AUGUST 2017 • COUNTRY LIFE IN BC


LIFO a hindrance, supply managed


groups say Last in-first out rule inhibits sales, quota transfers


by DAVID SCHMIDT


ABBOTSFORD – LIFO and 10/10/10 must go for commercial dairy and poultry producers, say BC’s five supply managed boards. The BC Farm Industry Review Board imposed the two rules as part of its 2005 Specialty Review. LIFO (Last In-First Out) means producers transferring part of their quota are deemed to sell the most recently received quota first. The 10/10/10 rule specifies that all transfers of quota received after 2005 are subject to a 100% assessment in the year of issue. That assessment declines by 10% a year until year 10 and following, when it is subject to a flat assessment of 10%. Quotas allocated before 2005 are subject to a 5% assessment. In November 2016, FIRB launched a Quota Assessment Tools Evaluation Project. FIRB detailed the questions it expected the province’s five supply managed boards to answer and the process they were to follow in a February 2017 letter. FIRB asked them to consult with producers and other stakeholders regarding their transfer assessment structure and industry entry (new entrant) programs. Boards were given until June 30 to make their final submissions and recommend possible changes. FIRB executive director


Kirsten Pedersen says FIRB is now going through the submissions to “determine what, if any, further process may be required to support sound marketing policy outcomes.” All five boards have called


for an end to LIFO and 10/10/10 even though only the BC Milk Marketing Board and the BC Egg Marketing Board have issued new quota to existing producers since 2005.


Both boards have seen exponential growth in their sectors, particularly in the last few years. They say the rules penalize producers who want to “right-size” their production, and drive up quota prices unmercifully. BCEMB notes it has issued quota seven times since 2005, meaning all of its producers have some issuances subject to the 10/10/10 rule. “If any of these producers


were to transfer a portion of their quota today, they would lose 15-20% of their quota value due to assessments,” the board states, adding that makes producers unwilling to sell quota unless they are getting out of the industry completely.


Changes to the code of


practice for laying hens, which mean most producers must make changes to their barns, exacerbate the situation. “Approximately 65% of our hens will need to be moved from conventional to enriched or specialty housing in the next 20 years at a very significant cost to industry ($75 to $100 a hen),” BCEMB states. It suggests that rather than build additional barn space, some producers could choose to downsize their flocks to fit the enriched housing within their existing space. Under the existing transfer rules, the high cost might rule out the option. In contrast, if assessments are eliminated, it would allow other producers, including new entrants, to grow their operations by purchasing the available quota.


Dairy dilemma


Dairy producers face a similar dilemma. In the past three years, producers have been allocated more than 22% additional quota. The allocations have often required them to add barn space or lose the additional production as it would be almost fully clawed back if put on the exchange. Although the chicken


industry has also experienced double-digit increases in recent years, the BC Chicken Marketing Board has avoided LIFO and 10/10/10 restrictions by not issuing quota since 1997. Instead, it allocates production “over-base,” with producers now allowed to produce more than 105% of their quota if they have sufficient barn space. Removing LIFO and 10/10/10 would allow the board to issue new quota, BCCMB manager of strategic initiatives and analysis Cheryl Davie told a recent BC Chicken Growers Association meeting. All boards agree that LIFO and a transfer assessment policy should be maintained


Dream job! After four years as agriculture critic for the NDP, Saanich South MLA Lana Popham was sworn in as the first female agriculture minister in BC history by Lt. Gov. Judith Guichon on July 18. PROVINCE OF BRITISH COLUMBIA PHOTO


for the new entrant programs. In fact, most propose making new entrant quota non- transferable for 10 years, after which it would be like any other quota. The BC Turkey Marketing


Board has not issued any new quota since 2005, not to avoid LIFO and 10/10/10 but because turkey demand has been stagnant in recent decades. In fact, commercial growers are currently allocated just 89% of their quota. In contrast, the 21 new entrants the board has admitted since 2005 (20 of which are self-marketers) are


at 103% of their quota. The BCTMB is proposing to increase new entrant quota holdings by 2,500 kgs so both new entrant and traditional growers will be producing at the same percentage of their allocation.


When it introduced the


current rules, FIRB said one of its intents was to provide quota for new entrant programs. All boards report success in securing new entrants, with the egg board boasting that 20% of its producers are new entrants. They also say the boards can continue to fund new entrant


programs without the need to assess individual quota transfers. In fact, the BCCMB is already doing that by allocating a deemed 5% of its quota transfers to new entrants. BCEMB is proposing something similar, saying it will only apply assessments to quota transfers if the increases they receive from Egg Farmers of Canada are insufficient to fund the program. Pedersen said FIRB expects


to “make any decisions it deems necessary about the evaluation outcomes by December 2017.”


3


HORST running gear provides reliable trailing so you can keep your focus on what’s ahead of you. Our large diameter king pins and large bore bearings keep our pivot points tight eliminating sway as they are trailed down the road. Available in a variety of models and capcities ranging from 6-40 tons, Horst has the right sized wagon for any job.


At HORST Wagons we’re not just committed to moving agriculture, we’re comitted to move it safely. For more information please contact your nearest dealer.


www.horstwagons.com | 1.866.567.4162


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44