Province Shuns Chick Price Dispute

By ROBERT IRWIN

"Mention three-way-deals or discounted chicks and
you've got an instant audience because it's a very
sensitive and sore subject," says one chicken
industry insider. Larocque Hatchery owner Mashoud
Janjua goes further: these practices are
"destroying the industry."
Janjua, whose operation is located at North
Lancaster in Glengarry county, about 30 kilometres
east of Cornwall, claims a six-cents-per-bird
discount offered by Curtis Chicks cost him one of
his best customers and a 60,000-chick order earlier
this fall.
In a written response to questions from Farm &
Country, Kathy Wienhold, spokesperson for Maple
Lodge Farms, which owns Curtis, notes "chick
pricing is set by the Ontario Broiler Hatching Egg
& Chick Commission (OBHECC), therefore discounting
is not an option."
It won't say it publicly, but since late last year,
the Ontario Chicken Producers Marketing Board has
been upset with OBHECC's handling of the situation.
The board has pressured the Ontario Farm Products
Marketing Commission's Jim Wheeler to intervene.
In a recent telephone interview, Wheeler confirmed
that he received "three or four phone calls and a
couple of letters," after the chicken board's
February newsletter asked producers to come
forward. In another meeting early this month
Wheeler again told the chicken board OBHECC is
doing a good job of enforcement.
"They were still disappointed in that response, but
I think they were expecting the Farm Products
Marketing Commission, under the Farm Products
Marketing Act, to do more than it's mandated to
do," Wheeler observes.
In her written reply Wienhold says, "Maple Lodge
Farms promotes an integrated partnership program
which provides our producers with services not
provided by any other program." Services listed in
her message include: "veterinarian consultation,
specialized formulation programs, scheduling and
delivery." She concludes: "integration provides a
win-win partnership netting a top quality product
for the producers, processors, and ultimately all
of us as consumers."
Some vertically integrated hatcheries in Ontario
have traditionally used "three way deals" to
circumvent chick pricing regulations. They discount
feed purchases in order to attract customers to the
lucrative hatchery side of their business. Wheeler
confirms that "there's nothing illegal about
three-way deals."
Rick Martin, head of Wallenstein Feed and Supply,
Kitchener Waterloo, argues: "It's very very unfair
to your average chicken producer in Ontario to have
these phony feed prices used as a base for
establishing the live price of chicken." Operating
since 1958, Wallenstein is Ontario's largest
independent feed mill and one of fewer than two
dozen independents remaining active in the broiler
and layer industry.
Martin supports the industry's new bottom up
approach for establishing chicken supply. However,
he says three way deals and discounted chicks,
mostly available to large producers, "are driving
profitability of the broiler business down to
levels where we've now got people unable to pay
their feed bills."
Chicken board spokesman Roy Maxwell says the board
is concerned about discounting, but, "if the chick
price is what it's supposed to be, the feed can
sell at any price." He rejects charges that feed
discounts have skewed cost of production
calculations used at the last two price arbitration
hearings between producers and processors. However,
it's no secret that this board, which fought hard
during the past two years to improve supply in
Ontario and nationally, is stunned at the
consecutive losses of two recent arbitration rounds
with processors.
In the latest round for period A-4, the arbitrator
opted for the $1.09 per kg. requested by processors
instead of $1.11 sought by producers. Earlier in
the decade, producers enjoyed $1.20 per kg and
more.
"They're (producers) just getting taken to the
cleaners every time on that negotiation," Martin
complains. 
"The weighted average, that the average producer is
paying for feed, is our price or a little higher
than our price. Marketing boards were supposed to
put everybody on a pretty level playing field. Now
what has happened is that if you're big and you are
aggressive and you can negotiate a good chick
discount, then you're insulated from the fact that
the live price is down."
Martin estimates that average producers, who can't
get the special deals, have seen profitability drop
about 40 per cent in the past year. He says new
broiler producers with borrowed money have recently
begun having trouble meeting feed bills.
Ontario is the only province regulating chick
prices. Everyone is supposed to pay the same rate
regardless of size of order, breed of chicks, or
delivery distance.
Some breeds are very profitable at the hatchery,
but don't perform well in broiler barns. With other
breeds the opposite is true. Critics argue that
makes uniform pricing impossible. 

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