Laying hen husbandry and egg production in Canada are unique because of the Supply Management system which controls production volume, egg prices and egg trade. The system is organized in a way that all stakeholders in the supply chain can generate profits.
The uniqueness of Canada’s production system
Laying hen husbandry and egg production in Canada are unique. For a period of almost 50 years, the production volume and the price of certain food has been controlled by the so-called Supply Management system (McIsaac, 2008). It was implemented in the 1960s when dairy farmers were confronted with severe economic problems because of the volatility of milk prices. They demanded means to control the prices, the production volumes and imports. In milk production such a system was implemented in the 1990s, later it was
Presently, about 17,000 farmers are producing under the regulations of the Supply Management system, of which about 1,000 are egg farmers. Every year, quotas for egg production are set for the provinces, which are based on the expected demand. The advantages of the management system are (Muirhead, 2017):
- Farmers have the possibility to exert influence on the fixing of egg prices.
- It guarantees market transparency.
- It does not need government subsidies.
- It guarantees a high product safety.
- It supports family farms and the future of rural communities.
Between 1996 and 2016, the Canadian laying hen inventory increased from 17.6 mill. to 25.7 mill. birds or by 45.8%. This documents the constantly growing demand for eggs and egg products (Table 1). Parallel to this growth, egg production increased from 5.2 billion to 8.2 billion pieces or by 57%. In Table 2, the higher growth rate in egg production is compared to the laying hen inventory. It reflects the
Volumes of egg production and market prices
In Table 4, the production quotas for 2016 and 2107 are listed for the Canadian provinces. With a share of 35.9% Ontario ranks in first place, followed by Quebec and British
Despite the Supply Management system, trade with eggs and egg products is necessary to meet the domestic demand or export a surplus. As can be seen from the data in Table 5, the trade balance with shell eggs was negative in the past years. The high deficit in 2015 is a result of the extraordinary price increase for shell eggs in the USA because of the egg shortage following the AI outbreaks in the upper Midwest.
The main results of the preceding analysis can be summarized as follows:
- The spatial pattern of laying hen flocks and egg production reflects the distribution of the population. Production quotas are derived from the expected per capita consumption on a national basis and then allocated to the single provinces.
- Between 1996 and 2016, the laying hen inventory increased by 45.8%, egg production by 57.0%.
- Despite the applied system, eggs are imported and exported to either meet the domestic demand or to get rid of the surplus.
- The Supply Management system may be challenged during the ongoing NAFTA negotiations.
This article is an abridged version of a special report which the Author prepared for the IEC Business Conference London 2018
References
Clarke, P.: Supply management is Canadian Genius. http://www.eggfarmers.ca/2016/08/supply-management-is-canadian-genius.
Egg Farmers of Canada (Ed.): Annual Report 2016. Ottawa.
http://www.eggfarmers.ca/wp-content/uploads/2017/03/2016_Egg-Farmers-of-Canada-Annual-Report.pdf.
Muirhead, B.: Under Siege: Supply Management as Threatened Paradigm. Ottawa 2016. www.nfu.ca/sites/www.nfu.ca/files/Muirhead.pdf.