being abused in the Chicago meat packing plants.  What really got citizens riled up though, were the unhealthy and despicable practices used by these all powerful meat packing mega corps so as to maximize their power and profits.

Upton Sinclair was surprised at the public expressing greater concern for the quality of the food placed on their plates by this devilish system, rather than the people who were virtual slaves being used and abused to get that meat to the consumer's dinner plates.  He later said,

"I aimed at the public's heart, and by accident hit its stomach."

It appears that the food industry didn't learn its former lessons, and the same needs to occur again.  This time, HRW has a facts-based report that may have missed both the heart and the stomach.

Based on what I know from personal experience in poultry processing plants in Canada, and the research that I have done for Canada and US processing plants, the report seems believable, is based on objective evidence, and is collaborated by all the other evidence I have.

However, will it cause or contribute to launching the necessary changes in the industry?

Since the report came out in 2004, 10 years have passed.  Has there been significant change?  Based on a Google search, the HWR report is mentioned on a labor law university course, a workers compensation website, and is cited in a few books.  Not exactly a steam roller of change.

It appears that the report was thrown into the public's lab, but nobody became a champion of the cause.  The author was a consultant hired by HRW, so I assume they went on to finding other projects to pay the bills.  HRW has hundreds of projects to concern themselves with, and I assume that some are even more dire and higher priority in the grand scheme than a few thousand lost souls in the US meat packing industry.  Should HRW have dropped everything else to focus all of their efforts onto this one single issue, until completion?  Was it reasonable to expect Tyson, Perdue, and the other mega corps to change their evil ways from one flashbulb that popped, flooded the scene in brilliant light, then quickly faded back to black?

What would Upton Sinclair have advised, or done differently if he had been asked to do the 2004 report by HRW?

Most important of all for this Blog about the small flock poultry system vs. Supply Management mega corps in Canada, is this a worthy cautionary tale that we can learn from?

I believe Canadians can learn vicariously from the dismal experience in the US poultry and meat packing business.  Here is what I suggest:

  1. Organizations can only abuse people (whether customers, workers, suppliers, or others) only so much.  Multiply the severity, duration, and publicity of the abuse together as a measurement of the ticking abuse bomb.

  2. Based on the measurement method in Item #1, I estimate that we have less than 20 years before this meat industry abuse bomb suddenly goes off at grave consequences for the meat mega corps.   In case this encourages the meat mega corps to blindly continuing on their current path for another 19 years, I caution them that these issues tend to change abruptly all at once (see The Tipping Point) so there is no time to lose with correcting these chronic, latent, and mis-guided plans and defects.

  3. There are viable alternatives to the current methods employed.

    "For what will it profit a man
    if he gains the whole world
    and forfeits his soul?
    The Bible, Book of Mathew, 16:26

  4. If the meat mega corps are unwilling or unable to change their evil ways (which is highly likely, for they don't believe their world could suddenly collapse under their feet), the citizens, consumers, and abused workers will need to act on their own to create a solution.

  5. Remember, once a viable option begins to threaten the status quo, the mega meat manufacturers will attack, denounce, ridicule, or attempt to highjack the solution and destroy it before it hurts them.  Everyone will need to adequately protect themselves, as well as the solution.

  6. Because of the high capitalization required, the lack of competition due to overlapping oligopolies, and regulatory capture enjoyed by the mega corps, the people will have to fight a guerrilla chicken war against the mega corps.  Frontal assault is not a winnable option.

  7. There is likely 1 or more disgruntled chicken grower in every county who is currently, or previously been abused by the mega corps.  Being disgruntled most likely means they were blacklisted and are no longer a supplier to the mega corps.  Ask them to grow chicken for the local community on the basis of CSA (Community Supported Agriculture), or some similar basis.  With a direct to customer model, that disillusioned farmer will be able to earn significantly more with a community based model, than what they previous earned through the mega corps.

  8. Once the chickens are ready for harvesting, do a community-based chicken harvest similar to Connecticut's mobile abattoir system, or an on-farm processing similar to Joel Salatin of Polyface Farms.
  9. Enjoy your safe, nutritious, locally produced, affordable, and sustainable chicken

In another similar video, Joel Salatin relates how typical factory farm chicken that is processed through an USDA approved high speed abattoir typically has 3600 CFU (Colony Forming Units) of bacterial contamination on the chicken when sold in retail grocery stores, even after dunking and spraying with numerous noxious chemicals to limit bacteria contamination.

Joel has had his operation as shown in the video tested, and he came in at 133 CFU's; which is just 3.69% of the heavy industry mega meat manufacturing results.

While 0.0 CFU is the ideal, Joe's method certainly seems better than what I've seen of the high speed abattoir lines.  As an example of high speed abattoirs see:   To me, this is pretty gruesome; no wonder mega meat manufacturers typically have 3,600 CFU

Joel's system is what we recommend for Canadian small flockers.

In speaking to Max Bert here on Manitoulin during a recent farm and abattoir tour of his place, he has had similar experiences and similar CFU results to Joel Salatin for his small, hands-on abattoir here on Manitoulin Island, Ontario Canada.

It won't be easy, nor will it occur over night, but we can leave the mega meat manufacturers to stew in their purulent chicken dunk tanks, and create a better way for ourselves.

Thursday, February 27, 2014

Lesson #4: Freedom to Choose & Constitutionality

This is a continuation from Lesson #3:  Absolute Marketing Power.  It all starts at Lesson #1 

“The federal government passed the Agriculture Products Marketing Act in 1949.  The second section of this Act allowed the Cabinet to extend the same powers exercised by a provincial marketing board within a province outside the province for that portion of the product moving in interprovincial and export trade.
This was obviously a sly way of delegating federal powers to a provincial marketing board for controlling trade between two different provinces, as well as for export out of Canada.

So the Federal government adds additional powers to this independent provincial board, thereby making it more powerful than both the federal and provincial government.

Isn't that similar to Dr. Frankenstein when he created his monster.  Did we not learn anything from how well that worked out?

A pragmatic, industry standard for delegation of power and authority has 5 key steps:
  1. Clear expectations
  2. Provide or ensure access to all necessary power, authority, and resources.
  3. Ensure the delegate is responsible and capable to periodically and accurately measure the difference between those expectations and what has actually occurred.
  4. Ensure the delegate takes the necessary, timely, and effective corrective actions to close any gap between those expectations and current reality.
  5. Ensure that the delegate reports to stakeholders on a timely basis for any significant changes in risk, plans, actions, and other significant events.
Did either the provincial or federal government take any of these steps?   We have either none, vague, conflicting, or weak implementation of all 5 mandatory principles described above.  No wonder we have had  problems ever since.

Secondly, where do they get off with delegating their responsibilities to others?  In A.G. of Nova Scotia v. A.G. of Canada (see Supreme Court of Canada, [1951] S.C.R. 31, [1950] 4 D.L.R. 369), Chief Justice Rinfret said at page 34:
"The constitution of Canada does not belong either to Parliament, or to the Legislatures; it belongs to the country and it is there that the citizens of the country will find the protection of the rights to which they are entitled. It is part of the protection that Parliament can legislate only on the subject matters referred to it by section 91 and that each Province can legislate exclusively on the subject matters referred to it by section 92. The country is entitled to insist that legislation adopted under section 91 should be passed exclusively by the Parliament of Canada in the same way as the people of each Province are entitled to insist that legislation concerning the matters enumerated in section 92 should come exclusively from their respective Legislatures. No power of delegation is expressed either in section 91 or in section 92, nor, indeed, is there to be found the power of accepting delegation from one body to the other; and I have no doubt that if it had been the intention to give such powers it would have been expressed in clear and unequivocal language."

I assume that in 1949, the Federal Government didn't yet understand this principle, or needed to be reminded of it in 1951, two years later, by this other lawsuit.  Either way, the principle stands.

Even today, on the basis of Farm Products Agencies Act, the Federal Government has only 20 issues which it can control through Farm Products Council of Canada or the Agencies under the Act; most of which are administrative in nature.  There is no direct nor ultimate control over the Federal Government's delegated powers, so it seems to be contrary to the requirements established by the Supreme Court of Canada.

