N.B. won’t restructure chicken system for Maple Lodge

The New Brunswick government isn’t biting at a regulatory proposal by poultry packer Maple Lodge Farms to ensure a supply of chickens for its New Brunswick operations.

The Tory government’s decision forms the latest twist in a debate over whether Groupe Westco, New Brunswick’s biggest poultry producer, is obliged to supply packers within the province.

Maple Lodge, the Ontario processing firm that owns New Brunswick’s Nadeau Poultry, on Thursday ripped the province for what the company called an “abdication of its legislative responsibility” that will cost over 100 processing jobs.

But New Brunswick’s agriculture minister Mike Olscamp retorted Thursday that the province won’t intervene in a chicken supply issue which from the beginning has been “between two companies that, for the past several years, have been at odds.”

The issue dates back to 2008 when Westco announced plans for “Sunnymel,” a $30 million chicken slaughter, cutting and deboning plant it would build at Clair, N.B. in a joint venture with Quebec meat packer Olymel.

Westco in 2009 began shipping its chickens to Olymel plants in Quebec pending construction of Sunnymel, at which point Nadeau announced layoffs at its St-Francois-de-Madawaska, N.B. plant.

The previous Liberal government in New Brunswick responded in January 2010 with a ministerial order designating Nadeau as the only federally-inspected plant for processing of chickens raised within the province.

But both the order and the Liberals have since been defeated.

“All attempts by the provincial government have been legally challenged and struck down by the courts,” Olscamp said in a statement Thursday. “We must respect those legal decisions.”

The courts, he said, “have ruled that the interlocking federal-provincial legislation governing the marketing of live chicken is predicated on the free movement of this farm product both in within and outside Canada, so long as the quota limitation on each producer is faithfully observed.”

Thus the province “is not prepared to interfere by attempting to restrict producers’ rights to market their product where they so choose.”

“Blind eye”

Nadeau had proposed a New Brunswick Chicken Marketing Agency that would deal “solely” with the marketing of broiler chickens past the farm gate and would allocate live chicken supply to processors both within and outside New Brunswick.

“This is known as single-desk selling,” the company said Thursday. “The current regulatory bodies would retain all other powers within their current mandate.”

But Olscamp replied Thursday that the court rulings are clear and “this issue will not be resolved by trying to circumvent the regulations under which the chicken industry is regulated in the province and across the country.

“It is ultimately up to the companies to resolve this, and our offer of mediation remains open.”

Maple Lodge CEO Michael Burrows, in a release Thursday, said the province “is ducking its responsibility when it describes the breakdown of the system as simply a ‘commercial dispute.’

“It’s a supply management failure and the government is responsible for fixing it,” he said. “You would be hard pressed to find anyone knowledgeable about the system who would not agree that a producer should not be able to destroy or force the sale of a private commercial processing business by using the regulatory protection of supply management.”

Nadeau general manager Yves Landry said the problem could be traced back to “previous New Brunswick governments” which “turned a blind eye as limits were removed on the amount of the province’s chicken production quota that could be held by any single producer.”

Historically, Landry said, a producer was restricted from controlling more than 10 per cent of the product, but Groupe Westco has now “built a production cartel that today controls almost 80 per cent of the commodity (in New Brunswick), a level of control unprecedented in Canada.”

Burrows, in the same release, noted Nadeau invested millions in a new plant in 2002 when its original plant burned down, rebuilding “based on the expectation of a stable supply of product as guaranteed in supply management.”

“Stops talking”

By not intervening, the current Tory government is “in fact rewarding Westco’s very questionable business practices in attempting to starve Nadeau of chickens,” Landry said, “not to mention Groupe Westco’s total disregard for the devastating economic and human toll on a small community where so many jobs have been lost.”

Nadeau’s management said there are precedents for the province to intervene, citing a plant supply allocation policy in British Columbia, and Manitoba’s refusal to allow Westco to exceed regulated quota limits there.

Maple Lodge and Nadeau on Thursday enlisted the support of former federal agriculture minister and former Ontario MP Lyle Vanclief for their cause.

National supply management representatives and others are watching the New Brunswick situation with concern, Vanclief said in the company’s release.

“The need for a continuous flow of product to processors is not being recognized or ensured in New Brunswick, thus jeopardizing the province’s opportunity for a strong, efficient and competitive industry — not just a wealthy producer sector.”

The supply management system, Vanclief said, was devised to protect the country’s food security and accessibility by way of interlocking federal and provincial legislation in a legal framework that assumes ongoing dialogue.

“But, when one partner stops talking, it doesn’t work,” he said, referring to the provincial government.

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