Supply Management

How Does It Work?

Supply Management

Supply management is a uniquely Canadian approach to agricultural production that benefits Canadian farmers, processors and consumers. Farmers get a fair return for their products, processors get a reliable supply of raw ingredients, and Canadians get a consistent choice of excellent and high-quality chicken at reasonable prices – all without government subsidies.

For this to be possible, three critical and equally important pillars must be maintained: production planning, import control, and producer pricing. If one pillar is weakened, supply management as a whole is weakened.

Production Planning Pillar

Under supply management, farmers plan their production to provide a steady supply of quality food that accurately reflects changes in demand; this prevents sudden price shifts that can result from the ‘boom and bust’ cycles that are common in agriculture. In our case, we make sure to raise the right volume of chicken required to meet Canadian demand.

As part of planning production, we use a quota system to ensure there are no surpluses or shortages of chicken on the market. Regulated chicken farmers buy quota in order to grow chicken that will then be shipped to processors. Purchasing quota is a lot like buying franchise rights, whether as a restaurant operator or a taxi owner: it’s an investment in the stability provided by supply management. While those who were in the business at the time the system was put in place were given quota, new farmers must purchase some through their provincial marketing boards. Many provincial marketing boards have new entrant programs designed precisely to help new farmers get started.

In order to keep the supply of chicken steady, Chicken Farmers of Canada Directors meet every eight weeks to determine how much chicken must be produced. This amount is set based on provincial requests, indications from industry stakeholders, market forces, and how much chicken Canadians are eating.

Import Controls Pillar

Matching supply with demand for food allows Canadians to count on stable food prices and farmers to make a sustainable living in agriculture. However, this is only possible when we can safely predict how much will be imported into the country. The predictability of imports plays a crucial role in determining how much chicken must be produced domestically to satisfy the country’s needs.

To achieve this, we need tariff rate quotas with effective over-quota tariffs to control imports of chicken products in all their forms.

Producer Pricing Pillar

The third pillar, producer pricing, is what allows supply-managed farmers to receive a stable income for their hard work and form a sustainable, subsidy-free sector.

In Canada, our chicken farmers collectively negotiate a minimum farm gate price – what they receive when their products leave the farm – which is based on the cost of production. The farm gate price should not be confused with wholesale or retail prices as farmers have no say on those.