BVA Farms Ltd., Del Van Farms Inc., and CJVA Farms Ltd. of Watford, Ontario v Egg Farmers of Ontario, 2020 ONAFRAAT 5

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 Courriel: AFRAAT@ontario.ca

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL:

BVA Farms Ltd., Del Van Farms Inc., and CJVA Farms Ltd. of Watford, Ontario v Egg Farmers of Ontario (RE)

BVA Farms Ltd., Del Van Farms Inc., and CJVA Farms Ltd. of Watford, Ontario v Egg Farmers of Ontario

STATUTE:

Ministry of Agriculture, Food and Rural Affairs Act

HEARING:

December 2 and 3, 2019

DATE OF DECISION:

April 23, 2020

008BVA-Del Van-CJVA19

NEUTRAL CITATION:

2020 ONAFRAAT 05

IN THE MATTER OF THE MINISTRY OF AGRICULTURE, FOOD AND RURAL AFFAIRS ACT, R.S.O. 1990, CHAPTER M-16, AS AMENDED.

AND IN THE MATTER OF: An appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by BVA Farms Ltd., Del Van Farms Inc., and CJVA Farms Ltd. of Watford, Ontario from the decisions of the Egg Farmers of Ontario.

Before:

Harold McNeely, Vice-Chair; Christine Greydanus, Vice-Chair; Fred Stulp, Member

Appearances:

Paula Lombardi, counsel for the appellant

John Van Aert, appellant, BVA Farms and on behalf of Del Van Farms and CJVA Farms

Gregory Brown, witness for the appellant

Scott Houghton, witness for the appellant

Geoffrey Spurr, counsel for respondent Egg Farmers of Ontario

Scott Graham, witness for respondent

Andrew DeWeerd, witness for respondent

DECISION OF THE TRIBUNAL

1. This appeal was heard in Guelph, Ontario, on December 2 and 3, 2019. BVA Farms Ltd. (“BVA”), Del Van Farms Ltd. (“Del Van”) and CJVA Farms Ltd. (“CJVA”) (collectively the “Appellant”) appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal (the “Tribunal”) from decisions of the Egg Farmers of Ontario (the “EFO”) regarding policies and procedures for the leasing of pullet quota.

OVERVIEW

2. BVA and CJVA are Ontario pullet producers. Del Van is an Ontario egg producer. Del Van is owned solely by John Van Aert. CJVA is owned solely by Christine Van Aert, the wife of John Van Aert. BVA, a new pullet producer, is owned solely by Bryce Van Aert, the son of Christine and John Van Aert.

3. Under provincial legislation, the Egg Farmers of Ontario (“EFO”) administers the supply of pullets for egg producers through a quota system.

4. EFO had instituted a system of leasing pullet quota that in conjunction with owned quota, provided pullet growers with greater flexibility in meeting the needs of their customers. EFO uses lease fees to assist in achieving the intended goals of the Pullet Leasing Pool (“PLP”) Policy.

5. Leases were administered by the EFO board with EFO staff vetting leases, approving leases that were within defined parameters and denying leases outside of the parameters.

6. In 2017, BVA started purchasing quota and commenced the construction of an aviary pullet. BVA’s first pullet flock would supply Del Van with 50,000 aviary birds in February 2018. BVA did not own sufficient quota for its first flock and applied to lease 45,998 units of quota.

7. In January of 2018, EFO received three lease applications that were for large quantities of quota. All were denied. The Appellant BVA’s application was one of these lease applications. In February 2018, BVA’s lease application was reconsidered and approved by the EFO board.

8. Consequent to the January lease denials, on March 7, 2018, EFO placed a moratorium on all new leases. All leases received prior to March 7, 2018 were under the provisions of the December 2017 PLP Policy with a lease fee of $0.55/pullet. In May 2018, EFO introduced an interim PLP Policy which continued the moratorium and increased the fees charged for leases to $1.40 per bird for all housing types except aviary, which were increased to $2.40 per bird.

