Bos v. Chicken Farmers of Ontario, 1999 ONAFRAAT 31

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:

Bos v Chicken Farmers of Ontario

Bos v CFO 1999 ONAFRAAT 31

STATUTE:

Ministry of Agriculture, Food and Rural Affairs Act

HEARING:

December 7, 1999

DATE OF DECISION:

December 14, 1999

1999-31

NEUTRAL CITATION:

1999 ONAFRAAT 31

Bos 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 Henry Bos, Stevensville, Ontario from a decision of the Chicken Farmers of Ontario not to hold a hearing regarding the cancelling of his Form 101 for Quota Period A-31 and the signing of those forms by P&F Meats.

Before:

Jim Rickard, Chair; Armand Bechard, Member; Ralph Huckle, Member.

Appearances:

Henry Bos, appellant.

Kevin Thompson, Operations Manager for the Chicken Farmers of Ontario.

Paul Karges, Vice-Chair of the Board of Directors of the Chicken Farmers of Ontario.

Geoff Spurr, Counsel to the respondent, the Chicken Farmers of Ontario.

DECISION OF THE TRIBUNAL

This appeal was heard in Guelph, Ontario on Tuesday, December 7, 1999. Henry Bos, appealed to the Farm Products Appeal Tribunal (the Tribunal) from a decision of the Chicken Farmers of Ontario (the CFO) not to hold a hearing into his concerns regarding the cancelling of his Form 101 for Quota Period A-31 with P&F Meats (P&F). The issue to be decided is whether the CFO ought to hold a hearing for Mr. Bos to explain his situation and make his request to the CFO for relief.

The Background

The CFO controls the supply of live chicken produced and marketed in Ontario using a quota system. Processors of live chicken are provided a supply of live chicken under Quota Policy 138-1998 of the CFO. Producers and processors enter into a contract of production and sale on a prescribed form known as a Form 101. The producer agrees to supply kilograms of live chicken in a given weight category and the processor agrees to purchase those kilograms from that producer.

P&F is a meat processor that has been purchasing live chicken in Ontario. P&F had been assigned a supply of live chicken by the CFO in accordance with Quota Policy 138-1998. The CFO became concerned that P&F was not slaughtering the supply of live chicken it was receiving. After notifying P&F of its concern, the CFO considered the situation at a meeting on October 27, 1999. By letter dated October 29, 1999, the CFO informed P&F that it had decided to cancel P&F’s supply of live chicken effective Quota Period A-31 (A-31). Henry Bos had contracted to sell his live chicken to P&F in A-31. As a result of the CFO decision, he had to find a different processor to contract his flock for A-31. This caused Mr. Bos concern and he informed the CFO. The CFO provided an accommodation to Mr. Bos in that he is allowed to contract his A-31 production with the processor of his choice. The processor that signs the Form 101 with Mr. Bos will not be attributed Mr. Bos’ kilograms of supply. Therefore, he will not be subject to any monetary penalty for oversigning as it relates to Mr. Bos’ kilograms of chicken.

Mr. Bos remains concerned about the situation and requested a hearing before the CFO. The CFO has declined to provide a hearing and Mr. Bos has appealed to the Tribunal.

The Issue

The issue before the Tribunal is whether or not the CFO should be directed to provide a hearing to Mr. Bos so he can express his concerns about the cancellation of the supply of live chicken to P&F and the cancellation of his Form 101’s with P&F for A-31.

The Evidence and the Findings

Mr. Geoff Spurr, counsel to the CFO, raised as a preliminary matter the issue of whether the Tribunal should continue with the hearing. He argued that Mr. Bos does not have standing with respect to the issue of a supply of live chicken to P&F. He said that only the owners of P&F could appeal the decision of the CFO to cancel the supply. P&F have not appealed the decision and Mr. Bos should not be allowed to raise that issue through an indirect appeal. Mr. Spurr noted that Mr. Gallucci of P&F was present and if P&F indicated an intention to appeal the CFO decision this would resolve the first part of Mr. Bos’ concern. He said that the second part of Mr. Bos’ issue is with A-31 and the CFO has accommodated him for that quota period.

Mr. Spurr said that:

• Mr. Bos is concerned with A-32 and what happens to him at that time.

• In A-32 and beyond, Mr. Bos has the same opportunity as every other grower.

• What Mr. Bos really wants to talk about is the system used to allocate supply to processors and that issue is currently before the Farm Products Marketing Commission. It has held a hearing and is expected to release its decision on that matter on December 8, 1999. Therefore, it is inappropriate for the Tribunal to hear arguments on that issue at this time.

Mr. Bos argued that the Tribunal should continue with the hearing. He said he is aggrieved by the decision to cancel his Form 101’s with P&F. He said that the CFO recognized the effect of the cancellation on him by making provision for his situation in A-31 but he remains concerned because he will continue to have difficulty finding a processor in A-32. He said he is not in the same position as all other producers because not all other producers have to find a new processor because of a decision of the CFO. If other producers want to switch processors, they have the default of going back to the processor they were with. He argued that he does not have that option because P&F is no longer allowed to contract with him. He said he was not disputing the allocation system but he was challenging the CFO’s decision made within the allocation system.

