Agriculture, Food and Rural Affairs Appeal Tribunal 1 Stone Road West Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email: AFRAAT@ontario.ca
Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales 1 Stone Road West Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Email: AFRAAT@ontario.ca
AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL
APPEAL:
Association of Ontario Chicken Processors v Chicken Farmers of Ontario
Association of Ontario Chicken Processors v CFO 1998 ONAFRAAT 23
STATUTE:
Ministry of Agriculture, Food and Rural Affairs Act
HEARING:
June 11-12, 1998
June 24, 1998
1998-23
NEUTRAL CITATION:
1998 ONAFRAAT 23
Association of Ontario Chicken Processors v Chicken Farmers of Ontario
IN THE MATTER OF THE FARM PRODUCTS MARKETING ACT AND SECTION 16 OF THE MINISTRY OF AGRICULTURE AND FOOD ACT.
AND IN THE MATTER OF:
An Appeal to the Farm Products Appeal Tribunal by the Association of Ontario Chicken Processors from the May 28, 1998 decision of the Chicken Farmers of Ontario to allocate six hundred thousand kilograms of chicken supply to Niagara Country Fresh Poultry Inc. for Quota Period A-21.
Before:
Jim Rickard, Chair; Moira Connell, Member; John Lammers, Member; Karen Ratcliffe, Member.
Appearances:
Mr. Herman Turkstra, Counsel to the appellant, the Association of Ontario Chicken Processors.
Mr. Geoff Spurr, Counsel to the respondent, the Chicken Farmers of Ontario.
Ms. Sherri Pinsler, Counsel to Niagara Country Fresh Poultry Inc.
DECISION OF THE TRIBUNAL
This appeal was heard in Guelph, Ontario, commencing on Thursday, June 11, 1998 and continuing on Friday, June 12, 1998. The Association of Ontario Chicken Processors (the AOCP) appealed to the Farm Products Appeal Tribunal (the Tribunal) from the May 28, 1998 decision of the Chicken Farmers of Ontario (CFO) to allocate six hundred thousand kilograms of chicken supply to Niagara Country Fresh Poultry Inc. (Niagara) for Quota Period A-21.
Moira Connell, panel member, was unavailable for the continuation of the hearing on Friday, June 12, 1998. She withdrew from the panel at noon on Friday and did not participate in the deliberations or the decision.
The Background
The CFO regulates the production of chicken in Ontario under a quota system. Each quota period a total allotment of chicken for Ontario is set by the CFO in conjunction with the Chicken Farmers of Canada (CFC). A portion of this allotment is then assigned to each licensed chicken producer according to the quota held by that producer. Producers are required to grow their allotment of chicken and market that allotment to a licensed chicken processor. There are penalty provisions for producers who grow more chicken than they are allotted by the CFO. Producers are allowed to contract with the processor of their choice to sell their production. Over the years, several systems have been implemented by the CFO to assist producers in marketing their production to processors in an orderly fashion.
Niagara has constructed a processing plant at Smithville, Ontario and is seeking a supply of live chicken to process.
This is the third appeal to the Tribunal concerning the allocation of live supply of chicken to Niagara. At a hearing held on January 23, 1998, dealing with Quota Period A-19, Niagara first asked the CFO and then the Tribunal to allot a supply of 1.6 million kilograms of chicken for processing in Quota Period A-19. Niagara’s request was denied at both the Board and the Tribunal.
At a hearing commencing on March 30, 1998, Niagara asked the Tribunal to overturn a decision of the CFO denying it a supply of live chicken for processing. At that hearing, Niagara requested the Tribunal to assign an appropriate supply. In considering the evidence at that hearing, the Tribunal made the following findings:
The new entrant policy, Clause 14 of Quota Policy 126-96, says that a new entrant makes an application to the CFO and the applications will be reviewed case by case. The practice of the CFO has been that every application until now has received an allocation albeit in the order of 50,000 kilograms per quota period.
The Niagara application was before the CFO prior to the January 8, 1998 establishment of the allocation committee and freeze on new applicants under the new entrant clause.