9. BVA challenged the May 2018 interim PLP Policy. BVA wanted the policy to revert to the previous fee structure of $0.55. EFO rejected BVA’s challenge on first instance.

10. EFO issued a revised PLP Policy effective January 1, 2019 after a consultation process with Ontario egg and pullet producers.

11. BVA, Del Van and CJVA challenged the policy dated January 1, 2019. EFO rejected this challenge on first instance. BVA, Del Van and CJVA have brought the two challenges to the Tribunal under the Farm Products Marketing Act (“FPMA”) and are challenging aspects of EFO’s Pullet Leasing Pool Policy as amended in May 2018 and January 1, 2019.

12. The Appellants assert, among other things, that the Pullet Leasing Pool Policy was adopted on bad faith and for an improper purpose and imposes a penalty on new farmers attempting to enter into the market.

13. EFO argues that they are advancing the May 2018 and January 1, 2019 policy through their policymaking mandate and that among other things:

• The policy was arrived at through industry consultation;
• The policy reflects the view of pullet producers;
• The Board has the mandate to make these policy decisions;
• No one has shown any adverse impacts of these policies other than the Appellant;
• No one has shown that these policies;

i. impair the industry

ii. impair matching of pullet supply with layer demand

iii. impair, retard or constitute a barrier to dovetailing pullet production with layer allocation

14. For reasons explained hereafter, the Tribunal denies the Appellants the relief requested and dismisses the appeals.

ISSUES

1. Was the Pullet Leasing Pool Policy (“PLP Policy”) of May 2018 and of January 1, 2019 adopted by the EFO in bad faith and for an improper purpose and do they impose a penalty on new farmers attempting to enter into the market?

2. Should EFO pay the appellant compensation for the costs incurred as a result of the implementation of increases in fees set out in the 2019 Policy for those leases granted to pullet producers under the 2019 policy?

EVIDENCE / BACKGROUND

15. The Appellant John Van Aert and witnesses Greg Brown, Sales and Service Manager of Archer’s Poultry Farm Ltd. and Scott Houghton, Director, Producer & Industry Relations Ontario of Burnbrae Farms Limited, testified as did Scott Graham, Chair of EFO Board of Directors and egg producer and Andy DeWeerd, Pullet Director EFO, Chair of Pullet Growers of Canada and pullet producer.

Pullet Supply Management

16. Under provincial legislation, the Egg Farmers of Ontario (“EFO”) regulates the production and marketing of eggs and is responsible for Ontario’s egg supply management system. Ontario is a participant in the national marketing scheme for eggs administered by the Egg Farmers of Canada (“EFC”). EFC determines the domestic egg supply and divides it amongst the participating provinces. The EFO allocates Ontario’s share of the domestic egg supply to producers through a system of quota. In conjunction with administering the egg quota system, EFO manages the supply of chicks-for-placement or pullets through a system of quota.

17. In approximately 2008, EFO instituted a system of pullet quota leasing to more closely align pullet supply with pullet demand, to increase pullet quota holder barn utilization, to provide flexibility of pullet placement and to compensate pullet quota holders when they were left with barn space they were unable to fill. Barns would not be filled due to timing of a flock placement, uneven matching of barn systems (i.e. Aviary to Aviary) or displacement due to leasing (“a pullet moves a pullet”). Pullet leasing is administered in conformation to EFO’s Pullet Leasing Pool Policy. From time to time EFO amends the PLP policy in an effort to arrive at the intended outcomes of the policy.

18. There are various housing systems for the growing of pullets. Conventional housing systems grow pullets in cages, and the aviary free run system grows pullets on the floor with a series of perches so birds can move freely up and down. It is imperative that an aviary layer is grown in an aviary pullet barn. However, a conventional layer barn can source its pullets from conventional pullet barns and from aviary barns. As the consumer demand for free run eggs has increased, the egg and pullet farmers need to change to meet the demand. This change involves either retooling conventional egg layer and pullet barns or building new aviary system barns.