We continue with Mr. A.G. Wilson's words:
"A board could now control the marketing of its product outside the province.  This legislation did not provide, however, any effective procedure for coordinating the activities of provincial marketing boards.  The legislation was subsequently tested in the courts and found intra vires.  It was later modified to provide a basis for the collection of levies, a form of taxation in effect, to raise funds for marketing purposes.”
So the Federal Government, by not including the mechanism for resolving or co-ordinating issues between provinces, thereby set the scene for the subsequent "Chicken and Egg War" that destroyed many farmers, and almost destroyed Canada with inter-provincial bickering.

On a second issue, here we have an indirect for of taxation via levies, which was also ruled unconstitutional by the Supreme Court of Canada. 

Let's continue:
"Coordination of marketing activities was found to be possible when individual provinces agreed to delegate their powers over the product produced within their borders to a national or regional board.  Such delegation of provincial powers allows the Canadian Wheat Board, a board established under federal legislation, to market the wheat, oats, and barley produced in the designated area.  Coordination was theoretically possible also if board legislation became consistent between provinces.  The political problems attached to such a course have been found to be insurmountable to date [1971].  The difficulties of coordinating the activities of the respective provincial boards have led those producers having the marketing of their products regulated on a provincial basis to agitate once more for federal legislation.  The present policy of the Canadian Federation of Agriculture reflects their views."
While the national board may have helped, inter-provincial disputes continued.  Many complained about unfair treatment, inefficiencies, trade restrictions, unconstitutionality, lowest cost/most efficient producer, loss of personal freedom, self-reliance, population shifts and many other related issues.

As long as the Federal and/or Provincial governments were creating artificial systems and rules, the people would be restricted and chafe under the imposed rules.

Alternatively, the governments could have ensured fair treatment in the marketplace through the Competition Act and similar consumer protection legislation, then let consumers decide the issues every time they buy (or refuse to buy) the products offered by the marketplace.  As technologies, organizations, and consumer tastes change, the whole system can immediately adjust to the latest trend, rather than having fossilized and inappropriate regulations in place long after their usefulness.

Wednesday, February 26, 2014

Chicken Farmer Survey, Delmarva USA (1998 - 2014)

Delmarva Peninsula, Delaware,
Maryland, and Virginia USA

The Delmarva Peninsula (on Chesapeake Bay, at the cross roads of Maryland, Delaware, and Virginia) is a hotbed for the US poultry industry.  Poultry farming is the leading industry in this region.
Over the last 50 years, the US chicken processors (eg. Tyson, Perdue, etc.) have gotten bigger and stronger.  Chicken went from family farm to mega factories.

Today, independent family farms still grow chickens, but on a scale thousands of times bigger than before.  These farmers sell directly to the mega corp. chicken processors, or to integrators (an intermediary company who collects the chickens from many different farms, then delivers then to the major chicken processors).
All is not well in the US poultry system.

These chronic issues prompted the conducting of a survey for Demarva chicken growers.  Prof. Tom Ilvento, Professor at the Food and Resource Economics Dept. of University of Delaware conducted a survey of Delmarva chicken growers in 1998, 16 years ago.  The original survey data of chicken growers is presented in a summary report available on the Internet  (see 1998 Survey of US Chicken Farmers, Delmarva ).

This report re-analyzes the survey data, asks some key questions, and seeks a 2014 follow up on progress achieved on these substantial issues during the last 16 years (from 1998 to 2014).  See our previous Blog post Unhappy US Chicken Farmers ) for the source of the survey, and our improved analysis and measurement system for the survey results.

Q1:   Dr. Ilvento's analysis of the 1998 survey data suggested that 73% of Delmarva chicken farmers were "satisfied".
I suggest that this analysis was simplistic and would tend to mis-direct people from an important issue.
By weighting the survey data, we find that the overall satisfaction score is just 22.65%; pretty dismal.
What has been done about this since 1998 (16 years ago)?  Is it substantially better today?

A recent program on NPR suggests the 1998 problems are fossilized, chronic, and still not solved.

What should be done?  When?

Q2:  Having a light at the end of the tunnel is essential for staying the difficult path one might be on.

In this case, we have just 19.8% glimmer of light; not very much.

Based on this, I would suspect that many chicken farmers would become frustrated, disillusioned, depressed, or give up.

Has that occurred in the last 16 years?

What has been done?  What should be done?

Q3:   Walking on egg shells with a large, rich, and powerful organization, who has the power to make you or break you, is obviously stressful.

Trust and effective relationships depend upon open and honest communication.

With a score of just 24.7%, chicken farmers are more afraid and cautious, not trusting.

What have been the consequences of this daily fear over the last 16 years?

What has been done to improve the situation?

What more needs to be done?

Who will do it?

Q4:   As bad as the previous question was, this one is even worse.  Here, the majority feel that communications are inadequate.

With the challenges in today's economy, the growing need for food that is more affordable, and the world-wide competition; all of these require trust, and clear, effective communication between everybody in the supply chain.  To do otherwise is to encourage inefficiencies, and disaster.

Again, what has been done in the last 16 years to improve this situation?

Who will stand up and work towards a solution in this important area?

Q5:   A 52% score here is the brightest star in the Delmarvian sky.

As this is the closest connection between the large processor and the independent farmer, it is most important that a good relationship exists, and excellent, unstrained communication occurs.

What was done in the hiring and training of the Flock Supervisors so as to ensure this occurred?

It is usually best to build from a centre of strength, working outwards towards the highest priority weakness; rather than the worse.  If true in this case, this is the starting point.

What needs to be done so that the Flock Supervisor and the Chicken Farmer can start working together even more on one or more of these key, outstanding issues?

Q6:   At -15%, this is the most negative response in all the survey questions.

It would seem that the farmers wanted to keep the strong, beneficial relationship they have with their respective Flock Supervisor, rather than needlessly switch on some arbitrary schedule.

Were the chicken farmers listened to?

If not, why not?

What has been learned from this in the last 16 years?

Q7:   The Settlement Statement is a measurement and reporting tool.  This is the end result of much hard work.  It would seem reasonable that they would be assisted in fully understanding the Settlement Statement, as well as the reasons why that exist, are know, or can be estimated that support or cause the results reported here.
As a measurement tool, it should use the SMART method (Specific, Measurable, Actionable, Relevant, and Timely).  It also helps if the measurements are believable.

What has been done in this important issue?  Have commitments been made to ensure all issues are resolved in the near future?

Q8:   At a -12.7% score, the majority of chicken farmers are dis-satisfied with their income.
When income is considered, one must consider the risks taken, and the effort expended.  Neither of these factors is included in this question.

In a related article about chicken farming in the Southern US, Grist said,
"Payment [of independent chicken farmers] is results-oriented, based on measures like total weight gain of the flock. It’s a system, says the United Food and Commercial Workers, that leaves 71 percent of growers earning below poverty-level wages."

However, the wording of this question may have prompted this negative response, or enhanced the negativity.  Possible re-wording of the question would have produced different results.

Alternatively, the farmers may be economically abused by their powerful customers.

Has the situation resolved itself, or gotten even worse in the last 16 years?

What should be done now?

Q9:    Garbage in, garbage out.
It is obvious that poor quality chicks will cause the US chicken farmer to have difficulties with FCR (Feed Conversion Ratios, ie. the amount of chicken feed required to get 1 kg. of weight gain), mortality rates, and disease resistance.

Some of the comments from the NPR program suggested that the mega corps started the farmers out with high quality chicks, then at some point, switched to inferior chicks (assumed to be a lower cost for the mega corp to purchase, thereby saving them money), but the farmer was hurt by the resulting poor performance that resulted.

Whether it is a mistaken unjustified impression, or solidly based in fact, either way, the farmer feels cornered and at the mercy of the mega corp who contracted him.  Either way, this can create a dysfunctional relationship, loss of trust, and hard feelings.

What is a farmer to do if they start to feel this way, but are up to their eyeballs in debt from previously meeting the never ending improvements in the farming practices and "state of the art" equipment?  Abandoning the mega corp will surely cause the farmer's bankruptcy and loss of the family farm, yet a minor frustration or inconvenience to the mega corp.

Is there solid evidence to confirm or deny this impression about chick quality?  If none exists, even after another 16 years since this survey was done, we have to wonder why?