The Tribunal, in deciding the application for supply in Quota Period A-19, said that the capacity of the plant should be known before a supply was allocated. In making this statement for Quota Period A-19, the Tribunal was concerned that the plant would in fact be operable not that it could process “X” chickens at “Y” line speed for “Z” hours per day. It was undisputed that the plant will be ready to process for Quota Period A-20 (June 1998).
The Tribunal accepts that capacity should not be a criteria for allocation of supply.
The industry is struggling to accommodate new applicants that have the capability of processing as much product per quota period as Niagara wishes to process.
There is a problem with a controlled supply of raw product to an industry that has a far greater capacity than is needed to process the available raw product.
There is an industry committee (four members from CFO and four members from AOCP), chaired by the Ontario Farm Products Marketing Commission (the Commission), reviewing the allocation process at the present time.
The direction from the Commission, in its January 9, 1998 letter to the CFO and AOCP, was: “As of January 8th, 1998 the Commission directs CFO to not allocate chicken to new applicants. Regarding applications currently before the CFO, these should be dealt with in a manner taking into account that the policy review is being undertaken.”
The evidence indicted that Ontario’s share of the national market is decreasing and the western provinces have an aggressive campaign to increase production.
In the opinion of the Tribunal, Niagara had to know there was no assurance that it would get a supply of chicken and that the industry was operating at about 50% of capacity, and there was no evidence that Niagara had been promised an allocation of supply by the CFO yet Niagara went ahead and built its processing facility.
In the opinion of the Tribunal, the AOCP and CFO have worked well together under Quota Policy 129-96 to bring order to determination of the supply and the distribution of that supply to the processors in the province of Ontario.
In the opinion of the Tribunal, there should be an allotment to Niagara for Quota Period A-20.
At that hearing, the Tribunal directed the CFO to:
Allot 100,000 kilograms of live chicken to Niagara for Quota Period A-20 for use in the domestic market. This 100,000 kilograms to be added onto the 55,406,000 kilograms of production previously established for Quota Period A-20.
Allot 200,000 kilograms of live chicken to Niagara for Quota Period A-20 for use in the export market.
Niagara requested the Minister to review this decision of the Tribunal and by letter dated May 14, 1998 the Minister said:
“After having met with the interested parties and having had an opportunity to consider their views on this appeal, I have decided to vary the Tribunal’s decision by awarding to Niagara Country Fresh Poultry Inc. an allocation of 500,000 kgs. of live chicken for use in the domestic market for period A-20.
As often expressed in the past, I have concerns over the need to address Ontario’s declining share of national production. It is encouraging that progress has been made by the Chicken Farmers of Ontario and the Association of Ontario Chicken Processors in developing new export and domestic allocation policies. I am hopeful that these new policies will provide growth opportunities for the entire Ontario chicken industry and trust that Niagara Country Fresh Poultry Inc. will be able to work within these policies to achieve its future growth objectives.”
The CFO subsequently increased the live supply in Quota Period A-20 and allotted 600,000 kilograms of chicken to Niagara for processing in Quota Period A-21. The AOCP served notice of its intention to have the decision of the Minister reviewed in court and stated its position that the proper domestic allocation to Niagara for Quota Period A-20 is the 100,000 kilograms allotted by the Tribunal.
At the same time the AOCP, the CFO and the Commission had conducted a series of meetings to develop a new methodology of assignment of live supply to the processors. An agreement was reached and was to be put into effect for Quota Period A-22.
The elements of that agreement are as follows:
A base supply will be established for each current processor equal to each processors’ supply in A-20. The base supply for each processor is set out in the attached schedule. (Note: It is acknowledged that the base supply of Grand River Poultry may be increased to 4,300,000 kilograms by agreement of the AOCP).
Prior to each quota period beginning with A-22, the AOCP. will recommend to the Board a total supply amount for the period. Subject to paragraphs 5, 8, 11 and 12 the difference in total supply for each period relative to the total base supply will be distributed to processors on a pro rata basis. The resulting change in each processors supply from one period to the next will be described as the Growth Rate.
Each processor shall be entitled to increase its supply level for a quota period over the Growth Rate by an additional 50% of the Growth Rate or, in the case of a negative Growth Rate to decrease its supply by only 66.66% of the decrease.