19. EFO has made a commitment to move production away from conventional systems over the next 15 – 20 years. EFO had seen an increase in specialty pullet production being built, in some cases without adequate pullet quota, resulting in large amounts of pullet leases being requested. EFO had identified that there was a need for a mechanism to co-ordinate and connect changes in the number of birds in various layer housing types with matching changes in the housing of pullets.

20. EFO operates under provincial legislation authority to administer the Ontario supply management system for eggs. EFO was established and authorized under the Farm Products Marketing Act, Regulations 407 and 409 as the provincial regulators in respect to egg production and marketing.

“chicks-for-placement” or “Pullets” means female chickens 19 weeks of age or less or any class of them.

Regulation 409 defines the scope of the marketing system or “plan” at section 3.

“This plan provides for the control and regulation in any or all respects of the producing and marketing within Ontario of chicks-for-placement, eggs, hatching eggs and fowl, including the prohibition of such producing and marketing in whole or in part.”

Regulation 407 defines the power and authority of EFO.

7.(5) The Commission authorizes the local board,

i. to require that chicks-for-placement be marketed on a quota basis;

ii. to prohibit any person to whom a quota has not been fixed and allotted for the marketing of chicks-for-placement or whose quota has been cancelled from marketing any chicks-for-placement;

iii. to prohibit any person to whom a quota has been fixed and allotted for the marketing of chicks-for-placement from marketing any chicks-for-placement in excess of such quota; and

iv. to prohibit any person to whom a quota has been fixed and allotted for the marketing of chicks-for-placement produced on lands or premises in respect of which such quota was fixed and allotted from marketing any chicks-for-placement other than chicks-for-placement produced on such lands or premises.

(6) The Commission authorizes the local board,

i. to fix and allot to persons quotas for the marketing of chicks-for-placement on such basis as the local board considers proper;

ii. to refuse to fix and allot to any person a quota for the marketing of chicks-for-placement for any reason that the local board considers proper;

iii. to cancel or reduce, or refuse to increase, a quota fixed and allotted to any person for the marketing of chicks-for-placement for any reason that the local board considers proper; and

iv. to permit any person to whom a quota has been fixed and allotted for the marketing of chicks-for-placement to market any chicks-for-placement in excess of such quota on such terms and conditions as the local board considers proper.

8. (1) The Commission authorizes the local board to use any class of licence fees, service charges, and other money payable to it, for the purpose of paying the expenses of the local board, carrying out and enforcing the Act and the regulations and carrying out the purposes of the plan.

Pullet Leasing Pool Policy

21. The PLP Policy was first put in place about 12 to 13 years ago replacing a two-year averaging system that caused a shifting of pullet quota usage such that there would be empty pullet barns. Leasing was a system adopted to help correct the problem and was and is intended as a stop gap tool for pullet producers. Fees are charged for the leased quota, and rebates are due to growers who have barn space they are unable to fill. In 2018, there were approximately 212,889 unused spaces, and 379,435 units of leased quota.

22. The EFO PLP Policy was developed with the intent that as pullet producers transitioned away from conventional housing systems, they would use their own quota first. The concern was that as more pullet producers moved to speciality housing, there would be an underutilization of conventional pullet housing. Further, as the system is a closed system, as layer housing systems changed, any needed shift to specialty pullet production needed to be matched by an equal shift of an existing volume out of conventional pullet production or “a pullet moves a pullet”. EFO is responsible to ensure maximum utilization of existing pullet production facilities before granting leases.

23. In January 2018, the effective Pullet Leasing Pool Policy dated December 2017, had a goal to increase the utilization of Ontario issued pullet quota and Ontario pullet facilities, and charged a lease fee of $0.55/pullet.