Q10:    This is the strongest negative feeling of all the survey questions.
It appears that the chicken farmers realize that as bad as the chicken mega corp. are, insidious and inflexible government intervention via regulation is even worse.
In the NPR show, a number of farmers commented about other statutes and regulations against predatory practices by the mega corps, yet the courts are unwilling to enforce them.
Perhaps the US farmers have seen or heard of their Canadian cousins and their government regulations, and would rather fight on through rugged individualism, rather than start down the crazy road of Supply Management or excessive and restrictive government regulation.
Can the system be improved so as to provide the farmers a level playing field, and prevent the abuse of power against the chicken farmer?
A chicken processor in the Southern US went bankrupt, prompting Congress to request additional regulations to "protect" farmers.  In Nov. 2010, the Delmarva Chicken Growers Committee responded and lobbied against the proposed regulations.

Q11A:   The survey asked for the farmer's ideas for other programs and services that might help.  The formation of a "Growers Committee".
Delmarva Poultry Justice AllianceIn 1995 Jim Lewis, an Episcopal minister, was investigating at-risk people living in the Delmarva area.  Rev. Lewis found that people in the at-risk population had
one thing in common: some connection to the poultry

In 1995 Rev. Jim Lewis, an Episcopal minister, was investigating at- risk people living in the Delmarva area.  Rev. Lewis found that people in the at-risk population had one thing in common: some connection to the poultry industry. He helped form the Delmarva Poultry Justice Alliance ("DPJA").  Did DPJA help prompt the development of this survey in 1998?

The need and success of DPJA eventually lead to the formation of the National Poultry Justice Alliance ("NPJA").  Both of these organizations did many good works to help with social justice for chicken farmers, catchers, and workers in chicken processing plants.  Unfortunately, it appears that neither of these groups exist today.

Today, a Grower's Committee exists under the wing of Delmarva Poultry Industry Inc.  As of Dec. 2013, the Growers Committee was lobbying against the planned phosphorous regulations to protect against land and water pollution.

Did all of these fairness and social justice issues get resolved to the satisfaction  of the US chicken farmers?  Alternatively, perhaps these social justice movements were infiltrated, high jacked, and disemboweled by the mega corps.

Q11B:    The chicken growers tend to get little feedback on their performance, they just get a cheque and a number of deductions removed with little explanation.  The grower has to trust the mega corp.  Ask too many questions, and this may be  your last contract with that integrator, and/or the mega corp who buys from that integrator.

It is obvious from the response from this question, chicken farmers want objective, unbiased, verifiable data associated with their inputs (chicks, feed, drugs, etc.), the work performed by the farmer, and the resulting flock of chickens that were removed from the farm when fully grown.

As long as there is an direct opportunity for gain from fudging the data, there will be doubt, and the potential for abuse.

Did the situation significantly improve in the last 16 years?

Q11C:   Nobody's perfect, same for chicken farmers.  If each farmer has a reasonable opportunity to learn and improve over time, everybody gains.  We need to maximize learning and the rate of continuous improvement, and minimize risks.

There seems to have been great interest in a program to help chicken farmers to overcome unsatisfactory performance.  A common database of best practices is often found to help.  Forums for chicken farmers to meet and freely share ideas could also be done.

Has this occurred?  If not, why not?

Q11D:   In addition to education (see below, Question 11E), do new entrants have the ability to get the necessary funding?

Contract growers invest 50% of all the capital needed to grow chickens.  Grower’s return on that capital investment is typically less than 3%, while the mega corp. enjoys profits of 33% net return.

When you have a balanced business relationship, those who take the risk and make the investments typically get the majority of the benefits derived from success.  That doesn't appear to be the case for Delmarva chicken farmers vs. their mega corp. customers.

What should be done, if anything?

Q11E:    Learning to become a chicken farmer isn't easy.

Due to the highly competitive nature of the business, you can ill afford expensive mistakes, nor waste a moment.  There are thousands of details that must be taken care of; miss one, and it can quickly lead to a disaster for your chickens, or your bank account.

If you are unable to attract new blood into the industry, each year the old gang of veterans gets older, wiser, die, move away, frustrated, or some other problem that causes them to leave the industry.  This will eventually result in super concentration of ownership, and/or the death of the industry as the next generation chooses to stay away from the chronic abuse and unfair treatment.

In addition to education, do new entrants have the ability to get the necessary funding?

Today, University of Maryland School of Extension offers a course for new and existing poultry farmers.  Is this enough?

  1. No system is perfect, not even in the USA.
  2. We need to listen to all sides of the issue, and treat everybody fairly, especially the weaker party and minorities.  It's the right thing to do.  It's what we would want if the roles were reversed.
  3. Canada doesn't want nor need a US-style chicken production system.  We have enough difficulties without adding that burden.
  4. Using the challenges inside the US chicken production system as sufficient reasons for keeping Canada's current Supply Management system is a fallacious Straw Man argument.

Tuesday, February 25, 2014

Unhappy US Chicken Farmers

US chicken farmers in the Delmarva Peninsula, the highest concentration of chicken farming in the US, are very unhappy.

The 1998 survey of US chicken farmers is available here.  I assume that most contract growers in other parts of the US are equally unhappy, but we have no proof of that yet.

Why then, does this 1998 survey by Dr. Tom Ilvento, Professor at the Food and Resource Economics Dept. of University of Delaware say that 73% of them are satisfied?

Here is Dr. Ilvento's data in graph form.  I added the red text for adding clarity.

The vote was widely dispersed, but if you add up all those farmers who are on the "Agree" side, in various strengths, you do get a total of 73%.

However, this discounts the degree of strength for that agreement.

Obviously, if everybody said, "Strongly Agree", you can't get any better than that, so we can call that 100% satisfied.  Similarly, if everybody said "Strongly dis-satisfied", that would be -100%, or 100% Dis-Satisfied.

When couples get divorced or separated, they don't go from "love" to "hate" (at least not till after the lawyers get involved), they usually go from "love" to "I don't care anymore, I feel numb towards you".  That indifference score would be somewhere between "Somewhat Agree" and "Somewhat Disagree", and is the true 0%.

Figure 2: Weighted Survey Results
In surveys about feelings, same as in how our senses work (ie. taste, touch, sight, hearing, smell, time, etc.), we work on a logarithmic basis, not linear.  For example, decidels for sound.  Another example is when a child is made to wait for a candy, a 5 minute wait isn't 5 times as difficult as a 1 minute wait, it is perceived as about 16 times more difficult, and a 10 minute wait is perceived at about 512 times more difficult than a 1 minute wait.  Therefore there should be some weighting applied to these 6 scoring levels for satisfaction.

When we do that, we get the following data in spreadsheet format.  When we add up the weighted scores (0% is "I don't care indifference", 100% is "Strongly Agree"), we get a weighted score of just 22.65% satisfaction.

This is certainly totally different than the 73% agree that Dr. Ilvento is pushing out there.   Could that be related to the funding source of the survey, Delmarva Poultry Industry, Inc., Delaware Poultry Improvement Association, the Maryland Farm Bureau, and the University of Delaware Cooperative Extension?  I should say that Dr. Ilvento is using a typical method employed by many who conduct surveys, but that doesn't make it useful, correct, or avoid mis-leading the public.

I have sent this commentary to Dr. Ilvento, and we will see what he says.

Here we are, 16 years after this survey.  Did the mega corp chicken processors like Tyson et al. listen to their chicken growers?  Has anything changed, better or worse?  The NPR radio documentary (see Blog posting The US Chicken System) dated Feb. 20, 2014 says not much has changed.  If you have some facts or commentary on the glacial rate of improvement for US chicken farmers, type in your comments below.  Everybody wants to know, and better understand.

In the meantime, we can try to better understand the struggles faced by those chicken farmers to our South.  That is why Small Flockers is not suggesting the US system for use in Canada.  We can do better than that.

If Canada blindly adopted the US system for producing chicken, we'd be going from the frying pan, right into the fire.

The US Chicken System

We'll stop the Lessons for a moment so we can have a message from our sponsor.  Is the US system better than Canada's Supply Management system?

National Public Radio in the US has read the recent book by Christopher Leonard's The Meat Racket, a tale of caution and complaint against the US meat industry, similar to what was published in 1906, The Jungle by Upton Sinclair.

NPR also did a piece on Tyson, the leading chicken producer in the US, asking if Tyson was a "Meat Racket" as described in Leonard's book.

