Georgakakos Farm Ltd. v Chicken Farmers of Ontario, 1998 ONAFRAAT 51

Agriculture, Food and Rural Affairs Appeal Tribunal 1 Stone Road West

Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales 1 Stone Road West

Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email: AFRAAT@ontario.ca

Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Email: AFRAAT@ontario.ca

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL:

Georgakakos Farm Ltd. v Chicken Farmers of Ontario

Georgakakos Farm Ltd. v CFO 1998 ONAFRAAT 51

STATUTE:

Ministry of Agriculture, Food and Rural Affairs Act

HEARING:

November 27, 1998

DATE OF DECISION:

December 7, 1998

1998-51

NEUTRAL CITATION:

1998 ONAFRAAT 51

Georgakakos Farm Ltd. 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 Georgakakos Farm Ltd. from the October 27^th, 1998 decision of the Chicken Farmers of Ontario denying its request to produce the total under-marketing from Quota Period A-21 and spread it over Quota Periods A-23 through A-25.

Before:

Jim Rickard, Chair; Vern Spencer, Vice-Chair; Murray Cardiff, Member; Andrew Koopal, Member.

Appearances:

John Georgakakos, on behalf of appellant, Georgakakos Farm Ltd.

Kevin Thompson, on behalf of respondent, the Chicken Farmers of Ontario.

Geoff Spurr, counsel, for respondent, the Chicken Farmers of Ontario.

DECISION OF THE TRIBUNAL

This appeal was heard in Guelph, Ontario on November 27, 1998. Georgakakos Farm Ltd. (Georgakakos) appealed to the Farm Products Appeal Tribunal (the Tribunal) from the October 27^th , 1998 decision of the Chicken Farmers of Ontario (CFO) denying its request to produce the total under-marketing from Quota Period A-21 and spread it over Quota Periods A-23 through A-25.

Background

On June 12, 1998, John Georgakakos wrote to the CFO on behalf of Georgakakos Farms Ltd. and Woodland Poultry Ltd. In this letter he stated that due to the delay in the allotment from the CFO for Quota Period A-21 he had under-estimated his chick order and consequently he would be significantly undermarketed on each of the premises for Quota Period A-21. He requested that the CFO allow both premises to be undermarketed by more than 10% without losing the kilograms and requested that the under-marketing be grown in Quota Periods A-23, A-24 and A-25. He stated that growing in Quota Period A-27 (six crops later) would be difficult because of space considerations.

On August 20, 1998, the CFO held a joint hearing for Georgakakos Farm Ltd. and Woodland Poultry Ltd. to consider their request to produce their total under-marketing for Quota Period

A-21 over Quota Period A-23, A-24 and A-25. On October 27, 1998, the CFO held a further hearing to reconsider the requests which were denied on August 20, 1998. The CFO decided to uphold its original decision. In its decision letter, dated November 17, 1998, the CFO states: “The Board decided that you did not make a reasonable attempt to estimate your allotment. This could have been done by phoning in to the Board office and obtaining an estimate from staff. Notwithstanding the fact that you chose not to contact Board staff, a carefully considered estimate of your allotment by you would not have resulted in the very large undermarketing which you incurred.”

The applicable section of the CFO’s Quota Policy 133-1997 is as follows:

2.9(1) “Where a producer markets in the crop quota period fewer kilograms than the crop quota,

the producer may be allotted the amount of the deficiency, not exceeding ten per cent of

the crop quota, in the sixth crop quota period following that in which the deficiency

occurred.”

The Issue

The issue before the Tribunal is:

Should Georgakakos be granted an exemption from Quota Policy 133-1997, Section 2.9(1) so that it can grow the under-marketed chicken from Quota Period A-21 in a future Quota Period or Quota Periods?