24. On EFO evidence, the reasons for the unused spaces were the timing of when a layer producer required his pullets and the availability of space in a pullet barn that could match the layer barn production system. There was more utilization of leases in the second half of the year as pullet producers would use their own quota in the first half of the year and then “top up” with leased quota in the second half of the year.

25. EFO argued that if lease fees were too low it would be less expensive for producers to lease quota than to purchase quota. The effect would be that new barns would be built, small amounts of quota would be purchased and the barns filled with leased quota resulting in an existing pullet quota holder’s barn being empty. EFO maintains the lease was never supposed to be something that was more attractive than purchasing quota.

26. Factors taken into consideration in arriving at a fair leasing fee were the current cost of quota, the growing fee paid to pullet producers and the cost of producing a pullet. On EFO evidence, the $0.55 per bird leasing fee that was charged in the December 2017 PLP policy was set low and the effect of the low fee was being monitored. Further, EFO had advised producers at the November 2017 workshop that EFO was contemplating increasing leasing fees and moving to a staggered fee structure and that EFO was monitoring the need for quota leasing and the management of the pullet leasing system as a whole. EFO cautioned producers not to build new barns and then fill them with leased quota.

27. The system of leasing pullet quota, in conjunction with owned quota, provided pullet growers with greater flexibility in meeting the needs of their customer with respect to timing of flock placement, size of flock and housing system. Leases were administered by the EFO board with EFO staff vetting leases, approving leases that were within defined parameters and denying leases outside of the parameters. All lease went to the EFO board for formal approval or denial.

28. The evidence of EFO was that it was normal for EFO staff to request a pullet producer, whose lease had been denied, to use their own quota first. EFO expected producers such as the Van Aerts to shift pullet quota around within a farm business or within family owned farm businesses and utilize owned quota prior to being approved for a lease. Provisions existed to accommodate farms owned by close family members.

29. In January of 2018, EFO received three lease applications that were for large quantities of quota (over 10,000 units), making them unusual. The Appellant BVA’s application was one of these lease applications. All were denied. BVA’s lease application, denied at first instance, was later approved by the EFO board. Upon initial denial, BVA was offered the opportunity to use family quota first instead of leasing quota.

30. Subsequent to the January lease denials, on March 7, 2018, EFO placed a moratorium on all new leases. Leases received prior to March 7, 2018 were under the provisions of the previous PLP Policy.

31. In a March 23, 2018 Memorandum sent to Egg and Pullet Farmers, EFO advised the farmers of the leasing moratorium, provided background for the decision and posed a series of questions with a request for farmer feedback. EFO received 33 responses to these questions.

32. EFO held a special board meeting on April 20, 2018 to review pullet leasing and the problems they perceived. At that meeting EFO reviewed the responses from the March Memorandum questions, determined they would need to approve some leases during the moratorium, that lease applications received after March 7 would be considered on a case-by-case basis by the full EFO board and instructed the Pullet Committee to conduct a complete review of the PLP policy and to bring back a Draft 2019 Pullet Leasing Policy for Board approval.

33. An amended PLP Policy was approved by the EFO board for May 2018. Provisions included a two-tier fee structure and the continuance of the moratorium on new leases. The fees were set at $1.40/pullet, except aviary pullets which were charged $2.40/ pullet. The rationale for the fee was that $1.40 was 2/3 of the $2.12 grower fee paid to pullet growers and the aviary fee was at a $1.00 premium, as aviary pullet producers were paid a $1.00 premium on their growing fee. The goal was to disincentivize using leases to fill up barns.

34. The EFO board undertook a consultation process as they conducted a full review of the PLP Policy and developed a revised 2019 PLP Policy. A draft policy developed by EFO’s Pullet Committee was submitted to producers for commentary in September of 2018 at consultation meetings in Cambridge on September 25 and in Brockville on September 27. The PLP Policy was further examined at the Egg & Pullet Farmers’ Workshop November 28 & 29, 2018. A new amended PLP Policy was released January 1, 2019. EFO’s evidence demonstrated there was an evolution of the 2019 PLP Policy from the May 2018 PLP Policy through to the January 1, 2019 policy and that it incorporated producer input.