The Tribunal considered the submissions on the preliminary issue. In response to questions, Mr. Bos agreed that the issue of supply for P&F could be dealt with by an appeal to the CFO by Mr. Gallucci and that he had been accommodated for A-31. The Tribunal decided there was no issue to be decided on these two matters. The Tribunal then asked for submissions on whether or not it should direct a hearing on the A-32 issues.

Mr. Bos told the Tribunal that the main issue around A-32 is the difficulties for him to shift to another processor. He told the Tribunal that:

• He began having difficulty with his processor in Quota Period A-25 and decided to shift to another processor.

• He is tight for barn space to grow his allotment and so has made a practice of thinning his production part way through the quota period. He places chicks and grows them to about 1.9 kilograms, thins out about 1/3 of the kilograms and then grows the rest of the flock to heavy roaster size. He uses two processors to accommodate this production pattern.

• Few processors accept heavy roasters and in Quota Periods A-26 through A-29, he had to ship his heavy roasters to several processors rather than just one. This is inefficient and expensive.

• He prefers to grow in the 2.8 kilogram category as that maximizes his returns. Having to adjust his production to another category makes his farm more difficult to manage and reduces his income.

• If he cannot ship to P&F in A-32, or another processor that will take all of his heavy roaster production, then he is aggrieved by the CFO decision to cancel the supply to P&F.

• Other producers who sign up for A-32 are not confronted with the situation where the processor who accepted their kilos in A-31 may be required to reassign kilos in A-32 to accommodate them and therefore, he is not on the same footing as other producers.

• Contrary to what the CFO has stated in their document, P&F was buying his chicken in the past. He filed settlement sheets to prove this point.

• P&F does have a slaughter plant but is not operating it, rather P&F has chosen to custom slaughter its supply of live chicken.

• He earns about five cents per kilo more on his heavy roasters than he receives for his broilers. If he cannot continue his current production practice, he stands to loose $30,000 to $40,000 in profit per year.

Mr. Gallucci told the Tribunal that he will appeal the decision of the CFO to cancel the supply of live chicken to P&F.

Mr. Karges, Vice-Chair of the Board of Directors of the CFO, told the Tribunal that producers have to grow the category of chicken requested by the processor or be prepared to shift processors. If the market changes and the processors do not need the category he wishes to grow then he has to convince the processor that he is capable of growing that category better than someone else, or he has to shift category. While it is not common for processors to ask a producer to find another processor it is fairly common for processors to ask producers to change the weight category of their production. Mr. Karges said that it takes time to adjust to a new processor and suggested that one or two quota periods should be sufficient.

Mr. Spurr argued that:

• In future sign ups of Form 101 no producer has a guarantee that they can market the category they currently produce or want to produce, to their current processor.

• Mr. Bos is not aggrieved by his circumstances in A-32 – he is in the same situation as other producers.

• He has chosen to grow heavy roasters. He has made an operative decision to do that, just as other producers do. Then he has to make his decision fit into the marketing system.

• Mr. Bos’ issue is all about shipping heavy roasters in a block to make the most profit. What he wants to do is get a guarantee that he can sell his flock in a block. That does not make him aggrieved by the CFO decision. He is creating the grievance. He wants to grow heavy roasters and ship them in bulk, this is not a basis for a hearing at the board.

• Mr. Bos is in error when he claims he is not in the same position as other producers. All licensed producers have the exclusive right to market chicken. His issue is that he may not be able to market chicken in the weight category of his choosing but that is his operational decision not a decision of the CFO.

The Tribunal examined the submissions made relative to Quota Period A-32. The CFO was within its statutory rights to decide whether or not to hear an aggrieved producer. Nonetheless, the Tribunal feels that when a producer feels a need to discuss an issue with his marketing board there is some responsibility on the Board of Directors of the marketing board to listen to the concern. This does not mean that a formal hearing has to be held on every case, but producers should have an opportunity to address the Board of Directors with their concerns.

In this instance, Mr. Bos’ decision to move processors took more time than he had hoped for but he ended with a result that he was happy with. Now he finds himself with a processor that is unlicensed and he will have to search for a new processor again. This is the sense of grievance that Mr. Bos has. But, it is up to the processor to object to the cancellation of its supply not Mr. Bos. The CFO also said it takes time to change a farm operation from one processor to another and/or to get used to different production categories. The CFO suggested it might take a quota period or two to make these adjustments. The CFO has given accommodation for A-31 to allow Mr. Bos to adjust his operation.

After consideration of the evidence and submissions, the Tribunal decided the CFO was within its rights not to grant a hearing to Mr. Bos.

Decision and Reasons

After careful consideration of the submissions made, the Tribunal decided not to order the CFO to provide a hearing into Mr. Bos’ anticipated problems in Quota Period A-32.

The reasons for this decision are:

1. The Tribunal did not find enough reason to require the Board to hold a hearing at this time. However, if Mr. Bos continues to have problems marketing his birds in the future, the Tribunal hopes that the Board will look at the circumstances at that time.

2. The CFO accommodated Mr. Bos in Quota Period A-31 to adjust his production and marketing. The Tribunal was convinced by the evidence that this is sufficient consideration.

Dated at Guelph, Ontario this 14th, day of December 1999.