Each processor may bank its growth equal to the Growth Rate in a quota period, but such banking of growth must be used within four quota periods of the banking, and only one quota period bank can be used in any one future quota period.
The Board recognizes that King Capon, Lee’s Poultry and Chai Kosher Poultry are suppliers to niche markets with supply requirements which vary outside the broad based market patterns of the industry and are therefore exempt from this policy provided that these processors request reasonable supplies of chicken consistent with their niche market requirements.
A committee of knowledgeable and independent industry experts will be established and be known as the Special Request Panel. The Panel will be made up of three individuals chosen from a list of individuals agreed to by the CFO, AOCP and the Farm Products Marketing Commission (FPMC). Each of the CFO, AOCP and FPMC will appoint one member to the Panel from the agreed list with the member appointed by the FPMC acting as the Chair of the Panel. A review by the three parties of the individuals on the agreed list will be conducted prior to the Panel meeting each six periods. Additions and/or deletions to the list may be made at that time by agreement of the three parties. At the same time, but following the review of the list, any of the three parties may change its appointed individual on the Panel.
A total supply of 800,000 kilograms (“the Special Request Pool”) will be available to existing and potential new processors per quota period under the Special Request Program for a total supply of 4,800,000 kilograms every six quota periods.
The Special Request Panel will meet prior to Quota Period A-22 and every six quota periods thereafter. Existing and potential new processors may make application to the Special Request Panel for any part or all of the 800,000 kilograms available per quota period in the Special Request Pool. The Special Request Panel will make decisions on the applications for supply to it and then make recommendations to the CFO on the distribution of the Special Request Pool among processors and new processor entrants, if any, in accordance with Section 9 below.
Potential new processors may make applications to the Special Request Panel for a supply of chicken from the Special Request Pool, based on a business plan, on the condition that if a new processor is successful in obtaining a supply it must have a processing plant licensed and operational by the beginning of the fifth period following the one in which it is eligible to receive a supply. A new processor granted a supply on the basis of a business plan will have the option to have its supply custom slaughtered by another processor until such time as its plant is operational or, to not begin receiving its supply until the plant is operational. However, the new processor must inform the Panel of its choice at the time the application is made to the Panel. If a new processor chooses to have its supply custom slaughtered it must market the eviscerated chicken on its own behalf other than to the processor who custom slaughtered the chicken.
The guiding criteria to be used by the Special Request Panel will be the same as those currently followed by the AOCP’s special request panel. The Special Request Panel will be permitted to use its discretion in the application of the criteria. The Panel may also use its discretion in determining whether to grant an application in whole, in part or not at all.
When the Special Request Panel meets to consider applications for A-28 to A-33 it will first review the successful applicants from A-22 to A-27. The Panel will evaluate the prior successful applicants and make a determination whether each applicant has marketed the additional supply from the Special Request Pool on the basis that it had been granted to the applicant by the Panel. Based on its review, the Panel will make recommendations to the Board whether or not to add all or part of the additional supply to each processors’ base supply for A-28. When the Panel meets to review applications for A-34 to A-39 it will conduct a similar review of the performance of successful applicants for the periods A-28 to A-33 and similarly every 6 periods thereafter.
A potential new processor requesting a periodic supply of 50,000 kilograms or less may ask the AOCP to recommend to the Board that the new processor receive a supply. The AOCP may make such recommendations to the Board at any time. Any supply granted by the Board under this paragraph will be in addition to the Special Request Pool available to processors through the Special Request Panel.
When the ownership of a processor or of its assets changes, the Board will strongly consider the recommendations of the AOCP on the distribution of that processor’s supply to the new owner.
The Special Request Program will be reviewed prior to the Special Request Panel meeting to consider applications for A-28.
Niagara requested that the CFO allot 600,000 kilograms of supply to it for Quota Period A-21. This request was granted by the CFO by a decision dated May 28, 1998. The AOCP is aggrieved by this decision of the CFO and has appealed to the Tribunal.
The Issue
The issue before the Tribunal is: What supply of live chicken should be assigned to Niagara in Quota Period A-21?
