National Agencies and National
Plans
for Supply-Managed Commodities
Introduction
In Canada, the broiler hatching egg, chicken, dairy (industrial
milk and cream), egg, and turkey industries operate under national
supply management systems. By matching domestic production of the
commodities with the demand for them, the systems strive to provide
a stable income for producers and a consistent, reasonably priced
supply for consumers.
To facilitate effective supply management, national marketing plans,
which set out the framework for the operation of the systems, were
implemented. National organizations were established to administer
these plans. This factsheet provides information on the national
plans and national organizations.
Origins of National Plans
Prior to the establishment of national plans and agencies, marketing
boards existed only at the provincial level. Although some of these
boards tried to match supply with demand, it became apparent in the
late 1960's and early 1970's that provincial supply management marketing
boards could not effectively stabilize their markets from major fluctuations
in both supply and prices paid to producers.
The federal government has the authority to regulate interprovincial
and export trade. Provincial governments have the authority to govern
intraprovincial trade. It was critical to mesh these powers to have
effective supply management systems. Therefore, authorities from
both levels of government have been delegated to the provincial
marketing boards and national agencies.
The first commodity to be governed by a national supply management
system was industrial milk, which is used to make dairy products
like butter and cheese. The Canadian Dairy Commission (CDC) was
formed in 1966 under The Canadian Dairy Commission Act. This
Act provides the basis for the coordination of federal and provincial
powers that are necessary to operate a national system. In 1971,
the precursor to the National Milk Marketing Plan (NMMP) was implemented.
It established the Canadian Milk Supply Management Committee (CMSMC)
as the national body to administer the system.
In 1972, to help stabilize the egg and poultry markets across Canada,
the federal government passed the Farm Products Marketing Agencies
Act (FPMA Act). The FPMA Act allowed national agencies to be
created to control domestic production. (The FPMA Act has since
been replaced by the Farm Products Agencies Act.)
National Plans
National marketing plans, also known as federal-provincial agreements,
provide the framework under which the national supply management
systems operate. Any changes to the plans require the unanimous
consent of all signatories. These plans set out the roles and responsibilities
of the signatories and outline the operational aspects of the system.
The three Ontario signatories for the four poultry and egg agreements
are the Ontario Farm Products Marketing Commission (OFPMC), the
producer marketing board, and the Minister of Agriculture, Food
and Rural Affairs. The OFPMC and the Dairy Farmers of Ontario are
the Ontario signatories to the NMMP. Generally, the signatories
from other participating provinces are counterparts to the Ontario
signatories. For some provinces, the Minister of Intergovernmental
Affairs is also a signatory.
There is currently a process underway to review and revise the
national plans. This effort was initiated in order to reflect the
changes in the industries that have taken place since the plans
were implemented many years ago.
National Agencies and Their Roles
Poultry and Eggs
National agencies administer the national plans for poultry and
eggs. These agencies are:
- Canadian Egg Marketing Agency (CEMA). Formed in 1972. All provinces
and the Northwest Territories belong.
- Canadian Turkey Marketing Agency (CTMA): Formed in 1973. All
provinces but Newfoundland and Prince Edward Island belong.
- Chicken Farmers of Canada (CFC). Established in 1978, originally
as the Canadian Chicken Marketing Agency. Currently, all provinces
but British Columbia (B.C.) belong. Nonetheless, B.C. is on the
board of directors.
- Canadian Broiler Hatching Egg Marketing Agency (CBHEMA). Formed
in 1986. Ontario, Quebec, British Columbia, Alberta, and Manitoba
belong.
The board of directors for each national agency includes a producer
representative from each member province and territory. Not all
provinces belong to every agency, but the members represent the
vast majority of Canadian production.
The board of directors also includes representatives from the national
level of a variety of other stakeholders, such as processors, further
processors, foodservice etc. These individuals represent the views
and positions of their sectors at the national table. Each board
member gets one vote when it comes to making decisions. Commonly,
policy decisions need either a simple majority or 2/3 support in
order to be approved. In some cases, a certain percentage of domestic
production must be also represented by the supporters in order for
a decision to be approved.
A national agency's role varies with the commodity, but each strives
to make decisions in the best interest of the Canadian industry
as a whole. Policy issues that each commonly deals with include
setting the national supply level, allocating the national supply
among provinces in the form of quota, cost-of-production calculations,
and export programs.
One of the key tools of national agencies is the authority to establish
production quota to be assigned to all provinces. The initial allocation
of quota for each province is in the national plan and was based
on historical production levels. Each national plan also lists the
factors that are to be considered when distributing increases and
decreases in production among provinces. For example, the factors
to be considered when allocating production increases to provinces
for eggs are:
- comparative advantage of production,
- variations in market size,
- ability to market the level of production authorized,
- feasibility of marketing increased production, and
- comparative transportation costs from alternative sources of
production to market areas.
The chicken industry moved from the guidelines set out in its national
plan to determining provincial allocations using a 'bottom-up' approach.