Agri007 also covered Leonard's book, and has some wisdom to offer us.

The US system has huge processors who want to buy chickens ready for slaughter.  They don't have the capital, and don't want to have their capital tied up in expensive barns and farm land, so they contract independent farmers to grow chickens for them.

Because these US farmers are independent contractors to the mega corps, and generally unsupervised or loosely supervised, the mega corporations need some method to control those feisty US farmers, keep them in line, reduce costs, and reduce risk for the mega corporation.  For example, if there is an animal abuse charge at a farm, or a waste disposal problem, or ooze running into a creek, the mega corp want and need plausible deniability, just like the CIA and NSA.  If all the chickens die because someone at the farm didn't follow proper biosecurity protocol, the mega corp wants to be able to walk away, leaving the farmer to eat the loss, likely having to reimburse the mega corp for the lost chickens and wasted chicken feed.  If the chickens eat way more feed or the barn uses lots more propane due to a cold snap, its the farmer who pays the cost of the excess inputs used.

The farmer carries all or most of the risk.  The mega corp gets the resulting product, free of any issues, no strings attached, no unforeseen liabilities.

It's a tough system for chicken farmers in the US.  You grow up quickly under these rules.  It's not for the faint of heart.

But wait, there's more.

Piece work was somewhat invented in the US by Fredrick Taylor, the father of Industrial Engineering.  Under this system, you have to work hard all day to earn a living wage, getting paid only for the good parts you produce.  These methods originated in, and were tested in US steel mills at the turn of the 20th century, then quickly adopted for automotive parts production, then many other industries.

The mega corps loved Taylor's piecework systems, for it ensured workers achieved maximum productivity, kind of.  If the workers found a faster, cheaper way to do the job, more production in a shorter time would occur, the mega corp would end up paying the worker more for that shift, so the bosses quickly found out about improvements, everybody would be forced to adopt the better way, then a time study would be done to re-calculate the "fair rate" with the new improved method, and the worker would quickly lose his advantage he invented, and the extra pay that went with it.  If the mega corp installed new machines or methods that were faster or better, then the piece rate would be calculated immediately, as the job was likely easier, so more production would occur for the same effort, so additional pay wasn't warranted.  Improvement was needed continuously to just mark time.

Workers soon learned to hide the improvements from the boss so that they received the benefits of higher pay without enabling the spreading of that improvement to other workers, and thereby lose the personal advantage. Inspectors had to be eagle-eyed, as there was an  incentive for going faster at the expense of shoddy workmanship, and hiding mistakes.

A simple system that was self-policing and encouraged maximum productivity was what the Chicken Council (ie. all the mega processors)  wanted.  But how do you implement it when your farmers are spread all over the nation, on every back road?  They invented the "Tournament Pay System".  In this case, poor performers get less pay, and the best performers get more pay.  The total amount paid by the mega corp is constant, but farmers have to keep up with their peers, or they get docked on their pay.  If you are significantly behind your cohort, you aren't invited back, and you're out of work as a contract farmer for that mega corp.

The problem is quality.  I suggest that raising chickens is what the quality industry calls a "Special Process".  Crossing the finish line with a live chicken that weights 1.0 kg isn't enough.  I suggest it matters how you got to the finish line.  Was there any cheating, or did the farmer follow all the rules?  It is difficult, if not impossible to tell.  This is similar to the cat and mouse game for illegal drugs in athletics such as the Olympics, professional sports, college teams, and elsewhere.  One tries to find an advantage and hide it, while others tries to detect cheating.  As we know in sports, there is a lot of cheating going on.  I suspect the same occurs in raising chickens under the Tournament Pay System.

In many ways, the current US system is as bad or worse than the Canadian Supply Management system.  It certainly runs the US chicken farmer off his feet trying to keep up and avoid bankruptcy.  In comparison, Canadian chicken farmers lead the life of Rip Van Winkle, as they can be half asleep and still make out OK come the end of each grow out.

Small Flockers have significant concerns about the US system, and do not recommend it for Canada.

Canadians need a better system, one designed by Canadians, for Canadians.

Small Flockers have made specific recommendations on how that effective system could be implemented.  We only need some dialogue and consideration of the ideas presented.

Monday, February 24, 2014

Lesson #3: Absolute Marketing Power

Today, we roll back into history to look at the lobbying and government's response to pacify the agriculture sector.  Previous postings:   Lesson #1, Lesson #2

Today, we will learn that:

"You can avoid reality,
but you cannot avoid the consequences of avoiding reality."
Ayn Rand (1905 - 1982), Author, Playright, Screenwriter, and Philosopher

"The Splintered Market", a book published in 1980, relates that the first marketing co-op in Canada was the Okanagan tree fruit growers in 1913, which was of limited success, as they couldn't control the marketing done by members, and they had no control whatsoever over non-members.

As typical with government, if any action is a disaster, they assume doing lots more of the disastrous action will be an effective solution to the initial disaster.  In other words, if throwing gasoline on a fire fails to extinguish the fire, the reason for the resulting disaster is assumed to be insufficient gasoline was used in the first attempt.

Lets see what Mr. A.G. Wilson had to say in 1971 about the draft SM Bill in Parliament:
“The Produce Marketing Act passed in 1927 by the British Columbia legislature gave exclusive powers to a board to control and regulate the marketing of specific farm commodities. When tested in the courts in 1931, the legislation was declared ultra vires since it interfered with inter-provincial trade.
The Splintered Market also notes that the courts also struck the law down as the levy charged farmers was an indirect tax, which was not permitted by the Canadian Constitution.

Lets continue:
"The onset of the depression sharpened the desire of producers to obtain market control since they observed that industrial firms were able to maintain prices by curtailing output. Continued agitation resulted in the passage of the federal Natural Products Marketing Act in 1934. Several marketing schemes were approved under this Act before it was declared ultra vires by the courts in 1937 on the grounds that the marketing of a product within a province was a matter under provincial jurisdiction.
Strike 2, but not to be deterred, the Provinces join in to the fight:
The respective provinces, to circumvent this difficulty, have each passed their own Natural Products Marketing Acts. Well over 100 provincial marketing boards have now been established.
So now we have a piling on, of both Federal and Provincial governments, to restrict trade and freedom.
Provincial marketing boards found themselves limited in their ability to regulate marketing since their control was restricted to the product produced within the confines of their respective provinces. This limitation was particularly onerous for those products which were produced in several provinces. Some means of coordinating the activities of provincial boards handling the same product was considered necessary if effective market control was to be achieved.”
One of the reasons for having both provincial and federal governments is to prevent absolute powers, to have counter-balancing, to prevent extremes and excesses.  If something requires both the Provinces and the Federal government to act in unison, the first assumption should be "This is something that should not be done!".

Unfortunately, they lobbyists were bound and determined to have their way, so they pressed on, and called for united action by both levels of government.

So the next idea was to create an independent third party, and both the Federal and Provincial governments would delegate their respective powers to this third party, thereby making it more powerful than either government alone.

Does this not give anybody pause or caution?

"Power tends to corrupt, and
absolute power corrupts absolutely."

John Emerich Edward Dalberg Acton, First Baron Acton (1834–1902)
English historian, politician, and writer

Sunday, February 23, 2014

Lesson #2: Assumptions and Constraints in Designing a Supply Management System

Continuing with our #ChickenMafia History Lesson series (see Lesson #1 for the beginning), today we learn about the limitations and consequences of designing a Supply Management system.

Continuing from where we left off in Lesson #1, Mr. A.G. Wilson next said:
“The legislation has many ramifications for agriculture on the prairies and indeed for the nation as a whole."
It appears that he refers to "unforeseen consequences", the boogey man of all governmental intervention.  Best intentions are not enough.  Governments tend to have lack of forethought and planning.  Lack of participation by the majority forces the voice of lobbyists to dominate the discussions (if there are any discussions at all).

For many stakeholders who suffer and plead for relief, there is justifiable frustration with the status quo, unbearable inertia and delay by the bureaucrats, followed by a double scoop of neglect by the politicians in serial sequence after the bureaucrats finally agree that something must be done, followed by panic and a rush to respond by jumping upon an incomplete or jerry-built band wagon. Sometimes that rickety bandwagon doesn't survive the long and challenging process to achieve royal ascent.  More often the misguided legislation collapses soon after passing, or careens off the road and over the cliff, taking all those on board to their tragic fate.

