In This Section |
National
Agencies and National Plans
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| Author: | OMAFRA Staff |
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| Creation Date: | 01 December 19999 |
| Last Reviewed: | 01 May 2007 |
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.
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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 (The FPMA Act has since been replaced
by the Farm Products Agencies Act.)
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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.
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National agencies administer the national plans for poultry and eggs. These agencies are:
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:
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.
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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.
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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.
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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.
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.
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