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:
Boersma v Chicken Farmers of Ontario
Boersma v CFO [Preliminary Decision] 2001 ONAFRAAT 12
STATUTE:
Ministry of Agriculture, Food and Rural Affairs Act
HEARING:
February 15, 2001
February 25, 2001
2001-12
NEUTRAL CITATION:
2001 ONAFRAAT 12
Boersma v Chicken Farmers of Ontario [Preliminary Decision]
IN THE MATTER OF the Farm Products Marketing Act and section 16 of the Ministry of Agriculture, Food and Rural Affairs Act;
AND IN THE MATTER OF: an appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal (the “Tribunal”) by S. H. Boersma from a decision of the Chicken Farmers of Ontario, dated December 20, 2000 whereby it denied his request that he be allotted 6,500 units of basic quota, at no cost, to allow him to participate in the overall growth in the chicken industry, and by Siebren Boersma Jr. from decisions of the Chicken Farmers of Ontario dated December 20, 2000 denying his request that he be allotted 6,500 units of basic quota, at no cost, an additional 7,500 units of basic quota at no cost and a sufficient allotment of quota to allow him to commence chicken production.
Before:
Dr. Denis O’Connor, Vice Chair
Doug Flook, Member
Jim Gibb, Member
Appearances:
Geoffrey Spurr, counsel to CFO
Chris Vanderkooy, Service and Inspection Supervisor, CFO
Siebren Boersma, Sr., appellant
Siebren Boersma, Jr., appellant
Background:
A pre-hearing conference was held in the Tribunal boardroom, 1 Stone Road, Guelph, Ontario on Thursday, February 15, 2001 to 1) hear a preliminary motion made by the Chicken Farmers of Ontario (CFO) to dismiss the appeals and 2) clarify the extent of Siebren Boersma Jr.’s appeal.
The appeals of Mr. S. H. Boersma Sr. and Mr. Siebren Boersma Jr. come to the Tribunal from decisions of the CFO under subsection 16(2) of the Ministry of Agriculture and Food Act. Subsection 16 (2) states:
“Subject to subsections (4) and (5), if a person is aggrieved by an order, direction, policy or decision made under the Farm Products Marketing Act by a local board or under the Milk Act by a marketing board, that person may appeal to the Tribunal by filing with the Tribunal and sending to the local board or marketing board written notice of the appeal. 1988, c. 13, s. 1 (9), part.”
Subsection 16 (4) states:
“The Tribunal may refuse to hear the appeal or, after a hearing has commenced, refused to continue the hearing or make a decision if it relates to any order, direction, policy, decision or regulation of which the appellant has had knowledge for more than one year before the notice is filed under subsection (1) or (2) or, if in its opinion,
(a) the subject-matter of the appeal is trivial; (b) the appeal is frivolous or vexatious or is not made in good faith; or (c) the appellant has not a sufficient interest in the subject-matter of the appeal. 1988, c. 13, s. 1 (9), part.”
Subsection 16 (5) requires that the appellant has first appealed to the local board or marketing board on the subject-matter unless the local board or marketing board has waived its right to hear the matter.
The appeal of Mr. Boersma Sr. related to a decision of the CFO not to grant him 6,500 units of “basic quota”. The CFO allocated 6,500 units of basic quota to all chicken producers effective quota period A-33 pursuant to Quota Policy No. 141-1999, New Basic Quota Policy.
Basic quota is issued by the CFO to allow chicken producers to grow a specific amount of chicken in each defined quota period. The CFO also issues “additional crop quota” which allows chicken producers to grow extra chicken, as required, in specific quota periods. Chicken grown under both types of quota must be produced in registered premises. Typically, the amount of chicken a producer may grow under basic quota does not fluctuate from quota period to quota period, whereas the amount of additional crop quota fluctuates with market demand. Basic quota may be transferred to new or existing registered premises with the approval of the CFO.
Mr. Boersma Jr. also appealed a decision of the CFO not to grant him 6,500 units of basic quota in light of the allocation of this amount of quota to chicken producers. As well, he appealed a CFO decision to deny him an additional 7,500 units of basic quota and a sufficient allotment of quota to allow him to commence chicken production. At the pre-hearing conference he clarified that the total amount of quota he sought was 15,000 units, the minimum amount that the CFO required new entrants to acquire to establish a new production facility.