If all that is true, then what should be done with the current disaster of SM legislation at both Federal and Provincial levels?

Will we make an even bigger mess by trying to fix the current mess?  For one thing is sure with government action, as bad as it is today, the government can always make it significantly worse.

Let's continue:
"These ramifications can be placed in perspective by a review of developments in this form of legislation over time and the underlying reasons for passage of such a bill.  Such a review will also serve to explain the intent of particular sections of the bill which provides for the regulation of the marketing of farm products in interprovincial and export trade."
It always helps to understand the history behind how we got to today's disaster.  It helps to sooth the wounds, making our suffering more bearable.  Alternatively, it rubs salt into the wound, raising us up to a crescendo of pain that motivates us to cry out for immediate change. That urgency then reinforces government's hasty action and resulting folly, thereby repeating our downward spiral.

In spite of all this, we go on:
"Historical Background
Producers have long been concerned with their lack of bargaining power as individuals when marketing their products.  Early attempts to obtain bargaining power through the formation of “voluntary” cooperative marketing organizations met with limited success.  It was discovered that if bargaining was to be effective in raising price, control of supply was essential.  When members of a voluntary organization restricted marketings and raised price, the benefits accrued to those individuals outside the organization."
This speaks of unintended and non-obvious consequences.  It is not clear to me all the intricate mechanisms at work here.

To me, this is similar to taking the back off a mechanical watch.  I see the intricate mechanism of gears and levers actuating and turning.  I see the second, minute, and hour hands progressing in their steady pace.  However, I am unable to fully understand how it works, or why it was designed as it is.  I have no understanding of the designer's compromises and constraints that they had to overcome, or that the designer failed to address with the final product of their efforts ticking before my eyes.  I can only trust.

Mr. A.G. Wilson, the author of these words, seems convinced that it is all or nothing for supply management to work.  Let us see if, as Albert Einstein suggests, we can do a thought experiment to better understand the mechanisms at work.

Let's say that we have 50% of the farmers for a particular commodity (say, for instance, broiler chickens) convinced to stick together, have a 1-desk marketing body, and share the benefit and pain equally amongst all their members.  That co-op decides that prices are below what is reasonable, so the economics of supply and demand say that the total production of chicken must go down, or the consumption of chicken must be driven up, which will subsequently raise prices, relieving the farmers' financial pain.

The farmers' co-op then decides that all member farmers will cut their chicken production by 10%, and this should balance the supply-demand.  The downstream chicken processors can no longer get all the chicken that they desire from their regular supplier.  The processors start calling around, looking for alternatives, for reduced production creates a small base upon which to fund their fixed overhead costs, which will result in significantly lower profits if no solution is found.  Each producer finds a non-ideal alternative supplier, who can supply an inferior chicken, or a more expensive chicken due to the added shipping costs or less efficient upstream growing process.  The producer's profits shrink, so they will attempt to raise prices downstream.  If all or most suppliers are in the same boat, the average retail price of chicken will increase.  If the processor is unsuccessful in getting a retail price increase, they will suffer the lower profits until they can find a solution.

Remember that just 50% of the broiler chicken farmers are part of the co-op.  The other 50% of the farmers are independent actors who are looking out for their personal best interest.  What is their response as they observe the rapidly changing dynamic caused by the co-op's 10% production cut?

The independent farmers can choose to:

  • Do nothing different.  In this case, they will have the same production while the co-op cuts back, so they have automatically gained market share.  They will be getting phone calls from 1 or more processors asking if they can buy some chicken from the independent farmer to fill the supply gap.  The independent farmer will find it easier to sell all of his chickens, and it may fetch the same or higher price.  This encourages the independent farmer and provides him with more time on his hands (less time spent marketing), and possible a few extra dollars.  As the next growing period is planned, these independent farmers may choose to spend this extra time and/or money to grow some additional chicken.  This process continues again and again, until the co-op stops growing chicken, and the independent farmers have each doubled their chicken production.

  • Immediately raise prices.  When the co-op cuts production, the wise independent might assume that chicken will become a more scarce commodity, and therefore more valuable.  When the phone calls start to arrive, he is ready with a supply of chicken, but at higher prices.  The desperate producer negotiates as best they can, and possibly a sale occurs.  The independent farmer may have to adjust his price somewhat so as to be below the point of gouging the producers, but there are many more people interested in buying his chickens, so they eventually sell at the same or higher prices.

  • Immediately increase production.  This is the most aggressive tactic, and has the greatest risk.  Some of the co-op may be bluffing, saying they cut production when in reality they stayed the same, or possibly increased production to take advantage of the "silly" co-op members who were good to their word.  In this case, lack of co-op disciple could cause more, not less, chicken being produced, so that the co-op members, who already have the relationship with their customers, fully meet the needs of their traditional customers, some of the needs of customers previously supplied by fellow co-op members, and the independent farmer has more chicken which nobody wants.  If however, the co-op discipline is almost perfect, then the independent farmer has more chicken just when a shortage is created by the co-op.  This tends to prevent a retail price increase, or softens the amount of the increase.  With each additional chicken grow period, more and more independent farmers will choose this option as the rewards will likely outweigh the risks.

  • Reduce production in solidarity with the co-op.  It is unlikely that all of the independent farmers will make this choice.  Each independent farmer will eventually hear of the benefits accrued by those who raised prices or increased production to fill the gap created by the co-op.  If not in the first growing period, then eventually, virtually all of the independent farmers will learn what is in their best interest, and abandon this possibility over time.
So this mind experiment seems to indicate that the co-op farmers will loose big time no matter what the independent farmers choose to do in the short term.  In the long term, if the co-op is foolish enough to continue with its plan, each and every one of the co-op farmers will be driven out of the chicken business, or bankrupt (so that the former co-op farmer is out of all farming business ventures, not just chickens).

This mind experiment logic seems to confirm the statements by Mr. A.G. Wilson in his paper.

Let's continue:
"The experiences of the cooperative organizations formed under the influence of Aaron Sapiro in the 1920’s demonstrated the fallacy of attempting market control where the entire supply was not regulated."
It appears that Mr. Sapiro lead a group of farmers over the cliff in 1920's because of a poorly chosen strategy.  Game theory among 4 to 8 players around a table could have demonstrated the fallacy of his plan with just a few hours work, rather than destroying many farmers who were encouraged to "bet the farm" in real life as idealistic supporters of a cause.  Most unfortunate.

Continuing on:
  "Producers subsequently agitated for marketing legislation which would allow a majority to impose control over the total product."
Now here we have the tyranny of democracy.

One of the tests we have for such plans is to assume we have an independent country with just 3 citizens (A, B, and C).  Everybody gets 1 vote.  Mr. A by some random or skillful series of events, happens to have (or gain) more assets and/or skill and/or other valuable commodity than the other two citizens.  Human nature being what it is, Mr. B proposes that Mr. A will be nationalized and be taxed or have his property confiscated and divided equally amongst all citizens.  Of course, Mr. A will vote against this motion, but Mr. B and Mr. C have much to gain, so they vote in favor of the proposal, and it's 2 against 1, and the majority win in a democracy.  Perhaps there are even fewer scruples, and a motion is made to turn Mr. A into the slave of Mr. B and C.  Any minority can suffer terribly at the hands of the majority in an unconstrained democracy.

We can see that democracies must be tempered by the rights of the minority, or things get bad pretty quickly.

In our case, where a majority of farmers decide that all farmers no longer have the right to grow or sell their chickens as they please, violates the rights of those who do not voluntarily agree with this plan.  Even if there is just 1 farmer who disagrees, on what basis do all other farmers have the right to steal this one farmer's freedoms?

Tyranny of the majority, pure and simple.

Let's continue:
  "They considered that such legislation would enable them to obtain a higher price as a result of control of the total volume of product believing that higher prices were synonymous with higher incomes."
An interesting turn of the phrase, "believing that higher prices were synonymous with higher incomes."  It seems that Mr. A.G. Wilson suggests that this is an assumption that doesn't always (or never) comes true.