35. BVA, CJVA and Del Van Farms took part in the consultation process that EFO conducted by responding to the original survey questions and attending the September consultation meeting in Cambridge.

36. EFO released the 2019 final PLP Policy on December 17, 2018 with an effective date of January 1, 2019. The 2019 PLP Policy removed the fee distinction between the aviary pullet housing system and other pullet housing systems.

37. The 2019 PLP Policy provides a graduated fee schedule with fees increasing as the number of units of leased quota increases. For years 1, 2, and 3 lease rates started at $1.10 for the first 7,500 units and increased by $0.25 with every 10,000 units to a cap of a $2.25 (the growing fee) for that year; and for year 4 and five starting at $1.10 for the first 5,000 units and increased by $0.25 with every 10,000 units to a cap of a growing fee for that year. The 2019 PLP Policy also states that approved leases should not be considered a guarantee of approval for subsequent lease requests. Further leases in excess of 5,000 units require farmers to demonstrate participation on the Quota Transfer System (“QTS”) for the amounts requested.

Van Aert Family Farming Operations – BVA Farms Ltd., Del Van Farms Inc., CJVA Farms Ltd.

38. Del Van Farms produces commercial eggs and has approximately 250,000 units of layer production quota. Del Van has two 20,000 quota unit organic egg barns, a 50,000-unit aviary barn and the remaining 160,000 units in conventional egg barns.

39. CJVA holds pullet quota and operates three barns: two conventional-type pullet barns and one aviary barn. CJVA Farms grows commercial and organic pullets for a variety of customers. John Van Aert is familiar with all aspects of CJVA.

40. In March of 2015, John Van Aert on behalf of CJVA requested from EFO a commitment to be granted pullet quota leases until such time as CJVA was successful with its pullet quota purchase. EFO denied the request and advised that the pullet grower utilize their own quota prior to a lease being considered. In March of 2015 a new aviary pullet house was being planned for CJVA Farms. CJVA built the new barn and large amounts of quota were leased over the five years it took for CJVA to purchase its pullet quota for this barn.

41. BVA was originally owned and controlled by John Van Aert. BVA started bidding on the QTS for pullet quota in May of 2017. John Van Aert transferred sole ownership of BVA to Bryce Van Aert immediately upon Bryce Van Aert turning 18 on July 23, 2017.

42. John Van Aert testified on behalf of all three corporations.

43. Burnbrae Farms (“Burnbrae”), a supplier of eggs and egg products, needed to source more aviary produced eggs from Ontario egg producers in order to meet their customers’ demands.

44. In September of 2016 Burnbrae approached John Van Aert to supply free range eggs that would be produced in an aviary system layer barn. John Van Aert decided to develop a new 50,000 bird aviary layer barn for 2018 and ship the eggs to Burnbrae. John Van Aert needed to build a new layer barn and to find a pullet producer to grow the pullets in the aviary system.

45. On January 27, 2017 Bryce Van Aert sent a letter to EFO detailing his goals to build an aviary pullet barn. Further, he requested permission to bid on quota and delay assigning quota to a specific property until January 2018. EFO denied this request.

46. BVA purchased its first quota in June 2017 and was registered as an Ontario pullet grower. BVA commenced the construction of an aviary pullet barn. The barn was completed for a February 2018 chick placement. The pullets would supply Del Van with 50,000 aviary birds. In order for BVA to have sufficient quota for its first flock, BVA needed to lease 45,998 units of quota. On December 19, 2017, Greg Brown of Archer’s Poultry submitted to EFO a pullet quota lease application on behalf of BVA Farms.