The Evidence and the Findings
At the hearing, a great deal of time was spent by the Tribunal listening to evidence relating to the decision to provide Niagara a supply of 500,000 kilograms for Quota Period A-20. The Tribunal does not intend to recite that evidence in the decision because, while it provided background of the present situation, much of it is irrelevant to the decision on the allocation for Niagara for Quota Period A-21. Suffice it to say that, in the opinion of the Tribunal, the increased allotment to Niagara in Quota Period A-20 and the implementation of that allotment caused a great deal of frustration and tension between the AOCP and the CFO.
Mr. Robert Shaprio, speaking on behalf of the AOCP, told the Tribunal that it appeared to the AOCP that the CFO was giving preferential treatment to Niagara. In support of this opinion, Mr. Shapiro offered the following:
The AOCP met May 20 with the Commission Committee including the CFO. The AOCP‘s concern was whether it would go forward with the agreement on the new processor supply policy. At that time, the AOCP had not decided to appeal the Minster’s decision. The AOCP asked for assurance from CFO on how it would deal with the assignment of supply in Quota Period A-21. Mr. Shaprio said that the CFO gave assurance that Quota Period A-21 would be dealt with in the spirit of the agreement for Quota Period A-22.
In the spirit of the new agreement, AOCP assumed that Niagara would receive an allotment in Quota Period A-21 equal to its allotment for Quota Period A-20. Many processors would have requested more kilograms of supply but since the AOCP believed that the CFO would follow the spirit of the new agreement none of them applied for increased supply.
The AOCP originally recommended that Niagara be assigned a supply of 500,000 kilograms in line with the Minister’s award for Quota Period A-20 but then revised its recommendation to 100,000 kilograms when it decided to ask the court to review the Minister’s decision.
The members of the AOCP felt angry and betrayed by the CFO decision to allot Niagara an additional 100,000 kilograms of supply in Quota Period A-21. As a consequence, three processors have applied to the CFO for increased supply in Quota Period A-21.
The CFO threatened to call letters of credit of some processors who were over-signed in their supply if those processors did not re-assign their “over supply” of kilograms to Niagara. CFO took this action against the processors despite a notice to the producers that the allotment increase in Quota Period A-20 was late and the CFO did not expect all of the kilograms could be grown within the time frame needed for Quota Period A-20. Processors saw this action as an attempt by the CFO to ensure a supply to Niagara in Quota Period A-20 at the expense of the supply to existing processors.
Processors were forced by the CFO to re-assign supply to Niagara even though the plant was not open, has not had its final inspection by Agriculture and Agri-Food Canada for its license to slaughter and did not have a letter of credit filed with the Trustee as of June 2, 1998. Mr. Shapiro pointed out that the processor who originally signed for the production is liable to the producer for the chicken even when it is re-assigned under the CFO policies.
Niagara has made statements that it will be replacing chicken sourced out of province by further processors with its own production. The suppliers from out of province will not disappear as a result of the Niagara plant opening and unless practices change in the other provinces they will continue to sell in Ontario.
The Minister’s letter indicates that he intended Niagara to work under the new policy like every other processor. There is nothing in the Minister’s letter to indicate that Niagara ought to receive treatment different than any other processor.
John Georgakakos, spoke on behalf of Riverview Poultry (Riverview). He said that Riverview had offered to transfer kilograms to Niagara in compliance with the CFO direction and had been informed by Niagara that the chicken would be processed by Maple Lodge. He said he was concerned that he was being asked to give up production to Niagara that the CFO had admitted may not be produced. He was also concerned that Riverview is responsible to the producers for payment of this chicken which may be processed in some other plant once he has transferred it to Niagara. He said that the impact of the Minister allotting 500,000 kilograms to Niagara for Quota Period A-20 is unknown at this time because Niagara has not begun processing. He pointed out that one of the principles of Niagara used to be the production manager at Riverview. The list of potential customers provided by Niagara at the last hearing was all current customers of Riverview with the exception of three or four, and finally several production staff from Riverview have been hired by Niagara. In his opinion, Niagara is attempting to replace Riverview which he feels is unfair when both companies have to work within a supply that is limited and controlled by the CFO which appears to be giving Niagara preferential treatment. He said that, in his opinion, the CFO rules and regulations are maintained to the letter except for Niagara. He pointed out that despite the fact that deadlines established in the CFO rules for re-allotment, filing letters of credit, etc., had passed without Niagara’s compliance, CFO was still enforcing transfer of kilograms to a plant that was not even open for production.