The Evidence and the Findings

For Quota Period A-21 Mr. Georgakakos’ home week ended August 8, 1998, the second week of the period. It takes 21 days to hatch a chick. He ordered chicks May 25^th, 1998. The CFO printed the crop quota allotment Schedule 1 forms on June 5^th and mailed them on June 8^th. The Georgakakos chicks were placed in the barn on June 22, 1998 and marketed August 6 and 7^th, 1998. The latest the chicks could have been ordered for June 22 placement is June 1, four days before the CFO prepared the Schedule 1’s.

Mr. Georgakakos told the Tribunal that the issue at this hearing relates only to Georgakakos Farm Limited. He is also involved in another company, Woodland Poultry, but the Woodland Poultry decision is not under appeal.

Mr. Georgakakos told the Tribunal that he has been in the chicken industry for many years having started farming with his father. He currently grows chicken and turkey and is part owner of Riverview Poultry, a processing plant that processes both chicken and turkey.

Mr. Georgakakos said that for Quota Period A-21 the Schedule 1, the document from the CFO which tells him his crop quota, was late being sent from the CFO offices. As a result he had to estimate his crop quota and order chicks based on his estimate. He told the Tribunal that he could not recall the details of the method he used to estimate his quota and calculate the number of chicks to order. When he received his allotment of 50,190 kilograms on June 11 he realized that he had not ordered sufficient chicks for placement on June 22 so he contacted his hatchery to see if he could increase the order but he was unable to buy more chicks. It takes 21 days to hatch a chick so June 11 was too late to merely increase the eggs in the incubator for June 22 delivery. He told the hatchery that he would accept chicks of either sex and would take chicks one day later if necessary. He said, in his case, delaying the marketing date to increase the weight of the birds was not feasible for two reasons. First he is scheduled well in advance with his processor, Riverview Poultry. If his flock is delayed then he has to find another flock to replace it because the product is needed to fill customers orders. Secondly, if he delayed shipment he would not have enough time to prepare the barn for the next flock.

Mr. Georgakakos said he is cautious in his estimates. The CFO policy provides a 10% sleeve for producers and he tends to use this sleeve. Many times he is under-produced in the quota period but he does not keep track of these figures, that is the CFO’s job. The CFO keeps track of the adjustments to the crop quota and advises him of the correct allotment sufficiently in advance of the quota period to allow him to calculate and make his chick order.

Mr. Georgakakos said he asked for an exemption from the CFO to allow him to be under marketed more than 10% and to be allowed to produce this under marketing in three quota periods rather than one due to limitations of barn space.

Mr. Georgakakos based his argument on the time lines. He said that the CFO was late sending the Schedule 1 and he was forced to make an estimate of the Quota Period A-21 allotment. He did this in good faith. There is no benefit to him to underestimate his allotment. He does not recall the details of the methodology used but he must have made a mistake because his estimate and chick order was too low. He said that when a producer fails to meet a deadline on paperwork, the CFO enforces the rules rigorously. He supports this action, but he also feels that when the CFO does not meet its timelines, it has to accept responsibility.

Mr. Georgakakos filed a copy of a page from the October edition of Chicken Farmers Monthly. On this page the CFO indicates to producers that they should not guess about their allotment. It says that if farmers find themselves in the situation where they have to order chicks and do not have their allotment from the CFO they should call the CFO staff for an estimate of their allotment. He said that this publication is five months after the fact for him yet the CFO expects him to have known their thoughts on this matter. He said he did not call because the CFO did not have an allotment number for him. Mr. Georgakakos told the Tribunal that it was common knowledge that the CFO had not run the numbers because of the turmoil in the industry at the time.

Mr. Georgakakos said that this is not the first time the CFO has been late issuing Schedule 1 but in other instances when he estimated his allotment and chick order he was within the tolerances and it did not become an issue.

Mr. Georgakakos asked the Tribunal to allow all of the under-marketing to be grown spread equally over Quota Periods A-23, A-24, and A-25. He argued that the 8,324 kilograms involved are insignificant in Ontario’s total production so granting his request would have no impact on his fellow producers.

Mr. Kevin Thompson, Marketing Coordinator for the CFO, told the Tribunal that the CFO policy on under-marketing has varied over the years. At times producers have been allowed to carry forward:

1. no under-marketing.