I can only think of one class of examples of this.  If there are alternatives to the controlled market, people who resent the control can go to these alternatives.  For example, if there is a monopoly on gasoline, prices could be increased more than what some people are willing to pay.  Fortunately, instead of using gasoline, people can use LNG, propane, diesel fuel, kerosene, fuel oil, wood gasification, electric, or other alternatives.  One or more of these alternatives will win as a result of people moving away from gasoline.

If a monopoly in domestic chicken is created, there is turkey, beef, pork, foreign chicken, or a number of other alternatives.

Perhaps there are additional assumptions in this sentence that all of you can suggest, in which case, make a comment below.

Continuing on:
  "Furthermore they believed that control of the product would allow the market environment to be influenced in a manner favourable to them.”
Ah yes, self interest.  The old saw, "What's good for GM, is also good for the nation." and all similar ones.  While this might be true in the short term, continuing too far down this road leads to arrogance and privilege, to the point that the organization loses its way, and a growing divergence of interest occurs.  Soon, what is good for the organization is totally opposite to the best interests of the nation.  What is the key moment where this policy should be stopped?  If it is only stopped when the interests are diametrically in opposition, there will be a huge shock to the systems (both inside the corporation, the shareholders, the customers, and the nation) when the switch is suddenly thrown.  Therefore it is best to never get started down this road.

Any time somebody proposes shared interests, run for your life, or ensure systems are built in to detect these future divergences, and immediately throw the switch as the slightest difference in interests.

Unfortunately, that wasn't done with Supply Management.

That is why a SM system that may have been in the best interest of Canada at one point in time, is no longer so, but it has the power and inertia to force a continuation of their monopolistic system as if it was still in Canada's best interest.

Lack of foresight by the government allowed for inadequate protection of Canada's consumers and Small Flockers.  Now, consumers and Small Flockers are suffering terribly at the hands of the monster created by the government.

It is the government's responsibility to reign in the SM monster they created, so as to relieve the oppression and tyranny against consumers and Small Flockers.

Let it be so.

Saturday, February 22, 2014

Lesson #1: #ChickenMafia History Lesson

We need to know our #ChickenMafia history, or we are doomed to continuing listening to their broken record over and over again.

In a previous Blog posting (see The Supply Management Fortune Teller ) we reviewed the historic debate in the House of Commons in December 28, 1971 concerning the Farm Products Agencies Act.

Doing an Internet search, I found some relevant documents.  I ordered one of the contemporary documents from an university's archive, as follows:.
University of Saskatchewan Library, Department of Agricultural Economics, Ref. # KF1718.W55 1971 (front cover library label), b24167496 (inside back cover in ink), Catalogue Bar Code (back cover) # 902001621757
I received the inter-library loan a week later.  The document is 22 pages long, and is a faded mimeograph (an ancient form of making copies before Xerox or photocopy machines were generally available, after all, this was 1971, just shortly after the dinosaurs left the Earth).

It is so faded, it is hard to read, and impossible to scan or copy.  My only option is to re-type it.  Oh joy!

At 22 pages, it's too long for the 30 second attention spans of today, so I'm going to spoon feed it to you a paragraph or page at a time, then add my biting whit of commentary to it.  Stop me if you've heard this one before.  Here goes:

Bill C-176 “An Act to Establish the National Farm Products Marketing Council and to Authorize the Establishment of National Marketing Agencies for Farm Products”.
by A.G. Wilson*
* Talk prepared for presentation to a meeting of the Manitoba Institute of Agrologists held on March 22, 1971.

Bill C-176
“An Act to Establish the National Farm Products Marketing Council and to Authorize the Establishment of National Marketing Agencies for Farm Products”
“Few pieces of legislation have given rise to the kind of controversy which surrounds Bill C-176 since its first introduction into the House of Commons early in 1970. Opposition to the Bill has gradually increased as the many implications of its respective sections have become more apparent. Study has revealed the Bill as originally written to be incomplete as a document to serve as a guide for the attainment of the marketing objectives outlined. In addition, the philosophy of control inherent in the Bill and the lack of safeguards to prevent the abuse of such control have incensed citizens interested in the preservation of democracy. The vehemence with which various views of the legislation have been expressed has been largely responsible for the delay of its passage. This delay has provided time for consideration of amendments which could render the legislation more acceptable to the individuals and groups who will ultimately be affected by its operation.”
OK, that's enough for today.  Everybody needs to build up their stamina for something like this, slow and easy to start.

Biting Commentary
So we learn that SM wasn't a slam dunk.  There was huge controversy then, just as there is today.

Today, Small Flockers and the public plead for relief from the oppression and tyranny by the SM Mafia.

Isn't it interesting that United Grain Growers ("UGG") and others recognized the SM Bill was "incomplete", had a scary set of powers and authority, lack of controls of those powers being granted, and lack of safeguards.

Notice that they saw back in 1971 there may be abuses, up to and including those that threaten democracy in Canada.

Now it isn't every day that you hear such vitriolic language coming out of the mouths of farmers, especially in the 1970's.  "Incensed citizens" you say.

It is obvious that the Bill polarized many different groups.  Everybody fell into one of two groups:
  • You loved it (ie. those in line to receive a million dollar monopoly), or
  • You hated it (ie. those who would be losing their personal freedoms, confiscation of their livelihood, and subjected to abuse, oppression, and tyranny in perpetuity).
 That's the kind of stuff you can really get worked up over.
And so they did.

More to come.  Stay tuned.

Lesson #2: Assumptions and Constraints in Designing a Supply Management System

Factory Chicken has met its Match

The #ChickenMafia think they are guaranteed to win the battle against the Canadian consumer and Small Flockers.

And why not?  The #ChickenMafia have an interlocked grid of legislation at both the Federal and Provincial levels that protect their monopoly, Canada-wide.

Oh, wait a minute, that's right, I forgot, Alberta is so pissed off with the unfairness of the #ChickenMafia they have given notice, and dropped out of the deal.  It's used to be almost bullet proof, but significant cracks in #ChickenMafia amour are starting to show. .

Unfortunately for the #ChickenMafia, the tide may soon be turning against them, more and more.

If I heard great things about Small Flockers' chicken from my friends and neighbours, then I'd try to give that farmer a visit and check it out for myself.  With a few key questions, and looking the place over first hand, I'd quickly determine if I felt he was doing a reasonable job of it, and his chickens were safe to eat.  I'd then buy one and see how it tasted.

I think that is all very predictable and reasonable.

Now let's take it up another notch.

What would the typical consumer do if that Small Flockers' chicken tasted fantastic, AND was the same or lower price of what chicken is selling for in the nearest grocery store?

If it was me, I'd buy a year's supply of that affordable, great tasting chicken.

Does that mean that Small Flockers have to do charity and sell below their cost?  I don't think so.

Here's why.

By CFO's Live Price Bulletin for Quota Period A-122 (Jan. 25, 2014 - Mar. 22, 2014) for a chicken weighing between 0.9 kg to 1.1 kg, the farm gate minimum price is $1.720/kg.  Deduct from that the producer license fee of $0.0160/kg (CFO's levy) and $0.0044/kg for CFC's levy, for a total #ChickenMafia fee of $0.0204/kg, so the farmer gets a net sale price of $1.6996/kg for his chickens. By CFO's definition and Mission, that net income includes a reasonable return for the farmer's efforts.

In a previous Blog posting (see Small Flocker Price Difference ), I described how the #ChickenMafia pay about $388.375/tonne for their chicken feed (Quota Period A-121) according to CFO's feed price data.  As a Small Flocker, I currently pay $18.00 per 25 kg bag for my chicken feed, which is $720.00/tonne.  Note that this is 85.4% more expensive for Small Flockers than the #ChickenMafia.

When growing chickens, feed costs are about 60% of the total cost of production.  If we assume that Small Flockers and #ChickenMafia both have the same fixed costs per bird produced, and the only difference in total costing is the chicken feed, then we can calculate that Small Flockers farm gate price should be $2.601/kg    ie. 1.72*(0.6*1.854+0.4)=2.601

If you didn't do well in school on algebra. here's another chance to "get it". All others, skip to the next paragraph while I help my fellow citizens catch up. Chicken feed is 60% of the cost to raise chicken.  The total cost(feed + fixed costs) to raise #ChickenMafia chicken is $1.72/kg.  So what is the cost of chicken feed for raising a kg of chicken by the #ChickenMafia?  It is $1.72/kg * 60%= 1.72*60/100=$1.032/kg.  The Small Flocker's cost of chicken feed is 85.4% bigger than the #ChickenMafia's cost, so the Small Flockers cost of chicken feed is $1.032/kg * 1.854= $1.91332/kg.  The fixed costs for the #ChickenMafia farmer is 40% of the total cost, so the fixed cost is $1.72/kg * 40%= 1.72 * 40/100= $0.688/kg.  We'll assume that fixed cost is the same for the Small Flocker, so the Small Flocker's total cost of raising chicken is the cost of feed plus the fixed cost, which is $1.91322/kg + $0.688/kg, for a total cost of $2.60122/kg.