Kevin Thompson, marketing coordinator for the CFO, told the Tribunal that he was at the meeting where the Board chair, Mr. Mike Scheuring, was asked about the Board’s position on the allocation of supply in Quota Period A-21. Mr. Thompson told the Tribunal that the board members present caucused and then told the AOCP that, while the Board could not fetter its discretion and had to properly consider any applicant, it intended to deal with Quota Period A-21 in the spirit of the new assignment of supply agreement.
Mr. Thompson told the Tribunal that with respect to Quota Period A-20:
The CFO had implemented the Minster’s decision for Quota Period A-20 even though it was late in the process and difficult to administer. Allotments to producers were increased and the producers were asked to do their best at meeting this production. For most producers, the increase was less than one days growth on their flock. Processors that were over-signed were asked to reassign kilograms to processors that were under-signed just as they are asked every quota period.
The processors were asked to complete the re-assignment process by May 29th. By May 29th any under-signed processors who had not received their supply were to contact the CFO in writing. They were to indicate their efforts to get kilograms. If a processor did not contact CFO by that date, it was assumed that they were satisfied with their supply.
Re-assignments made within the deadline were approved by the CFO.
Niagara advised the CFO that it was unsuccessful in obtaining its supply. Niagara provided copies of letters to all over-signed processors showing that it had asked for re-assignment. At that time, three processors were still over-signed. The CFO directed these three over-signed processors to make re-assignments to Niagara. These processors assigned kilograms to processors other than Niagara, and filed form 121’s with the Board. The Board did not approve these re-assignments as they were not consistent with its direction to the processors. The Board advised the three processors of this decision and gave them an extension period to re-assign to Niagara. The processors then complied so their letters of credit would not be drawn by the CFO.
Riverview’s share of the 500,000 kilograms of the increase in supply the Minister ordered assigned to Niagara is 12,000 kilograms. That is the volume at risk to Riverview if none of the increase is grown by the producers.
On June 1, 1998, he received by fax a copy of a letter of credit for the Niagara plant for chicken to be processed in Quota Period A-20. He is responsible to administer the CFO policies and he was satisfied that the letter of credit was satisfactory for the policies.
Mr. Thompson said that with respect to Quota Period A-21:
On May 27th, the AOCP told the CFO that it changed its recommendation for supply to Niagara from 500,000 kilograms to 100,000 kilograms and stated its reasons for making the change.
The CFO hearing for Niagara was May 28th and after that hearing the CFO set the Quota Period A-21 supply to Niagara at 600,000 kilograms.
The CFC approved the supply figure for Quota Period A-21 proposed by the CFO.
The process for Quota Period A-21 is different from Quota Period A-20 in that the Board does not expect to have to make so many late additional changes in the allotment and any necessary changes should not be as late in the process. Quota Period A-21 should be business as usual.
The Board set the supply for Quota Period A-21. It assigned that supply to processors including the 600,000 to Niagara assigned on May 28th. After making the assignment to Niagara, the CFO decided it would not consider any more processor’s requests to increase their supply in Quota Period A-21 to avoid a situation similar to Quota Period A-20.
The CFO did not inform any processor that it intended to consider closing off applications for increased supply in Quota Period A-21.
Under the proposed new agreement, the base for assignment of supply is the volume in Quota Period A-20. The base is adjusted if a processor receives an increased assignment of supply by applying to the special request pool. In effect, under the new policy, the base for calculating a processor’s assignment of supply will be the supply assigned in the previous quota period.
Gabe Kocsis, chicken producer, board director for District 5 and Vice-Chair of the CFO Board, told the Tribunal that he was at the hearing for Niagara. He said that, in his opinion, the AOCP had abdicated its responsibility to the CFO to make reasonable recommendations for assignment of supply when it recommended a supply to Niagara of 100,0000 kilograms for Quota Period A-21. This left the CFO with nothing but the request from Niagara. He said he understood that the Minister’s decision did not contemplate that Niagara should fall back from the 500,000 kilograms assigned in Quota Period A-20. He agreed that the Chair of the Board had said the CFO would follow the spirit of the new agreement and the new agreement does not contemplate the Board giving up its responsibly to set volumes.