2. all under-marketing regardless of cause.

3. 5% of under-marketing.

4. 10% of under-marketing.

At the present time 10% of under-marketing is allowed to be carried forward and since this policy has been in place there have been no, or limited, exceptions granted by the CFO.

He said that the Schedule 1 was late being issued in Quota Period A-21 for a combination of reasons. The target is to have the allotments in the mail at the end of the 13^th week prior to the period commencing. In Quota Period A-21 the Schedule 1’s were sent out nine weeks prior to the period commencing. He explained that 13 weeks in advance would have been May 8. The Chicken Farmers of Canada ( the CFC) did not set Ontario’s allotment until May 11. The Minster decided on May 14^th to give Niagara Country Fresh Poultry Inc. (Niagara) additional supply in Quota Period A-20 which was about to start. There was an industry meeting to discuss how to deal with the Minister’s directive on May 20^th . On May 21^st Niagara requested a further increase in supply for Quota Period A-21. The CFO dealt with this request at a CFO hearing on May 26^th and decided to increase Niagara’s supply. This meant the CFO had to apply to the CFC to revise Ontario’s allotment. The CFC granted the increase in supply on June 4^th and the CFO issued the producer allotments on June 5^th.

Mr. Thompson told the Tribunal that after each quota period is finished every producer is sent a production summary showing the amount marketed and if that producer is over or under-marketed and by how much. He said it is common practice for staff at the CFO to be called by producers seeking information on their allotment. Even in periods where the staff meet the 13 week target there are producers who need the information sooner and they always call. He said that in recent quota periods the CFO has been late issuing Schedule 1 and staff are getting a lot of calls.

Mr. Thompson said that the Georgakakos situation was the impetus for putting the notice on estimating crop allotments in the Chicken Farmers Monthly publication. He said the CFO had not anticipated anyone estimating their crop allotment without checking with the staff and the purpose of the publication is to inform the producers and avoid a recurrence of this problem.

In response to questions Mr. Thompson said that:

1. The staff of CFO did not consider sending Schedule 1 based on estimates because producers that need the information could call and get an estimate.

2. The events surrounding the release of crop quota allotments for Quota Period A-21 were extraordinary.

3. The lateness of the allocation only affects a few farmers.

4. There are no qualifications or conditions in the CFO policy that have to be met in order to carry over to six quota periods in the future 10% of the crop quota as an under-marketing.

5. The CFO can make exceptions to this policy.

6. If a producer called staff and asked for an estimate of their allotment and was given a number then the CFO would not hold the producer responsible if the information turned out to be incorrect.

7. Late delivery of Schedule 1 was most unusual prior to Quota Period A-20 but has been a problem since.

8. The CFO maintains it is the producer’s responsibility to know what has been marketed and to reconcile with their records.

9. The original allotment for Quota Period A-20 was made 11 weeks prior to the beginning of the period, 13 is the goal. The allotment was revised the first time six weeks prior to the beginning of the period and the second time three weeks prior to the beginning.

Susan Starr, Quota Control Officer for the CFO, told the Tribunal that one of her responsibilities is to track marketing and prepare producer ledger cards. If there is over-production beyond 5% of the allotment she prepares the statement of levies and fees for over-production. She prepares and checks the summary of the production for each quota period for each producer and then sends that information to the producer. She said she has received several calls from producers asking for their allotment figures. She looks up the information in the CFO database and gives these producers an estimate of their allotment. The figures for basic allocation, previous under-marketing and missed additional are known beforehand; the only variable is the additional in any quota period.

John Maaskant, chicken producer and member of the Board of Directors of the CFO for District 2, told the Tribunal that it is very difficult to adjust a chick order once the eggs have been set in the incubator. He said he orders a buffer of chicks to cover that situation.