47. The lease request was denied by EFO on January 12, 2018. EFO staff advised BVA, along with CJVA and Del Van that they should use their own quota first prior to leasing pullet quota. As BVA, CJVA and Del Van are owned by close family members, EFO policy permitted movement of quota between parties. It was not a novel recommendation from EFO to shift quota around prior to being granted a lease. John Van Aert was of the opinion that EFO knew that CJVA was using all of its pullet quota for its own operation. Del Van, CJVA and BVA immediately sent an email to EFO appealing the denial of the lease.

48. John Van Aert testified he was surprised EFO denied BVA’s lease application, as he did not recall EFO ever denying a lease when there was a clear need and identified inability of the market to fill the quota being requested. The denial of the lease would negatively impact Del Van as there were no other farms at that time that could meet his demand for aviary raised pullets.

49. BVA sought a reconsideration of the EFO denial of the lease request again on February 9, 2018. EFO reconsidered and approved BVA’s request on February 12, 2018 for the 45,998 units of pullet quota.

50. Evidence from both EFO and the Appellants was that BVA has been granted all of its quota leases, as requested since the first one.

51. John Van Aert testified that on March 9, 2018 he had a telephone conversation with Scott Graham, Chair of EFO, where Mr. Graham advised him that pullet leasing was not intended as a means for producers building new barns, holding small amounts of pullet quota, to fill them with leased quota.

52. BVA contested the May 2018 PLP Policy changes, specifically the increase in the pullet leasing fees and the two-tier fee structure. A hearing resulted on June 7, 2018. EFO decided to maintain the interim rates.

53. John Van Aert was of the opinion that the discrepancy between housing systems of $1.00 per bird penalty for aviary housing system was without rationale, justification or reasons and that this fee detrimentally impacted the industry as there was a real demand in the market for aviary pullets and layers.

54. On August 1, 2018 BVA requested reconsideration of the EFO decision of June 7, 2018. EFO in a written decision dated August 10, 2018, denied the appeal. EFO advised that the board was examining the entirety of the policy and that additional decisions would be made in 2019. Further, EFO outlined an option that was open to BVA for acquiring pullet quota through a within-family basis. Despite BVA, CJVA and Del Van being separate corporations, they are all owned by close family members. EFO asserted it would therefore be possible for them to move pullet quota around amongst their corporations.

55. On November 15, 2018 BVA launched an appeal of the decision of EFO dated August 3, 2018 to this Tribunal on the basis that the May 2018 PLP Policy penalizes growers considered niche, such as organic and aviary systems, where there is a known increase in market demand.

56. In January 2019, the Appellants narrowed their appeal of the May 2018 PLP Policy to only requesting a reduction in the lease fee to $0.55. EFO had rebated $1.00 to all who paid the surcharge on their leased quota in 2018.

57. John Van Aert provided evidence that the pullet lease rates under the January 1, 2019 PLP Policy are significantly higher that the lease rates between 2013 – 2017, ranging from $0.50 to $0.55/pullet. John Van Aert argued that EFO failed to provide any rationale or justification for imposing such a significant increase and that the 2019 PLP Policy restricts pullet producers and does not allow them to respond to market demands such as the increase in demand for organic and aviary pullets.

58. On June 24, 2019 BVA, Del Van Farms Inc. and CJVA launched an appeal of EFO’s decision dated April 29, 2019.

ANALYSIS AND FINDINGS

59. BVA made a lease application for 45,998 units December 2017 while holding a small amount of pullet quota. The lease fee at the time of the application is $0.55/unit. BVA required leased quota because it did not own enough quota to fill its new aviary pullet barn.

60. BVA agreed to grow 50,000 aviary pullets for Del Van Farms commencing February 2018 knowing it would not have sufficient quota and could not possibly acquire sufficient quota by the time the chicks are placed in the barn.

61. BVA’s December 2017 lease application was initially denied by EFO but was later approved, as was every subsequent lease application made by BVA.

62. The appellant argues the EFO were not transparent in their process of arriving at the May 2018 and January 1, 2019 Pullet Pool Leasing Policies. The appellant cites EFO’s refusal to provide detailed minutes of the board’s discussion of the policies’ development to support this argument.