Mr. Kocsis said that the decision to close applications for assignment of supply for Quota Period A-21 was administrative. He said the industry is still mired in the Quota Period A-20 situation and the CFO did not want a repeat in Quota Period A-21.
He said that the CFO determined that Niagara was a new entrant and there seemed to be a pattern of new entrants with a period of growth. He based this comment on Quota Policy 129-96 which provided small companies incremental volume. He said it is also common sense that new companies have a growth period at start up.
Mr. Kocsis told the Tribunal that there is evidence that Ontario is under produced. The population in Ontario is 37% of Canada’s population while its chicken production is 34% of Canadian production. The CFO wants to replace the kilograms coming into Ontario from other provinces with its own production.
In response to questions from the panel, Mr. Kocsis said he could not identify any specific difference between the information provided by Niagara in its request for allocation of supply in Quota Periods A-20 and A-21.
Mr. Robert Beliak spoke on behalf of Niagara. He told the Tribunal that:
The Niagara plant is operational and has a federal establishment number as of late April early May. The final inspection for slaughter license could have taken place any time and is scheduled for this week. A staff of 30 people were hired May 29th and will start processing June 15. Niagara could have processed sooner but the chicken assigned in Quota Period A-20, before May 29th, by the other processors was not available for processing before mid July. He had 320,000 kilograms starting the week of the July 1st holiday.
There are only eight federally inspected processing plants in Ontario, counting Niagara. Niagara has been in contact with further processors and has verbal arrangements with them to sell product to these companies.
Niagara asked for 600,000 kilograms in Quota Period A-21 because it needs growth and is entitled to growth. Based on the record for Quota Periods A 9 to A 20 there has been growth for new processors. The Minster’s decision says Niagara is entitled to growth and should work within the system to get it. Niagara needs another 300,000 kilograms but has to be reasonable in its request and work within the system.
For Quota Period A-21, there was no place other than the CFO to apply for increased assignment of supply and that is what Niagara did. He said Niagara needs 800,000 kilograms of supply or it will be out of business.
Niagara has not been allowed to contract chicken for Quota Periods A-20 or A-21 but is assigned supply from other processors. In this assignment Niagara is given chicken without input on timing or size. Niagara has not changed its marketing plan or strategy but has to get through these two quota periods dealing with whatever product is assigned.
Niagara will be asking for increased supply in Quota Period A-22 and will work within the system to obtain that increased supply.
In his summation on behalf of the AOCP, Mr. Turkstra urged the Tribunal to conclude that there is no rational basis for the decision of the CFO to assign a supply of 600,000 kilograms to Niagara in Quota Period A-21. He argued that there was no material change in the marketplace or the submissions of Niagara between Quota Periods A-20 and A-21 and therefore the Tribunal should fix the supply for Niagara in Quota Period A-21 at the level actually processed in Quota Period A-20. This amount could be less than the Minister’s allotment of 500,000 kilograms since Niagara will not be in the processing business for all of Quota Period A-20. He argued that if the CFO wanted to increase Ontario’s production, and do so in cooperation with the processors, the way to do that is increase the allocation and then tell the AOCP to come forward with a recommendation on the assignment of supply. Since the CFO effectively controls the competitive relationship between the processors by controlling the supply of live product, not only does the CFO have to act in a fair and independent manner but it must be seen to be acting in this way as well. In this case, Mr. Turkstra argued that the CFO had clearly acted in a manner that favored Niagara by increasing its assignment of supply and then closing the door on all other processors for Quota Period A-21 without even telling the processors it was contemplating this action.
In his summation, Mr. Spurr argued that the issue to be determined is whether the CFO decision was fair in the circumstances. Is it fair for the CFO to provide additional supply to Niagara as a new entrant into the processing industry? He argued that the AOCP had not brought any evidence that the 600,000 kilograms of supply was inappropriate for the marketplace only that the supply to Niagara was not in the spirit of the agreement that does not come into effect until Quota Period A-21.