Mr. Boersma Jr. argued that he was entitled to an allocation of quota under Clause #3 of Quota Policy No. 141-1999 as he was a new producer. Clause #3 of the policy states:
“A person whose application to become a new producer has been accepted by the board on or before May 29, 1999 will be eligible for new basic quota.”
“New producer” is defined as:
“an allottee of basic quota who, prior to the date on which the board fixed and allotted basic quota to the producer, was not the allottee of basic quota.”
Preliminary Issue
Mr. Geoff Spurr raised a concern with the lack of a reply to his motion by the appellants. He pointed out that his motion to dismiss the appeals was made in accordance with the Tribunal’s Rules of Procedure, that he had served his papers to Tribunal and the appellants and that he had set out the grounds that the CFO was relying on in an affidavit. He submitted that the appellants were required to put the documents and an affidavit of oral evidence in a reply, and that this had not been done. He said his position was that the appellants could not submit any further written documents or verbal testimony to the pre-hearing conference and that the only documents properly before the Tribunal were the documents filed by the CFO.
Mr. Boersma Jr. responded that the Tribunal had set March 2, 2001 as the date by which documents to be relied on in the Hearing were to be filed and that there was no similar order made regarding the filing of documents to be relied upon in the Pre-Hearing Conference. He said he had not yet collected all the information he needed for the appeal, but he expected it before the hearing date.
Mr. Boersma Sr. objected to ‘fancy footwork’ by the counsel to the CFO. He told the Tribunal that the CFO had received his complete file, except for one map, and that the CFO had incorporated some of his literature into their brief. He said the CFO was using legal moves to prevent him from stating his case. He said this was against the spirit in which Canadian soldiers liberated his hometown in Holland so he could be free.
Mr. Spurr clarified that he was not proposing that the appellants could not give evidence on the matter before the Tribunal. His concern was with the possibility that they would submit additional documents and verbal testimony without giving him notice of it. He submitted that they had to follow the rules so that they were all on the same playing field.
He said he had no objection to a letter outlining the CFO’s reasons for denying the appeals being introduced into evidence.
The Tribunal indicated that it would respect its Rules of Procedure but that it would decide what it would hear. It clarified that it was hearing the motion to dismiss the appeals, not the actual appeals.
The Evidence and the Findings
Mr. Spurr stated that the CFO motion was made under Section 16 of Ministry of Agriculture and Food Act, specifically subsections 16 (2) and 16(4). He asked the Tribunal to decide not to proceed with the appeal on the grounds set out in Act.
Mr. Spurr said it was not enough that the appellants were aggrieved by an order, direction, policy, or regulation of the CFO. He submitted that there must also be some direct linkage between the appellants and the subject matter of the appeal.
Mr. Spurr reminded the Tribunal that it could refuse to hear an appeal if it related to something to which the appellant has had knowledge for more than one year. He also pointed out that the Tribunal could refuse to hear the appeal if it found that the appeal was trivial, frivolous, vexatious and not made in good faith, or if the appellants did not have sufficient interest in the subject-matter of the appeal.
Mr. Spurr stated that part of Mr. Boersma Jr.’s appeal related to his failure to gain quota through a lottery in 1986, and he suggested that it was too late to appeal that matter to the Tribunal. He said that both Mr. Boersma Sr. and Mr. Boersma Jr. were aggrieved by a CFO decision to convert additional crop quota issued to chicken producers into basic quota. He submitted that since the appellants were not chicken producers, they did not have sufficient interest in the matter under appeal. He suggested that if these appellants could appeal, then everyone could appeal. He submitted that there was nothing remarkable or unique about the appellants that gives them sufficient interest in the matter under appeal.
Mr. Spurr said it was important for the Tribunal to understand the policy under appeal. He explained that the CFO decision to allocate 6,500 units of basic quota to each chicken producer was a conversion of additional crop quota to basic quota. He said it represented the current production in the chicken industry and that it was not related to future growth. He said that the amount of chicken that could be produced by each chicken producer before and after the conversion did not change.
Mr. Spurr submitted that neither of the appellants were chicken farmers, that they did not have a registered premise to grow chicken and that they did not hold any basic quota. He also submitted that they were not eligible to receive 6,500 units of basic quota as new producers as they had not applied to or been accepted by the CFO as new producers before May 29, 1999, a cut-off date identified in the policy. Mr. Spurr said that since the appellants could not qualify for quota under the CFO policy, they did not have sufficient interest in the matter.
Mr. Spurr told the Tribunal that arguments made by the appellants to support their case had no merit. He said that the conversion policy did not cause any additional manure; that the appellants could participate in the industry if they chose to invest in it; and that it was inappropriate to equate freedom gained in wars with an allocation of free quota. He pointed out that Mr. Boersma Jr. was one of many individuals who did not receive quota in the 1986 lottery.
Mr. Spurr said that principles in a regulated industry were that no producer is entitled to participate in the quota system and that the only bar to entry was the degree of investment required. He said that the CFO had the authority to make changes to its quota policy, that the courts had upheld this right and that producers who speculated on what they believed future quota policy would be did so at their own risk. Mr. Spurr recognized that there was a cost to entering the chicken industry but said that the cost was the same for all potential new entrants. He suggested that Mr. Boersma Sr. should be well aware of the way in which supply management worked, as he was a former dairy producer. Mr. Spurr submitted that the nature of supply management was that the CFO was a monopoly supplier, and that this was exactly as the government intended. He acknowledged that the CFO had a built-in bias as it is a self-regulating industry, but he said that this was contemplated when the marketing system was established.
In response to questions, Mr. Spurr indicated that:
A parallel between supply managed industries and the legal profession is that both required new entrants to make a substantial investment.
Every supply-managed board has a built in bias, as producers of the regulated product are elected to manage their industry. Every decision the board members make has an impact on their own personal affairs.
The CFO was established in 1965 to regulate broiler chickens. At that time there was more basic quota issued than the industry required. As the market increased the CFO issued additional crop quota. In 1972 the CFO was given authority over roaster chickens. In 1978, 1986 and 1999 the CFO issued new basic quota to catch up on demand. When additional crop quotas get too large, the CFO converts them to basic quota.
The CFO policy states that future growth in the chicken industry will be allocated on a pro rata basis. This is largely due to direction from the Farm Products Marketing Commission. The 6,500 units issued to each producer in 1999 did not relate to future growth in the industry. He agreed that this quota represented market growth from 1986 to 1999.
The CFO did not consider Mr. Boersma Jr.’s application to receive quota in the 1986 lottery as an application to become a new producer. Had he been successful in the lottery, he would have then have needed to apply to become a producer and aquire a suitable production facility.
He agreed that there was no requirement to have a registered premise for producing chicken in 1986 when quota was distributed by lottery, but said that facilities must be in place before the quota was allocated.
Mr. Chris Vanderkooy clarified that in 1986, 18 producers were selected to receive quota by lottery and that two additional new producers received quota at that time. He said that all these producers were required to prove they had adequate facilities to grow chickens, or build or acquire a suitable facility. He recalled that these new producers had one year to obtain adequate facilities.
In response to further questions Mr. Spurr indicated:
Clause #3 in the CFO Quota Policy No. 141-1999 did not apply to unsuccessful participants in the 1986 quota lottery. The definition of new producer in the policy included a provision that a new producer be an allottee of basic quota, and Mr. Boersma Jr. did not meet this qualification. New producers who received quota under this policy had purchased basic quota from other producers. He agreed that Clause #3 did not mention transferred quota.
He did not know of any statute of limitation Mr. Boersma Sr. felt might apply.
He was aware that Mr. Boersma Sr. had knowledge of a supply-managed industry.
He did not know why Mr. Boersma did not have legal counsel.
Two court cases were heard in 1975 with regard to broiler producers who had built large production facilities in the expectation that the CFO would allocate broiler quota on the basis of available facilities, rather than historic production. The Ontario Divisional Court upheld the right of the CFO to allocate quota as it saw fit.
Mr. Boersma Jr. submitted that the CFO motion was frivolous and not made in good faith. He said he believed he had an interest in the matter under appeal. He clarified that he was contesting a new policy of the CFO and that he had not known about the policy for more than one year when he made his appeal.
Mr. Boersma Jr. told the Tribunal that the CFO was effectively giving existing chicken producers the right to all future growth in both the domestic and export chicken markets through its Quota Policy No. 141-1999. He submitted that it was inappropriate for the CFO to eliminate the entry provisions for new entrants and that the export market was out of its jurisdiction.
Mr. Boersma Jr. explained that he had been trying to enter the chicken industry for several years but had not been able to obtain financing. He said that the new policy is inhibiting him from entering this industry. He told the Tribunal that the CFO had given 6,500 units of basic quota to existing producers, free of charge, except for the cost of constructing additional facilities. He said he was prepared to construct a chicken barn.
Mr. Boersma Jr. reiterated that he was before the Tribunal in good faith. He pointed out that he has had an application into the CFO since 1986 and that the CFO had failed to acknowledge it. He said it was his view that Clause #3 of the new policy should be interpreted such that he is eligible to receive this quota allocation, on the basis of his 1986 application for quota. He pointed out that before the 1999 quota allocation, the CFO had not issued additional basic quota since 1986. Mr. Boersma Jr. said the CFO had not responded to his concern with regard to Clause #3. He pointed out that the CFO had allowed for new chicken producers in past and although his application was not accepted at the time, the new policy states that he is eligible for this quota.
Mr. Boersma Jr. told the Tribunal about a recent article by Dr. Fox, an economist. He said that Dr. Fox criticized the CFO as it had no transparency to its quota policies, and no solid ground regarding how it allocates quota. As a non-producer, Mr. Boersma Jr. said he did not know which way the CFO is heading. He said that bankers were also confused and he submitted that this was why they hesitated to finance his purchase of quota.
Mr. Boersma Jr. told the Tribunal that he had asked the Farm Products Marketing Commission for clarification on its involvement in the policy change but that he had not yet received a reply.
Mr. Boersma Jr. submitted that the CFO was not allocating chicken quota in a proper manner, as it does not allow new producers the same access to free quota that existing producers are given. He said that the supply management system was put in place to stabilize the industry, and that while it had achieved that goal, it had taken away the security for the next generation. He submitted that it now only serves to enrich current producers, and he questioned their right to all the new growth in the chicken industry.
Mr. Boersma Jr. said he would like time to organize other applicants for the 1986 quota and time to convince general farm organizations to stand behind them. He stated that by allowing only those in the chicken industry to obtain new quota, the CFO was limiting the potential for any new producers. He submitted that with quota values rising, existing chicken producers were getting greedy and trying to prevent new entrants, when new growth should be available to all people who want to produce chicken.
Mr. Boersma Jr. said that Clause #3 of CFO Quota Policy No. 141-1999 needed clarification before the Tribunal could decide on this matter. He submitted that, even with the new policy, he is eligible for new basic quota.
In response to questions, Mr. Boersma Jr, said:
He was speaking only on behalf of himself.
The total quota allotment he was asking for was 15,000 units of quota as that is the minimum amount necessary to begin chicken production under current CFO rules.
He first approached the CFO on this matter in conjunction with his father on February 8, 2000. He was not aware of Clause #3 in the policy until December 2000.
He attempted to get bank financing to enter the chicken industry in 1989 and 1993 but was not successful. He said the banks were concerned about the uncertainty in the marketing system arising from talks on the General Agreement on Tariffs and Trade (GATT). He observed that every time he reaches a goal, the CFO raise the floor.
In presenting his case, Mr. Boersma Sr. also quoted Dr. Fox, saying the economist said the board failed in the areas of communication and transparency and that the industry faces higher costs as a result. Mr. Boersma Sr. stated that the CFO had declared it has unfettered discretion to set policies and he submitted that this was not good. He said that he was before the Tribunal because he believes the supply management system is still good and that if we see errors with it, we should speak up. He submitted that absolute power corrupts.
Mr. Boersma Sr. explained that he is supportive of marketing boards, but that the new CFO policy allowed it to hand out quota to existing chicken producers, allow the recipients to sell it and allow the rich to get richer. He said that policies he would find acceptable would be ones that made quota available to all, or allowed it to be sold at market price. He told the Tribunal that only 20% of farmers can generate a profit.
Mr. Boersma Sr. expressed the view that the CFO had the nerve to say that his appeal was vexatious. He said that he was just fighting for his children and grandchildren, and their generations. He said that the growth in the chicken market was not the result of the efforts of the few Ontario chicken producers and that they should not be the sole beneficiaries. He also pointed out that his appeal was submitted within one year of the policy change.
In response to questions, Mr. Boersma Sr. stated that he appealed on behalf of himself and three of his sons. Two sons did not want him to proceed on their behalf so there was only his appeal and his son Siebren Boersma Jr.’s appeal to be heard.