63. The Tribunal accepts EFO’s evidence that detailed minutes of board meetings, including directors’ discussions, were not available.

64. The Tribunal finds that in amending the PLP Policy in May 2018 and January 1, 2019, EFO consulted with pullet and egg producers through questionnaires, special meetings, the regular AGM, the fall workshop and the provision of materials through direct mailings, emails, handouts and website access.

65. The Tribunal finds that EFO was transparent in their process.

66. The Tribunal finds that the EFO was responsive and interactive as it managed the pullet quota leasing system throughout 2018 and implemented the May 2018 PLP Policy. The Tribunal accepts the evidence of EFO that they communicated to the egg and pullet farmers at both the 2016 and 2017 November workshop meetings the purpose of and the challenges to the PLP Policy.

67. The Appellants argued that in implementing the May 2018 and January 1, 2019 PLP Policies EFO acted for improper purposes.

68. EFO requires pullets to be marketed on a quota basis. EFO utilizes policies such as the PLP Policies to further manage the quota system efficiently and cost effectively. EFO charges fees (pullet lease fees) that are set from time to time in order to fulfill their mandate.

69. EFO stated the goal of the PLP Policy was “to increase the utilization of Ontario issued pullet quota and Ontario pullet facilities.” (Pullet Leasing Pool Policy December 2017 and May 2018).

70. EFO expanded the goal in the January 1, 2019 PLP Policy under the heading Purpose and Intended Objectives where it states among other things,

• “To ensure pullet quota is the first and primary mechanism to support provincial quota allocation and recognize pullet leasing as a secondary tool that will be used on an as-needed basis.
• To prioritize the interests of Pullet Growers’ utilization of quota and ensure that pullet leasing does not interfere with their market opportunities.
• To establish lease rates that support the policy objectives of providing EFO and Pullet Growers the desired short-term flexibility to respond to market changes and optimize Ontario allocation.”

71. EFO set pullet leasing fees at a rate that would serve to fulfill the intended goals of the PLP Policy. The Tribunal finds that the changes EFO made to the May 2018 and January 1, 2019 PLP Policies PLP Polices were made within the purposes of the EFO’s mandate and authority.

72. The Appellants argued that in implementing the May 2018 and January 1, 2019 PLP Policies, EFO imposed a penalty on new farmers attempting to enter the market.

73. The Tribunal finds that EFO is authorized by Reg. 407 “to use... fees ...for the purpose of enforcing ...and carrying out the purposes of the plan”. The Tribunal finds that EFO used the pullet lease fees as a means to assist in carrying out “the Plan” through the PLP Policy and as a deterrent to those who were acting contrary to the express goals of the PLP Policy while not being punitive to producers working within the intended purpose of the PLP Policy.

74. The Tribunal finds that the Appellants have used the PLP Policy as a tool to start and to expand a pullet operation and that it comes with the risk of the PLP Policy being changed by EFO and of a lease not being guaranteed. The Tribunal finds that the Appellants demonstrated that this was a risk they were aware of. Further, the Tribunal finds that the Appellant BVA used the PLP Policy contrary to the express goal of the policy.

75. The Tribunal accepts the evidence of the EFO that they had cautioned producers at industry meetings about the risk of building new barns, purchasing a small amount of quota and leasing the balance of quota required to fill the barns.

76. Accordingly, the Tribunal finds that the EFO acted within its mandate in making the May 2018 and January 1, 2019 PLP Policies changes and increasing its leasing fees, pursuant to the Farm Products Marketing Act and dismisses the appeals of BVA Farms Ltd., Del Van Farms Ltd. and CJVA Farms Ltd.

ORDER

1. The appeals filed by BVA Farms Ltd., Del Van Farms Ltd., and CJVA Farms Ltd. are hereby dismissed.

2. There shall be no costs to the parties.

Dated at Petrolia, Ontario this 23^rd day of April, 2020.