He argued that the CFO is not favoring Niagara but merely attempting to implement the Minister’s decision in an even-handed manner. The CFO was left with a recommendation from the AOCP of 100,000 kilograms for Niagara in Quota Period A-21 and a new agreement that takes effect in Quota Period A-22. Mr. Spurr said that the CFO dealt with the Niagara request as a new processor in a fair and reasonable manner given all the circumstances and the CFO decision should be supported by the Tribunal.
In her summation, Ms. Pinsler argued that the other processors were treated fairly in assignment of supply for Quota Period A-21 and Niagara, as a new entrant, should be treated differently. The AOCP accepted all other requests except Niagara’s and made a recommendation that was approved by the Board and the supply was set accordingly. Niagara applied to the CFO and received an increase in supply. She argued that the applicable policy is Quota Policy 129-1996 and that is the basis for the CFO decision.
She argued that the Minister recognized that Niagara had growth objectives and directed that Niagara receive growth.
The Tribunal examined the conduct of this hearing and the evidence presented.
In the opinion of the Tribunal, some witnesses made a concerted effort to avoid answering direct questions. They clearly operated in an obdurate fashion. Lawyers asking repetitive questions and the bringing in of irrelevant arguments contributed to this hearing lasting far longer than required. The Tribunal wishes to serve notice that these actions will not be tolerated in future hearings and will rely on the parties involved to assist the Tribunal in ensuring these actions are not repeated.
After reviewing the evidence, the Tribunal came to the following conclusions:
An issue at this hearing was not the amount of the increase in supply to Niagara but the appearance of unfairness in the process followed by the CFO. The perception left by the CFO is that the CFO closed the door on requests for increases in assignment of supply immediately after making a decision to increase the assignment of supply to Niagara in the face of the fact that there was no substantial change in the request for Quota Period A-21 than the request for Quota Period A-20.
The Minister’s letter clearly indicates that growth should come under the new policies. “I am hopeful that these new policies will provide growth opportunities for the entire Ontario chicken industry and trust that Niagara Country Fresh Poultry Inc. will be able to work within these policies to achieve its future growth objectives.” (emphasis by the Tribunal). The Tribunal interprets the Minister’s letter to say that, as far as growth is concerned, Niagara participates with the rest of the processors in the new policies.
The Minister did not direct that Niagara receive growth. Niagara indicated clearly that it wants to work within the system.
There was no rebuttal to the fact that Mr. Scheuring said the CFO would treat the assignment of supply in Quota Period A-21 in the spirit of the new agreement.
The Tribunal found no reasoning for the increase of 100,000 kilograms in the Ontario allotment except to increase the assignment of supply to Niagara. There appears to be no change in the market to justify the increase.
The policy overview that begins for Quota Period A-22 talks about fair treatment of existing and potential processors. This policy has been negotiated by the industry and, in the opinion of the Tribunal, should be given a chance to work.
In the opinion of the Tribunal, there is no doubt that Niagara is a new entrant to the chicken processing industry. Under the new policy, all processors, new entrants or not, get treated the same.
In the opinion of the Tribunal, the CFO sent out a signal that assignment of supply for Quota Period A-21 would be addressed in the spirit of the new agreement and then it appeared that Niagara was given special treatment under Policy 129-96 and then the CFO closed any opportunity to all other processors to grow in Quota Period A-21. No notice was given to the industry that the CFO was considering this action nor did the CFO notify the processors that it had made this decision.
Decision and Reasons
After careful consideration of the evidence presented and the submissions made, the Tribunal decided to grant the appeal of the AOCP and directs that the assignment of supply to Niagara for Quota Period A-21 be fixed at 500,000 kilograms of live chicken.
The reasons for this decision are:
In the opinion of the Tribunal, there is no substantial change in the marketplace or in the submissions from Niagara that justify an increase in allocation in Quota Period A-21 from the level of supply assigned in Quota Period A-20.
In the opinion of the Tribunal, when a new assignment of supply system is being implemented in Quota Period A-22, and this supply is dependent on the supply received in Quota Period A-21, the CFO must not only be fair but be seen to be fair to all processors in the supply assigned in Quota Period A-21.
The Tribunal interprets the Minister’s letter to say that Niagara is to participate with the rest of the processors in the new policies of the CFO to attain its growth objectives.
Dated at Guelph, Ontario this 24th day of June, 1998.