Why Canada has Fair Farm Pricing under Supply Management for Eggs
Perishable staple food products with long planning cycles (12 to 24 months) but relatively short shelf lives, such as eggs and milk, are inherently unstable markets if they are not managed. Stability of supply and prices in these markets is critical public policy for consumers, governments and farmers worldwide.
About 95 per cent of global egg production and 93 per cent of global milk production are consumed in the same country where they are produced. Against this reality, almost all developed countries use specialized systems to manage and stabilize these markets, often with a complex web of subsidies, government buy-back programs, price supports and many others in countless combinations.
Canada chose a subsidy-free approach through fair farm pricing under a supply management system.
In the 1960s and 70s, Canada’s egg industry was plagued by chronic overproduction and unstable prices. The government introduced supply management as a way of stabilizing the egg market for consumers, while providing farmers with fair returns.
Egg farmers operate their businesses in a fair farm pricing system where farmers produce enough eggs to meet consumer demand. A national egg production target is first set and farmers in every province work to meet this target. They guarantee a stable supply of eggs to feed Canadians in exchange for a fair price for their product.
Because production is matched closely with demand, overproduction and waste are avoided. Farmers can earn fair and stable incomes directly from the market, not from subsidies.
Supply management promotes the steady production of high-quality eggs.
It’s a sustainable agriculture system that encourages the consumption of local products. It allows egg farmers to earn a living from farming, not from taxpayer dollars. This is a sustainable food marketing system that ensures stability of egg supply from the farm to the processing sector to the consumer and guarantees that enough eggs will be available to meet Canadians’ needs.
To learn more, check out the following videos:
Egg prices paid to farmers
In Ontario, EFO is authorized to establish the farm price for the eggs produced in the province. This is done using a Cost of Production (COP) formula and other relevant criteria. Prices are adjusted as costs increase or decrease.
The COP approach ensures egg and pullet farmers are paid fair prices based on the actual cost of production that includes a fair return for their labour and investment. The COP survey is updated and costs are tracked with prices adjusted as costs increase or decrease. Egg farmers don’t take money from government. Egg farmers get returns directly from their egg sales.
Check out the following video for more information on the COP and how supply is determined to meet the demand: