Minnema v. Ontario Pork Producers’ Marketing Board, 2005 ONAFRAAT 21

Agriculture, Food and Rural Affairs Appeal Tribunal

1Stone Road West Guelph, Ontario

Tribunal d’appel de l’agriculture,

de l’alimentation

et des affaires rurales

N1G 4Y2

Tel: (519) 826-3433, Fax: (519) 826-4232

Email:Tribunal@OMAF.gov.on.ca

1, chemin Stone Ouest

Guelph (Ontario) N1G 4Y2

Tél.: (519) 826-3433, Téléc.: (519) 826-4232

Email:Tribunal@OMAF.gov.on.ca

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL:

Minnema v Ontario Pork Producers’ Marketing Board

Minnema v Ontario Pork Producers’ Marketing Board

2005 ONAFRAAT 21

STATUTE:

Ministry of Agriculture, Food and Rural Affairs Act

HEARING:

June 8, 2005

DATE OF DECISION:

August 11, 2005

2005-21

NEUTRAL CITATION:

2005 ONAFRAAT 21

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 by Rein Minnema, Glencoe, Ontario from a decision of the Ontario Pork Producers’ Marketing Board to deny his request that it adjust its payment to him for two loads of hogs he shipped in the week of November 4^th^, 2003. The dispute related to the difference in the price of the hogs obtained from a Quebec processor, and the price that would have been received had the hogs been shipped to a processor in the United States.

Before: Rod Stork, Chair; Doug Flook, Member; Graeme Hedley, Member

Appearances:

Christopher Diana, counsel to the Ontario Pork Producers’ Marketing Board.

Rein Minnema, appellant.

Paul MacDonald, witness for the appellant.

Andrew Marks, witness for the respondent.

Ron Gerrie, witness for the respondent.

DECISION OF THE TRIBUNAL

The hearing in this matter commenced on Wednesday, June 8, 2005 but was adjourned to allow for the production of additional evidence and witnesses. The hearing recommenced on Friday, July 29, 2005 in Guelph, Ontario. Mr. Rein Minnema, a hog producer, appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal (the Tribunal) from a decision of the Ontario Pork Producers’ Marketing Board (OPPMB) regarding a dispute over payment on two loads of hogs.

Statutory Context

Subsection 16(2) of the Ministry of Agriculture, Food and Rural Affairs Act reads as follows:

Idem

16. (2) Subject to subsections (4) and (5), if a person is aggrieved by an order, direction, policy, decision or regulation 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. R.S.O. 1990, c. M.16, s. 16 (2).

Subsection 4 outlines conditions under which the Tribunal may refuse to hear an appeal. Subsection 5 requires that appellants first apply to the marketing board for a hearing, unless both parties waive their right to a hearing.

The Evidence

Mr. Rein Minnema told the Tribunal that:

• On Sunday, NO 02 03 he arranged with MacDonald Transport that two loads of his hogs would be shipped to the United States. He was aware that there was no longer a heavy hog grid in Quebec. The hogs were heavy as the market had been slow for four weeks.
• On Friday, NO 07 03 the hogs were ready for loading but he then learned from the transporter that the hogs were to be shipped to Quebec.
• He asked the transporter to call the OPPMB to request the hogs be redirected to the U.S.
• Had he known the hogs were destined for Quebec, he would have held them and shipped them to the U.S. the following week.

Mr. Minnema also said his expertise was in producing hogs, not marketing them, and he did not get involved in transport logistics. He agreed that had he known his hogs were to be shipped to Quebec on Tuesday, he would have told the transporter to send them to the U.S. instead. He said he did not tell Mr. MacDonald, the transporter, that there was no heavy grid in Quebec, as he assumed he would know.

Mr. Paul MacDonald testified that he and his brother owned MacDonald Transport. He told the Tribunal that the company informed the OPPMB of the number of hogs they had available to ship the following week on Thursday afternoon or Friday morning. He said the OPPMB sent a Hog Allocation Management System (HAMS) statement to the transporter outlining how many hogs were to be shipped to each processor, and on what date. He said usually Monday-Wednesday shipments were confirmed on the HAMS initially, and late-week shipments were confirmed at a later date.

Mr. MacDonald explained that hogs had been backed up for 2-3 weeks prior to the week in question. He said all the auction hogs they transported were being shipped to the U.S. at that time, but that in the past MacDonald Transport had taken hogs to Quebec and the U.S.. He said he was informed on Tuesday, NO 04 03 that two of the MacDonald Transport loads of hogs were to be shipped to Olymel in Quebec. Mr. MacDonald said he was not aware that Olymel no longer offered a heavy grid, as hogs had been sold on the heavy grid the last time he shipped them to that plant – the week of OC 12 03 – OC 18 03.

Mr. MacDonald said he spoke to Mr. Minnema while the hogs were being loaded on NO 07 03, and told him his hogs were being shipped to Quebec, but Mr. Minnema told him that they should be shipped to the U.S.. Mr. MacDonald said he only learned that there was no longer a heavy grid in Quebec when his brother called Ontario Pork that morning and was told there was no heavy grid. Mr. MacDonald submitted that had he known earlier, he could have made arrangements to send the hogs to the U.S.. He said that the OPPMB would not re-route the hogs that morning.

Mr. MacDonald explained that, while he was present during the loading of the Minnema hogs, they were put on another transporter’s truck. If he had known more about the circumstance he could have taken them to his yard and re-sorted them. He said that once the hogs were taken out of Mr. Minnema’s barn they could not be returned due to disease concerns.

Mr. MacDonald also indicated:

• He did not recollect telephone conversations he had in November 03, but to the best of his knowledge transcripts of the conversations were correct.
• Mr. Minnema’s hogs were selected to go to Olymel due to ease of loading and because he understood there was still a heavy grid in Quebec. Mr. Minnema had been a very flexible producer.
• According to the transcripts, on the morning of NO 07 03 his brother told an employee of the OPPMB Mr. Minnema’s hogs were heavy and would probably average around 250 pounds.
• He knew it was likely that Mr. Minnema’s hogs would be heavy as the market had been backed up, but he did not see the hogs until the morning of NO 07 03.
• The OPPMB did not direct him to bring a specific producer’s hogs to a specific plant. The OPPMB did direct him as to how many loads to take to each processor.
• He was not informed by the OPPMB that the heavy grid was no longer available at Olymel. Normally he would not receive written notification of changes in grid availability. The information would come up in conversation.

Mr. Andy Marks told the Tribunal he had been with the OPPMB for 18 years and had been Director of Sales and Logistics for the past three years. He said one of his responsibilities was booking and scheduling transport of 5,000 hogs per week. He said the OPPMB was the single seller of the market hogs of 3,600 Ontario producers. He briefly described three marketing options available to producers and said Mr. Minnema used the Pool Plus option.

Mr. Marks explained that under Pool Plus agreements, producers agreed to provide a specific volume of hogs to the OPPMB and that the OPPMB negotiated contracts with processors to purchase these hogs, and sold additional hogs at the best prices it could achieve. He said transporters usually told the OPPMB each Thursday or Friday how many hogs they had to deliver under the Pool Plus option, and the OPPMB assigned loads through the HAMS system as described by Mr. MacDonald. Mr. Marks said it was the transporter who dealt directly with the producers, except for a few producers who transported their own hogs.

Mr. Marks referenced a HAMS document for the week of NO 03 03 – NO 07 03 and noted that MacDonald Transport shipped three loads of hogs to Swift in Kentucky and two loads to Olymel in Quebec on Friday, NO 07 03. He submitted that the transporter could have shipped Mr. Minnema’s hogs to the U.S..

Looking at the loads of Minnema hogs, Mr. Marks said there was a wide size variation between the hogs. He said if they had been shipped to the U.S. he would have been paid using a four quarter rolling average of his index and 80% of the live weight. He said the Pool Plus would have taken a loss had the Minnema hogs been shipped to the U.S.. Mr. Marks explained there was standard grading in Canada but it did not directly correlate to U.S. grading so the OPPMB had to develop a payment method for hogs shipped to the U.S..

Mr. Marks also told the Tribunal:

• Transporters would have been informed verbally in early August that a block contract the OPPMB had with Olymel would be expiring in October.
• He said the Olymel sale in November was a new sale.
• He agreed the OPPMB did not tell Mr. MacDonald that the heavy grid was no longer available at Olymel when it spoke to him on NO 04 03. His brother was told this on NO 07 03.
• He agreed with testimony that a large number of loads had been sold to the U.S. that fall. In the week of NO 03 03 – NO 07 03, MacDonald Transport took eight loads of open auction hogs to the U.S. and two loads to Quebec.
• The OPPMB has made changes in destinations of hogs right up to the day of shipment – usually because there was either a processor breakdown or a poor match between hogs and grid.
• The OPPMB had a commitment to the Olymel plant and there were no loads that could be switched with the Minnema hogs.
• The OPPMB would have known that there would be a penalty for shipping heavy hogs to Quebec on the Ontario grid, but it would not have been severe if the hogs had all been close to 250 pounds.
• Producers using the Pool Plus option shipped on the Ontario heavy grid, the Ontario grid or the Olymel heavy grid, before it was discontinued. The buyer makes the decision as to which grid to use.

Mr. Ron Gerrie said he had been with the OPPMB for 31 years in total and was the Logistics Coordinator. He explained that he scheduled loads of hogs to be delivered to processors. He said he did not recollect telephone conversations he had in November 2003, but that if someone told him hogs averaged about 250 pounds, he would think they ranged from 240 pounds to 260 pounds and most would be fine for the Ontario grid.

Summations

Mr. Minnema said the Tribunal had heard the evidence and he asked it to rule in his favour and order the OPPMB to fully compensate him for his losses on the two shipments of hogs, and correct his index.

Mr. Diana submitted the onus was on Mr. Minnema to demonstrate that the OPPMB acted improperly and that he had not done so. He pointed out that MacDonald Transport could have shipped Mr. Minnema’s hogs to the U.S. and said the OPPMB had no control over the decision to send the Minnema hogs to Quebec. He said the transporter could have told Mr. Minnema as early as Tuesday, N0 04 03 that the hogs were to go to Quebec and Mr. Minnema could have asked him to make different arrangements. Mr. Diana said the OPPMB had no way of knowing where Mr. Minnema wanted his hogs to be shipped. He said the OPPMB did not deviate from its policies and he asked that the appeal be dismissed.

The Findings

The issues that the Tribunal needs to determine are:

1. Is the OPPMB responsible for the Minnema hogs going to Olymel in Quebec instead of a processor in the U.S.?
2. Does the OPPMB have any responsibility in that the transporter was not informed that the heavy grid was no longer available in Quebec?
3. If the OPPMB is responsible in any way, what is the appropriate remedy?

The evidence in this matter is that the OPPMB made a commitment to Olymel for a volume of hogs and assigned MacDonald Transport the responsibility for shipping two loads of hogs to Olymel in Quebec. Mr. Minnema knew there was no heavy grid available in Quebec when he informed MacDonald Transport on NO 02 03 that he had two loads of hogs that he wanted to go the U.S.. However, he did not inform MacDonald Transport at that time that there was no heavy grid available at Olymel in Quebec. The final decision to ship Mr. Minnema’s hogs to Olymel in Quebec was between MacDonald Transport and Mr. Minnema. This is understandable since Mr. Minnema intended his hogs to go to the U.S.. It was not until the hogs were being loaded that Mr. Minnema found out the hogs were destined for Olymel in Quebec. The OPPMB did not specifically direct that the Minnema hogs be shipped to Quebec. That final decision was between MacDonald Transport and Mr. Minnema. On the first issue, the Tribunal finds the OPPMB was not responsible for the two specific loads of Minnema hogs being shipped to Quebec on NO 07 03.

The Tribunal does find that the OPPMB has some responsibility in this matter as it did not make MacDonald Transport aware that there was no longer a heavy grid in Quebec at a reasonable time. On Tuesday, NO 04 03, the OPPMB had an opportunity to relay this information to the transporter when it told him two loads were to be shipped to Quebec. Given the fact that hogs had been backed up and held over for the previous two to three weeks, it was reasonable to expect that there would be heavy hogs to be shipped during the week of NO 03 03. It was incumbent on the OPPMB, therefore, to communicate to transporters the fact that there was no heavy grid available for hogs being delivered to Quebec.

The Tribunal finds that all involved – the producer, the transporter and the OPPMB – are somewhat responsible in this matter. The appellant lost money on two specific loads of hogs that were shipped to Quebec, relative to what he would have received had they been shipped to the U.S.. The Tribunal finds that the appellant must bear the loss on those two loads as it finds the OPPMB is not responsible for determining exactly which hogs go to which processor. The Tribunal finds the OPPMB is not responsible for that loss.

Nonetheless, the OPPMB does have some responsibility to communicate to the people with which they deal - the transporters - any factors that affect the settlement to producers. Since the grid they sell on is an important issue, and because the recent market conditions had resulted in most hogs being shipped to the U.S., it was important that the transporters be informed of changes in the Quebec market when shipments to Quebec recommenced.

The Tribunal finds that the portion of future losses incurred by Mr. Minnema as a result of his rolling average index being affected by the two loads shipped to Quebec should be compensated by the OPPMB. The Tribunal will order that Mr. Minnema’s rolling average index be amended for one year out from the week of the two shipments and that the OPPMB adjust his payments for hogs shipped in that year accordingly.

Decision and Reasons

After careful consideration of the evidence filed and the submissions made the Tribunal orders the appeal is granted in part:

1. The OPPMB is to compensate Mr. Minnema for the difference in payments it made for his hogs, and the payments that it would have made had his rolling index not been affected by the two loads shipped to Olymel on NO 07 03, on hogs shipped by Mr. Minnema in the 12 month period commencing the shipping week of NO 10 03 – NO 14 04.

The reason for this decision is that the Tribunal finds that the OPPMB should have informed the transporter, MacDonald Transport, of the change in the grid availability at Olymel when it ordered shipments to be delivered to Olymel which did not allow for the use of a heavy grid.