Mr. Spurr stated that he did not object to the other two sons’ names not being mentioned in the appeal, provided that it was understood that these sons could not come back later and launch an appeal. Mr. Boersma Sr. indicated his agreement.
In summary, Mr. Spurr said that the CFO did not dispute that both Mr. Boersma Sr. and Mr, Boersma Jr. appeals with regard to the CFO refusal to allocate them 6,500 units of quota each were less than one year old. He said it was the CFO’s position that these appeals were frivolous and that the appellants did not have a sufficiency of interest in the matter under appeal. He argued that the portion of Mr. Boersma Jr.’s appeal that related to his request that he be granted an additional 7,500 units of basic quota, and an additional 1,000 units of basic quota related to matters of which he had knowledge for more than one year. He also submitted that the CFO Quota Policy No. 141-1999 was clear and that Mr. Boersma Jr. did not qualify to receive quota under Clause #3. He said Mr. Boersma Jr. was unsuccessful in the 1986 quota lottery, his cheque was returned and he did not receive quota, and that he was not accepted as a new producer.
Mr. Spurr stated that supply management is a closed system, that only producers within its parameters can legally produce chickens, but that new producers can enter the industry by purchasing quota. He submitted that the relief sought by the appellants would undermine the supply management system as if they were to be granted quota, everyone could be granted quota.
Mr. Boersma Jr. summarized his position with the statement that the distribution of 6,500 units of basic quota to each chicken producer was not the same as the distribution of additional crop quotas. He stated that the CFO accepted his application in 1986 and that he was eligible under Clause #3 of the new policy to receive quota. He said he was aggrieved that the policy was changed as the new policy gave quota only to existing producers, making the marketing system more of a monopoly. He argued the CFO had no right to lay claim to the export market. He submitted that the CFO decision to change the non-producer eligibility for allotment was detrimental to future farming generations. Mr. Boersma Jr. said he wanted the Tribunal to note that growth in the chicken industry took place since 1986, when he applied for quota. He said it had only recently come to light that this growth was given to existing producers over the years.
Mr. Boersma Sr. said he did not have legal counsel because he was told the CFO has deep pockets. He said that he objected to the CFO motion, as it was intended to deny him a proper hearing. Mr. Boersma Sr. submitted that an artificially high price for quota increased the price consumers paid for chicken. He said he would like to see more young farmers on the land as large producers pollute. He also said it was unfair that existing chicken producers could sell the additional quota they were allocated to cash in on the handout when other farmers were in financial difficulty. He said he felt he and his family had the right to equal participation in growth in this industry.
The Tribunal examined the documentary evidence submitted and the testimony given at the Hearing.
The Tribunal recognizes that Mr. Boersma Sr. and Mr. Boersma Jr. felt strongly that there is inequity as to who can participate in the chicken industry. It also recognizes that the CFO Policy No. 141-1999 may inhibit the potential for future generations to enter this industry. However, the Tribunal notes that once a person does enter the chicken industry, he is treated the same as other chicken producers.
The Tribunal finds that Mr. Boersma Jr. did not make an application to become a chicken producer when he entered a lottery for chicken quota in 1986. The Tribunal finds that Mr. Boersma Jr. was not eligible to receive quota under Clause #3 of the CFO Quota Policy No. 141-1999. In addition, the Tribunal found that it was not appropriate for the Tribunal to hear the portion of Mr. Boersma Jr.’s appeal that related to the 1986 chicken quota lottery, due to the passage of time.
With regard to the appeals related to the CFO decision to deny the Boersmas requests for the allocation of quota to them, at no cost, the Tribunal finds that the appellants, who are not registered chicken producers, did not have sufficient interest in this matter as contemplated in Section 16(4) of the Act. The Tribunal could find nothing to distinguish the appellants from other individuals who might wish to enter the chicken industry. The Tribunal accepted the CFO argument that to grant quota to these individuals, would effectively end the supply management marketing system in the chicken industry.
Decision and Reasons:
After careful consideration of the submissions, the Tribunal decided to grant the Chicken Farmers of Ontario motion and decline to hear the appeals of Mr. S. H. Boersma and Mr. Siebren Boersma Jr..
The reasons for this decision are:
The appellants did not have a sufficient interest in the subject matter of the appeal.
In the case of Mr. Siebren Jr., the appellant has had knowledge for more than one year that he did not receive quota in the 1986 quota lottery conducted by the CFO.
Dated in Guelph, this 25th day of February, 2001.