Therefore, if a Small Flocker charged $2.601/kg for his live bird at his farm gate, that would be similar or equivalent to the farm gate price charged by the #ChickenMafia.  With eviscerated meat being just 73.72% of the live bird weight, that farm gate price would be equivalent to $3.529/kg eviscerated meat   ie. 2.601/0.7372= 3.529

Allowing for transportation to and from, and the abattoir processing charge(ie. transform a live bird to eviscerated meat ready for cooking), let's assume its $3 per bird.  For a 1 kg bird, slaughter adds $3.00/kg to the cost, so our total Small Flocker farm gate price is $3.529/kg+$3.00/kg=  $6.529/kg.

Our retail chicken price survey conducted (see Ontario Chicken Prices ) found fresh whole chickens selling at $6.59/kg.  Therefore, even though Small Flockers are forced to pay an 85.4% premium for their chicken feed, they can supply fresh, safe, nutritious chicken meat at $6.529/kg, which is just below the #ChickenMafia current retail chicken price in grocery stores.

Look no further for a safe, affordable, supply of chicken that a Small Flock farmer near you.

From this example, we can see that chicken factories don't necessarily have "economy of scale".  Alternatively, their economy of scale advantage is wiped out by the price gouging by all the middlemen downstream of the farmer.

On a similar basis, Big Barn reports that UK farmers typically receive just 9% at farm gate of the retail price charges in stores.  By selling direct to consumers at the farm gate at just 50% of retail prices, farmers can earn 555% more than selling through traditional distribution chains.  This benefits the farmer with greater return, benefits the consumer with a 50% discount and fresher foods; all at the expense of the current distribution chain who is seen as price gouging and inefficient.

Many trans-national agriculture mega corporations have their fingers in the pie all along the chicken supply chain, from eggs to broiler to feed mills to processors to further producers (ie. making raw whole chicken into drumsticks or chicken nuggets, etc.) to distribution.   They won't do it voluntarily as it would hurt themselves and their #ChickenMafia buddies, but lets assume their feed mill henchmen gave Small Flockers a break, and supplied chicken feed at the same price as the #ChickenMafia.  Then the Small Flockers farm gate price could be $1.72/kg too.  Add on the 73.72% weight change (life bird to ready-to-cook meat) plus $3.00/kg for slaughter, and we have a Small Flocker price at farm gate of $5.33/kg (ie. 1.72/0.7372+3.00= 5.33).  Now, Small Flockers' farm gate ready-to-cook chicken price is 19.11% cheaper than the #ChickenMafia.

Tastes better, more nutritious, and 19% cheaper.  Exactly why does the #ChickenMafia deserve that guaranteed monopoly?  I suggest they don't deserve it, they need it to protect them from the Small Flockers.  It isn't the hords of foreign barbarians bearing chicken that the #ChickenMafia need to worry about, it's the enemy from within, the Small Flocker, who will finish off this dinosaur.

The #ChickenMafia is huge and powerful dinosaur.

 Exactly how does the small, independent Small Flocker going to eat the #ChickenMafia dinosaur?

One steak at a time, that's how.

The trick is to get that #ChickenMafia dinosaur to squat over top of our BBQ.


Wednesday, February 19, 2014

Hate vs. Frustration

Do Small Flockers hate all Supply Management farmers?

There was a recent posting in Better Farming that questioned the principles of Small Flockers on this important issue.

Here is my response, with a few added ideas:

You raise an excellent point about how someone can hate SM farmers, yet be filled with compassion for all Canadians who are adversely affected by SM's monopoly and price gouging.

I would suggest that it is more frustration than hate.

For example, in 1980 Mothers Against Drunk Driving ("MADD") was started in California by Candice Lightner after her 13-year-old daughter was killed by a drunk driver. Before MADD started, most everybody laughed about "Joe" or "Jill" tying one on last night, and the crazy results that occurred. It has taken great effort to re-educate chronic drinkers, governments, judges, police, etc.  MADD claims that drunk driving has been cut in half since their founding. So in 34 years, we only have 50% of drunk drivers convinced and converted to a new way of thinking.
Today, drunk drivers are no longer seen as the life of the party.  Few drunk drivers get nominated as Citizen of the Year. There is growing frustration and intolerance towards their continued anti-social behaviour.  In some cases, especially when a love one is killed or maimed by a unrepentant drunk driver, it goes as far as hate.
Is that where SM farmers want to go in the near future, where they are seen in their community as an unacceptable, anti-social person because they're a member of SM that preys upon the weak and poor?
For the first 530 years (ie. 1500 to 1930), tobacco was a pillar of all communities, and provided great wealth creation. Around the 1930's, we started to realize the risks and costs of smoking, and that the tobacco industry was a parasite on society.  This realization has been steadily growing for more than 80 years and counting.  During that time of growing awareness, Big Tobacco continuously denied the health and financial impact of smoking, justifying themselves every which way they could imagine. In spite of this resistance, we have dropped from 42% smokers in 1965 to 16.1% as of 2012.
Today, many smokers feel like second class citizens when they want to practice their smoking habit.  Working for Big Tobacco, in spite of the higher than average wages they pay to try and attract good people to these marginalized employers, is no longer seen as a plum job.
Is that where SM farmers and others in the SM industry want to go, where sometime in the near future they'll be ashamed to  honestly answer when somebody asks them, "So, what do you do for a living?"
I can understand that SM farmers will fight tooth and claw to hold on to such a sweet deal for themselves.  That's just human nature. 
I accept and admit that if I were in their SM shoes, I would likely fight hard to carry on in my beneficial, social parasite manner just as they do today.  As such, I therefore assume I am no better or worse as a person than anybody else in SM.  We're just starting from different sides of the same issue.  We need to listen and understand each other's point of view.

I hope that everybody on the SM side of the issue will eventually be intrigued by the growing wave of neighbours, friends, fellow farmers, and the government who are less and less in support of SM.  Perhaps there are some SM individuals who are strong enough today to reach out and understand the reasons for the growing wave of people who are against SM.

If SM refuses to listen or change, there will be minimum movement in society due to their resistance and current strength.  That means the pressure behind the SM dam will get greater and greater as the anti-SM water rises each day.  Eventually the strength of the SM dam will be overcome.  There will then be catastrophic failure of the SM dam, and many SM farmers will be personally destroyed by the sudden release of the built up pressure.

As an alternative to this worse-case scenario, I suggest that it would be far better for SM to recognize the problems with SM, and be willing to work with all stakeholders to find a smooth, effective transition from the old, arcane, fossilized SM system, to something that works better for everybody.

This choice belongs to SM.

Each day, SM can choose to listen to others, or refuse to change.

However, if SM continues to choose resistance and ignoring, one day soon that pig headed choice will be ripped from their grasp by the sudden rupture of the SM dam, which will destroy all.  Choose wisely, SM.

Glenn Black
Small Flock Poultry Farmers of Canada 

Sunday, February 16, 2014

Why do we need cheaper food?

Feb. 7th 2014 was Food Freedom Day ("FFD").  This is the day when the average Canadian has earned enough money to pay for their food for the rest of the year.

Just 1.5 months into a year to reach FFD seems pretty good.

But is it?

Canadian Federation of Agriculture says FFD is happening earlier and earlier each year due to the great work farmers are doing.  For example, last year, FFD occurred on Feb. 14, 2013.

A Better Farming article on this issue quoted some "experts" who suggested the earlier FFD was due to greater competition among the grocery chains, thereby lowing food prices.  Interesting opinion, but I have a different viewpoint.

