BC Eggs for Processing Program

Transcription

1 BC Eggs for Processing Program Project Description September 8, 2015

2 Background: Historically, the industrial egg market has been used to remove surplus eggs from the market in order to maintain stability, allowing growers to supply the table egg market in times of higher consumer demand and remove excess eggs when demand is low. The industrial egg market has experienced considerable growth and now makes up 25-35% of the total egg market. The Table Egg Market has always been the first priority for eggs with the industrial products market receiving the surplus and/or under-grades. As the industrial market has grown, the processors have been required to source eggs from out of province as well as out of country. The Eggs for Processing Program was developed to help supply the industrial products market with quality eggs without shorting the table market. Objective: Through the Eggs for Processing Program, BC producers will receive supplemental quota in the amount of 100,000 layers from Egg Farmers of Canada to supply the industrial market. This supply cannot enter the table market and must be in addition to the IP program. Based on a Rate of Lay of dozens per hen, BCEMB is required to supply 169,900 boxes of 15 dozen annually to Vanderpol s Eggs which is an average of 3,262 boxes per week. BCEMB is subject to quarterly audits by EFC and must be able to keep track of the EFP eggs by volume and weight. BCEMB must also ensure that Vanderpol s Eggs receives an average yield weight during the year which is at least equivalent to the average yield weight of the IP shipments in BC. Methods: Quota Issuance On April 7, 2015, the Board notified producers that there was a quota increase in the amount of 6.5% with 3.8% that being supplemental EFP quota. Producers are required to respond to the Board with whether or not they have space for the quota. If a producer replies that they have the space for the entire quota, it is issued. As most producers will be unable to utilize the increase at the time it is issued, they are given three options with regular quota: 1) Reduce the current quota credit usage; or 2) Apply for quota credits for short placement for up to six months; or 3) Apply for a levy abatement for up to six months. As EFP is supplemental quota, producers' options will be different for this issuance. Firstly, growers are required to place all 6.5% at once. This will reduce any potential problems where a grower might decide to delay placing the EFP portion of the quota in favor of the regular quota. Secondly, we will be issuing the quota (EFP and regular) at time of 19 week placement, or with a corresponding reduction in quota 1 P a g e

3 credit usage, so growers will be unable to collect quota credits on the 2.7% regular quota. This will encourage producers to place as soon as possible. The statement upon confirmation of space for this quota will be: Thank you for confirming your eligibility for the quota. A 6.5% increase to your quota in the amount of will be issued to you upon placement of the hens in your lay barn. Please provide details as to when you expect this to happen. If you are unable to utilize the increase in your quota at this time due to barn space, please provide details as to what your plan is and when you expect to place the additional hens. The statement upon issuance of this quota will be: Thank you for confirming your eligibility for the 6.5% quota increase. As EFP is not applicable to levies, the 3.8% will not be reflected on your producer statement but the amount communicated to you earlier this week has been issued and is being tracked internally. Please be aware that your levy rate will increase by the 2.7% issued to you effective Week 18, 2015 and will be reflected on your producer statement. Barn Space There will be some producers who are unable to take the increase due to being short of space. At this time, staff is requesting that these producers provide a written plan to the Board with a time frame as to how they plan on meeting the space requirements. If producers can expand their egg production units and place the additional hens within a reasonable time frame (545 days or 18 months), the quota will be held by the BCEMB and issued to those producers once they are space compliant. At this time, Board policy is that producers must be able to place the entire amount prior to it being issued. This reduces the likelihood that a producer will place the regular quota and hold off on placing the EFP quota. Ramping up Production It will take approximately 18 months to ramp up production to 100,000 layers. Throughout this time, it is important that the BCEMB keeps track of how many layers are in production in order to send the appropriate amount of product to Vanderpol's. The BCEMB also needs to communicate the flocks that are currently producing within the EFP program with Vanderpol's, Island Eggs, and Golden Valley as their flock accounting will be different. Producer Payments Producers will be paid table price for all production; however they will be invoiced monthly for the Equalization Fee on their EFP allotment. This will apply to all producers, even if they are not actively shipping product to Vanderpol's. In cases where the whole flock is shipped to Vanderpol s, we would use the weight and volume category values for the last actual grade out. The BCEMB will be charging all producers who plan on utilizing EFP quota the EFP Equalization fee as of October 1, 2015 in order to encourage increased production as quickly as possible. This would also build up the reserve fund to help buffer the cost of the program. 2 P a g e

4 EFP Price Vanderpol's will pay BCEMB the calculated price average of the Urner-Barry and feed based prices for the relevant size and grade of eggs as posted by EFC for the EFP program, plus an agreed upon premium for any specialty product. The difference between these two prices will be made up for by charging the producers an EFP Equalization Fee. EFP Equalization Fee The EFP Equalization Fee is made up of the Price Differential, Administration Fee and Levies. This will be invoiced to participating producers on a weekly basis and be automatically deducted from the payment. The administration fee will be $0.02 per dozen to cover the freight and other program costs. The Levy will be equal to the amount of the combined BCEMB + EFC Levy. The Price Differential will be equal to the table market price for caged white minus the levy and EFP posted price. The Board will assume that each EFP hen reported as placed by each producer is in production and is producing at the standard rate of lay (25.44 dozens per year). The total Equalization Fee to be invoiced will be calculated on a weekly basis based on EFP hens*25.44/52*equalization Fee. Example Week 16 Example Week 25 Supplying the Processor Board staff will work closely with the Processor and Grading Stations to ensure that all parties are aware of when a producer begins utilizing their EFP quota and what those quantities are. Staff will also work with all parties to ensure that the product levels are as consistent as possible. The program allows for some flexibility where all parties can plan for periods of high table egg consumption and balance that out with the Processor s needs (increase shipments to processor for a short period of time followed by a 3 P a g e

5 decrease as product is diverted to table market). From time to time, flocks may be required to ship product to the processor during peak periods in order to balance the weights and volumes. The Registered Grading Stations will pick up the EFP Product with their regular farm pick-ups and deliver the EFP portion to the processor on a weekly basis, ensuring that the average weight yield for product shipped to the processor is at least equivalent to the average yield weight of the industrial product shipments for BC. This needs to balance out quarterly. Smaller grading stations will ship their required amounts on an annual, semi-annual or quarterly basis, or with their IP shipments. These Registered Grading Stations would have to ensure that they ship the appropriate number of boxes annually. The Board recognizes the increased labor involved in picking up the product and will pay the registered grading stations $0.015 Zone 1, $ Zone 2 and $0.03 Zone 3 per dozen on the weeks that the product is delivered to the processor. The Board will pay the freight costs for those Registered Grading Stations outside of the Fraser Valley to ship the EFP product to the Processor. The processor has requested that 1/3 of the product shipped through this program be cage free. Administration: For the BCEMB BCEMB will track EFP program information by keeping an excel workbook, updated on a weekly basis, of all EFP bird placements, counts, production, payments and fees. On a monthly basis, BCEMB will compare EFP production as reported by all graders to the EFP product received at the processor and determine if the average weights and volumes of graded product and EFP product is the same. If the averages are different, BCEMB will work with the graders to ensure that this is rectified. For Producers An invoice will be ed to the producer on a weekly basis for the Equalization Fee. The fee will be deducted from their following week s statement and will be calculated based on the number of EFP Hens assigned to that producer. For the Processor The processor will be required to report all EFP product received at the grading station in the same format that the IP product is reported. For Graders Graders will be required to ship product to the processors on a regular basis. This will be weekly for larger grading stations. They will continue to report in their current manner. 4 P a g e