Mr. Maaskant said if he ran into a situation where he needed his allotment he would phone the staff at the CFO for figures because if the figure given was incorrect he would not be held responsible. He said recently he has been involved in a quota transfer and had to phone for his allotment for three quota periods. He said that, in his opinion, this is what the CFO expects producers to do when they do not have their Schedule 1 at the time the chicks have to be ordered.

Mr. Maaskant told the Tribunal that he keeps his crop summaries in a file for reference. He knows about the missed additional quota if his schedule is such that he does not grow a flock during one quota period. Using the information that is available to him, and every other chicken producer, he can estimate his crop quota fairly closely - the only unknown is the additional for the specific period. Even with all of this information he would still not recommend any producer estimating his crop quota - they should call the CFO staff.

The Tribunal examined the evidence and decided that the issue to be determined is who should bear the responsibility for the under-marketing from Georgakakos in Quota Period A-21. In arriving at its decision the Tribunal noted that:

1. The evidence is that the industry was in turmoil at the time the Schedule 1’s should have been issued for Quota Period A-21.

2. May 8 is the date that the CFO would have mailed the allotments for Quota Period A-21 under normal circumstances.

3. Schedule 1 is dated June 5^th and marked as being mailed June 8^th

4. In the opinion of the Tribunal, the CFO failed to inform all producers about the allotments for Quota Period A-21 in a timely manner.

5. The CFO has not issued the Schedule 1’s to the producers at the desired 13 weeks in advance for Quota Periods A-20 through to Quota Period A-23.

6. In Quota Period A-20 the Schedule 1’s were issued 11 weeks prior to the beginning of the period and were revised at six weeks and again at three weeks prior to the beginning of the period. No such action was taken in Quota Period A-21.

7. In Quota Period A-20 the producers who could not adjust their production when the Schedule 1 was revised late in the period were allowed by the CFO to carry forward the amounts of the adjustment in their under-marketings.

8. In Quota Period A-21 the Schedule 1’s were not issued until nine weeks prior to the period beginning. This is after the time of egg set for marketing during the first week of the period.

9. Any producer has the opportunity to call the CFO to receive or confirm information relative to his crop quota. The evidence indicates that this has happened where a producer is in the position of transferring quota or where a representative of the processor or hatchery calls on behalf of the producer.

10. When Mr. Georgakakos realized he had under estimated his chick order he attempted to increase the number of chicks that would be delivered.

11. Mr. Georgakakos admitted that he made an error in calculating the number of chicks to place.

12. The newsletter to growers advising producers to call the CFO office if they did not know their allocation is a result of the Georgakakos hearing.

The Tribunal concludes that the past actions of the CFO in delivering Schedule 1’s 13 weeks in advance of the Quota Period has lead the producers to rely on receiving this information soon enough to calculate appropriate chick placements. Having created the expectation, the CFO has the responsibility to its producers to meet the standard it set for itself. In the opinion of the Tribunal, there is responsibility on the CFO to provide Schedule 1 on a timely basis. The Tribunal also recognizes that producers who do not have their Schedule 1 in time to calculate their chick order ought to realize that they could contact the CFO and inform themselves as to their crop quota allotment and/or what the CFO expects them to do in these circumstances.

Decision of the Tribunal

After careful consideration of all the evidence before it, the Tribunal decided to partially grant the appeal and allow the appellant to carry forward 10% of his under-production plus half of the 8,324 kilograms of under-production that would be lost in a strict application of the CFO under-marketing policy. The total allowable under-marketing from Quota Period A-21 is to be included in the calculations for the crop quota allotment for Quota Period A-27. The reasons for this decision are:

1. In the opinion of the Tribunal, there is a joint responsibility for this problem. The CFO is responsible to provide Schedule 1’s to producers in a timely fashion. Producers are responsible to contact the CFO for the information that would be on their Schedule 1 if it has not arrived in time for them to properly plan their production in a crop quota period.

2. In the circumstances of this case the Tribunal assessed the relative responsibilities at 50% for the CFO and 50% for Georgakakos.

DATED at GUELPH, Ontario THIS 7^th day of December, 1998.