Yes, I agree that Walmart, Sobeys, and Loblaws are maneuvering to gain (or keep) market share and loyalty.  However, food prices are going up, not down.  I'd like to know where these "experts" from George Morris Centre at Univ. of Guelph do their grocery shopping.

Don't just look at the price per box or can.  Note that the amount squirted into the container is also dropping.  Whether you get less in the can, or the price on the can goes up, you're paying a lot more for food.

For example, look what has been happening to chicken prices.  A steady increase of 3.54% per year increase for more than 17 years.

Globe & Mail reported in June 2013 that during the last 5 years, food prices were up an average of 19% while non-food items went up 10.7%.
"Statscan report shows: Meat saw an 18-per-cent increase over the five years, the cost of eggs rose 25.8 per cent, nuts increased by 32.6 per cent, while coffee and tea grew by 26.8 per cent. The cost of fresh vegetables rose 12.6 per cent, but seafood only increased by 5.7 per cent. Food purchased from restaurants increased 14.5 per cent."

How do we explain it when we hear our local Food Bank has 70% more clients now than just 3 years ago, a 20% per year increase?

How do we square that FFD statistic with the huge inflation we have seen in grocery store prices in the last 5 years?

That same Better Farming article suggests that Canadians spent 0.7% less on food in 2012 than in 2011.

My question is:
Was that 0.7% reduction in food expenditures in 2012 due to a voluntary choice, or did our wallets just run empty? 

Does any of this make sense?

To find out, I tried to get Statistics Canada to do up the data, but they say they have no budget to do so.  I thought it would carry much more weight coming from them, rather from me, Mr. Nobody.  Besides, it's always easier to pawn your work off to somebody else.

I wanted the data as median, not averages, for if there is any distribution that is super skewed, its income levels, and the only hope of truly understanding what is going on is to look at median values.

Unfortunately, that isn't going to happen, so I had to spend the time myself to tease the available data into the next best thing, which is the graph at the right.

Here we can see the Household Savings (ie. the money we have left over after we pay all our bills), as a % of the Disposable Income (ie. all the money our Canadian households have coming in from any and all sources, such as jobs, self-employment, stock dividends, pensions, EI payments, welfare, or whatever).  To ensure we can see trends over time, we need to look at the data in constant dollars, so the impact of inflation (or deflation) is removed.

The data clearly shows a huge decay in our ability to save money from all our activities.  In short, we're on a treadmill, going round and round, but not getting anywhere.  The faster you work, the faster the belt goes around, the more tired you get, but you're still stuck in the same place.  The smart guy is the one who sits down on the belt and takes it easy; you get just as far as the someone running flat out, day and night.

Our rate of savings has been dropping by 8.76% per year for the last 33 years.  Our household savings get cut in half, and then halfed again, every 8 year.  That's an exponential collapse of society.  While under mathematical theory, you never quite get to zero, that will be small comfort when you look into your cupboards and fridge and see nothing but a half empty jar of mustard.

The drop is so consistent and predictable, you can set your watch by it.  I can't use the alternative expression "You can take it to the bank", because we just don't have any money left to take to a bank.

As of Sept. 30, 2013 we're at just 4.4% by StatsCan data, but our trend line says the average Canadian savings rate is just 1.73%.  This difference may be just rounding error, or survey sampling variability, but I believe the long term trendline is probably closer to the truth.

Since these are Canada-wide household averages, they have huge scatter in the data (ie. similar to putting your one foot into an ice water bath, and the other foot into boiling water, and on average, it's a nice warm bath; same problem with averages for household savings).  Some Canadian households are still OK, while others are totally destitute.  However, on average, we're all in big trouble; all except the 1%'ers.

Because the graph uses averages, and the average value is currently 1.73% (ie. pretty close to zero), and we know that income is a highly skewed distribution so the vast majority of Canadians find themselves below the average curve, I suggest the vast majority of Canadians are already below water, have a chronic cash shortage every month, and get by with putting their funding shortfall on their HELOC (Home Equity Line of Credit), a bank loan, or their credit cards.

They likely buy a $2 lottery ticket each week, as they won't miss the extra $2 expense in the grand scheme of their large monthly shortfall, and if they win the lottery, their financial worries for that year will be over.  It's their only hope.

Lotteries:  A tax on the dumb and desperately poor.

You may be interested in seeing similar data on the collapse of the Middle Class in the US by Prof. Elizabeth Warren of Harvard University (currently she's a US Senator).

The US data shows for a median family of Mom, Dad, and two kids, comparing between 1971 and 2005 (ie. one generation separation), what they spend on an inflation adjusted basis.

The 2005 median family spends:
  • 52% less for appliances,
  • 32% less for clothing,
  • 24% less per car owned, and
  • 18% less on food.
 However, that same median family in 2005 has:
  • 1,375% lower savings
  • 1,071% more revolving debt (ie. credit card debt)
and spends
  • 100% more for child care (didn't exist in 1971 as an expense for most families),
  • 76% more for housing (median house purchase price has gone through the roof, while interest rates are way down, and the average house size grew from 5.8 rooms to 6.1 rooms),
  • 74% more for health care,
  • 52% more for cars (2 cars in 2005 vs. 1 car in 1971), and
  • 25% more for taxes.
as compared to the median family in 1971.

However, if someone in the home gets sick, or one of the parents lose their job (or their hours are cut back), or an unexpected expense hits (eg, car maintenance, leaky roof, etc.), or there is separation or divorce, that family goes over the financial cliff, never to return.

With both parents working full-time (or trying to find work), they need 26+26 pay cheques each year to survive, pay the mortgage, etc..

With both parents working, you have twice the risk of somebody getting sick and can't work, twice the chance of having a car accident, twice the risk of somebody losing their job, etc. Today, there is double the risk of missing a pay cheque, as compared to 1971.  Miss just one pay cheque, and it's over the cliff you go.  There's no room for an error, nor to stop and take a breath.

Who designed this system, anyway?  Can we not see a disaster coming right at us?

So why is food spending dropping?

It's because most of us don't have any other choice.  For example, once you sign up for a mortgage, you have a deadline that must be met every month for the next 1 to 5 years. Mortgage means "Death Pledge" in French, and they weren't kidding.

Everybody now agrees that Canadian real estate is the most expensive in the world, and well into bubble territory.  Add to this rosy scenario the growing probability that Canadian real estate values will soon be dropping 30% to 90% in value (most likely a 60% discount from today's prices).  What happens if most people (73% of Canadians own their own home) get caught with a big mortgage on a house that isn't worth what they paid for it?  Remember hearing what happened in the US starting in 2007?  It will be Canada's turn next.  

Same goes for your car payment, making the minimum balance payment on the credit card, etc.  There is little to no flexibility in the vast majority of family expenses.  They want their pound of flesh each and every month, rain or shine.

The only choice most families have today is whether they put something into their grocery carts, or leave it on the shelf.  That is why food expenditures are going down.  Soon, too many people are going to be staring at the cans of cat and dog food and wondering just how bad it could taste, and if lots of ketchup could sufficiently disguise the true origin of this mystery meat.

As we "dumb down" our food purchases, we will have some significant long term consequences for our health.  See Health Consequences of Food Monopolies

CBC Television reported on a recent Harvard School of Public Health report that it costs $1.50 per person per day to eat healthier foods.  That study is somewhat limited because its definition of "healthier" is low fat cookies vs. regular cookies (neither of which I would call "healthy"), lean meats, high fiber, and Canada Food Guide Pyramid or equivalent; all of which is carbohydrate rich.

Our SFPFC healthy diet study found that true healthy eating is far more expensive, for food prices go up by 895.3% if we try to drop the carbohydrate consumption by 25.9%.  However, none of this is feasible for the 4 million Canadians who struggle every day with getting sufficient food, let alone healthy food, onto their family table.

It doesn't have to be this way.  We could have some financial relief just 30 days from now.

We could put the Supply Management System on 90 day notice (minimum notice period under Farm Products Agencies Act, Federal legislation, to cancel an Agency) to get their affairs in order, as the import tariff at 285% today will start coming down.  Everybody will be able to afford chicken again.  Chicken could become affordable once again, the least expensive meat available.  Per capita chicken consumption rate might just increase again.

Will Canadian politicians force the public so far down into the financial mud that we start swapping innovative recipes for dog food meat loaf, or will they give Canadians what they want and deserve:

Affordable, safe, and nutritious food.