Under the 1998 National Allocation Agreement, provinces submit their
requests to the CFC for the amount of chicken required to meet its
estimated market demands. As long as the requests do not exceed
certain limits, they are normally approved.
Another Agency tool to control production is the authority to impose
penalties on a provincial marketing board if the province exceeds
its quota allocation. This is commonly referred to as the liquidated
damages assessment (LDA).
The total supply in Canada is a combination of domestic production
and imported product. Thus, to accurately match total supply with
demand, it is necessary to be able to accurately predict the level
of imports. Currently, the imports are controlled with tariff rate
quotas (TRQs). Under TRQs, imports under a specified volume (quota)
are assessed a low or zero tariff (import duty). Imports in excess
of that level are assessed a very high tariff, which is usually
viewed as being prohibitive. Each commodity has a unique method
for allocating the rights to import the in-quota volume to stakeholders.
All national agencies impose levies (fees) on producers to cover
their marketing and administration costs. For example, CEMA uses
a portion of its levies to finance the movement of eggs that are
surplus to the higher priced table market to the lower priced industrial
products market. Consumer promotion is another common activity of
the agencies. Each agency currently appoints the provincial commodity
board to collect levies on its behalf.
Dairy
The national supply management system for industrial milk and cream
is structured somewhat differently than for poultry and eggs. However,
many of the basic concepts are the same, including the limitations
on imports.
The Canadian Dairy Commission (CDC), a federal crown corporation,
facilitates the development and implementation of major dairy policies
and programs. It provides a framework for federal and provincial
participation. The CDC's chair, vice-chair and a commissioner are
appointed from industry by the federal government.
The Canadian Milk Supply Management Committee (CMSMC) is the national
body that supervises the NMMP and makes policy decisions with respect
to the industrial milk system. Currently, all provinces but Newfoundland
belong to the CMSMC. It is chaired by the CDC.
At meetings, each province is represented by a 'team' of three,
comprised of a representative from each of producers, processors
and the provincial government. The National Dairy Council (a processor
organization), the Dairy Farmers of Canada, and the Consumers Association
of Canada are non-voting members of CMSMC.
Similar to the national agencies, the major issues the CMSMC deals
with are estimating domestic requirements, quota allocation among
provinces, surplus removal, and other export activities. The CMSMC
works on the principle of unanimity, with each provincial team getting
only one vote.
Currently, producers can voluntarily produce and market milk in
excess of their quotas. However, they receive the domestic price
for their in-quota production and the lower world price for over-quota
production.
Fluid milk and cream (milk and cream that consumers drink) is not
under a national supply management system because it tends to be
consumed in the province where it is produced rather than move across
provincial borders. Authorities delegated by the federal and provincial
governments allow provincial dairy boards to regulate the system
at a provincial level.
In recent years, two "all milk" pools have been implemented.
Ontario belongs to the eastern pool along with four other provinces.
A western pool also exists. After receiving the provincial industrial
milk allocations from the national level, each pool determines how
much fluid milk each province should produce. Each producer has
a single quota for a specific number of kilograms of butterfat daily
and receives a blended price that reflects the shared revenues from
the fluid and industrial sales in the region.
Provincial Marketing Boards
Provincial commodity marketing boards play a critical role in the
functioning of the domestic supply management system. They use authorities
delegated to them by the provincial and federal governments to carry
out their roles.
The volume of each regulated product that a province can produce
is established at the national level. The provincial boards control
the volume of production and marketing within the province through
a quota system. They issue quota to individual producers for each
production period.
The minimum prices paid to producers by processors are established
at the provincial level. In Ontario, the marketing boards for dairy,
eggs, turkey and broiler hatching egg boards set the minimum prices,
often after consultation with processors. The Chicken Farmers of
Ontario negotiates the minimum prices with processors. The national
agencies can use their anti-dumping powers to ensure that the price
of a commodity shipped to another province is no less than the price
in the producing province plus transportation costs to the destination
province.
Similar to the national agencies, each provincial board is funded
with levies paid by producers on the products they market. Currently,
the provincial boards collect the levies on behalf of the national
agencies. Each provincial board appoints one representative to the
board of directors of the national agency or CMSMC. Ontario belongs
to all the national agencies.
Supervisory Bodies
National Level
The National Farm Products Council (NFPC) oversees the national
agencies for poultry and eggs. It is a federal body with its Chair
and members appointed by the federal government from industry. The
NFPC's role is to ensure that the agencies operate in the balanced
interests of all stakeholders including producers, processors and
consumers. It also considers approval of agency orders and regulations
such as quota and levies.
Provincial Level
Each province also has a supervisory body responsible for the provincial
legislation related to regulated marketing systems, both supply-managed
and non-supply managed. In Ontario, this is the Ontario Farm Products
Marketing Commission (OFPMC). Like the NFPC, the OFPMC ensures that
these systems consider the interests of all stakeholders.
The provincial supervisory bodies are signatories to all of the
national agreements. They often work with their province's marketing
boards and processors on issues related to the national system.
They attend agency meetings and are sometimes the provincial representative
on agency committees. Supervisory bodies express opinions and pursue
changes to national plans or agency operations.
