Sunday, May 19, 2013

Questions for FPCC and PGC

In my last Blog posting, I discussed the application of Pullet Growers of Canada ("PGC") to become another one of Canada's infamous Supply Management Mobsters.  I have read all of the info presented by PGC, and the questions asked by FPCC (Farm Products Council of Canada), all available here

PGC might thank their fortunes that I didn't find out about their application until the public commenting deadline had closed.  At this point, we have to hope that FPCC does the right thing, or somebody who is attending the Winnipeg public hearing finds these notes and submits one or more of them into the public record.

So here goes.  Does PGC have answers for any of these?

  1. Why can the PGC Board arbitrarily decide that somebody raising pullets can't be a member of PGC, according to PGC's current Bylaws?  To me, this seems ready for abuse and unfair use.
  2. Why can somebody who is currently a PGC member be voted out on a 2/3rd majority?   Now, when PGC is a voluntary club, this power doesn't mean much, but if PGC membership becomes mandatory to hold quota, it could be used for unfair purposes.  Please explain.
  3. PGC's Mission, Vision, and Values talk about serving and helping its members.  You are now asking Canadians to give you a monopoly.  That monopoly is obviously very valuable, or you wouldn't have spent over $150,000 trying to get it.  What assurances do Canadians have that PGC will serve Canadians well?  Shouldn't your Mission Statement recognize your duty to serve Canadians, rather than just yourselves?
  4. PGC's Mission talks about producing high quality pullets.  Unfortunately, it makes no commitments about affordability, availability, on-time delivery, continuous improvement, understanding & serving the customer's needs, or risk.  Why not, PGC?
  5. The PGC Vision speaks of communication, but what are you going to communicate: lies or the truth?  Why not some commitment about openness, transparency, and accountability?
  6. In your roadshow slides, PGC talks about continual improvement in price efficiency.  In the official documents (eg. By-laws, Mission Statement, etc.), nothing on this could be found.  Is this "bait & switch" marketing propaganda, or does PGC actually commit to these essential elements?
  7. PGC states that quality assurance and cost/benefit analysis will be considered down the road.  Why shouldn't FPCC consider these as mandatory, with PGC having a proven track records in implementation prior to application for Part II acceptance?
  8. In the early documents and PGC's road show, you mention a cost to consumer of 0.25 cents per dozen for PGC to enter supply management, then it became 0.5 cents per dozen, and in the most recent answers provided to FPCC, you claim 2 cents per dozen.  That's 800% cost inflation in 2 years, or 282% per year; clear evidence demonstrating that PGC understands how Supply Management works.  How do we know that the acceptance of PGC's plan by those early supporters wasn't conditional on the 0.25 cents per dozen cost, and whether members/stakeholders of PGC would totally reject their proposal if they knew it was going to be a 2 cents per dozen hike in prices?  Secondly, please explain the inconsistency in these prices.  Are we to expect 282%/yr. price inflation from PGC from now on?
  9. PGC states that pullet quota will be owned by PGC, and once a farmer no longer raises quota, the quota is surrendered back to PGC at no cost.  The exception is transfer to immediate family members or to shareholder in corporation, or an immediate family member of a shareholder.  Can we not assume that farmers will incorporate, bring in a new shareholder, transfer the quota, and then cash out; thereby eliminating any quota that gets surrendered to PGC at no value?  Please explain what you foresee here.
  10. PGC states that they want to participate in and protect Supply Management.  Why is there no commitment from PGC that they will improve Supply Management for themselves and all Canadians?
  11. PGC notes that there are 550 pullet farmers in Canada, but had only 32 attend their AGM in 2009, 24 in 2010, 10 in 2011, and 18 in 2012; for a geometric average of 19.  These numbers include the PGC Executive and Board Members.  It appears that there are 19 or so committed members of PGC, which is just 3.45% of the total pullet growers.  I also note that the Minutes of the PGC Board are secret, not to be shared with members.  Please provide objective evidence that a majority of PGC members are truly supporting this group of 19 activists and their plans for Supply Management.
  12. BC and Saskatchewan are against PGC's plans, Alberta is doubtful.  EFA is hesitant.  PGC members in only 4 provinces have a majority of support for joining Supply Management.  With 10 provinces and 3 territories, that is just 30.7% of the jurisdictions that support.  By PGC's own figures, there is just 51.456% of the current pullet growers who support this plan.  Why does PGC feel this is adequate to proceed at this time?
  13. The PGC Directors are indemnified for everything.  I assume that this includes criminality such as fraud, bad faith, and negligence.  All of these costs for a wayward director will eventually be paid by the Canadian consumer.  Why is this blanket coverage necessary?
  14. During the PGC's roadshows, they were asked about the impact of this plan on small flockers.  No answer was provided.  Why was this relevant question not answered?  Secondly, what is the full answer to this question?
  15. Similar to the previous question, there were a number of other questions that were asked, recorded in the minutes, but no answer was recorded.  Will PGC supply answers to all of these unanswered questions before the end of the hearing?
  16. In one diagram in the PGC submission package, it shows the Hutterite communities as needing to be approached for input.  Was this ever done?  If yes, what was the outcome?  If not done, why not?  Will PGC be doing this prior to the end of these hearings?
  17. On numerous occasions and for assorted subjects, PGC has stated that they have nothing in place (ie. no policies, no plans, etc.) as of yet, but that once PGC is approved for Part II Supply Management, they intend to work on that issue.  Isn't that counting your chickens before they hatch, or perhaps asking FPCC to buy a "pig in a poke"?  With so many outstanding issues, there is a significant probability that one of these issues will not go as the stakeholders assume and expect.  What makes PGC feel that this is an acceptable approach?  Why not wait until PGC has worked out all of these issues, and then PGC can decide if they wish to re-submit their Part II application?
  18. PGC has stated that all pullet growers have been consistently and continually unable to recoup their true cost of production ("COP"), and this is the reason supply management must be sought and granted.  Yet in their submission package, a group of pullet growers on the East Coast questioned the need for this proposal as things were going quite well and profitable.  Evidence from Manitoba's pullet growers in the evidence currently before the Hearing Panel was of a similar nature.  If PGC's assertions were true, we would expect a rising tide of churn in the industry (ie. people selling out after they lose hope of a reasonable income), or go bankrupt, or price wars, and similar artefacts.  Have these occurred?  Can PGC provide collaborative evidence to support its assertions on COP?
  19. No where in PGC's submissions is there clear support for considering allocation of production to the lowest marginal cost producers.  PGC has repeatedly avoided answering this question, in spite of it being asked on many different occasions.  How does PGC see that they will meet this statue-imposed requirement?
  20. In the Apr. 26/12 answers provided by PGC, PGC declares itself as 1st Receiver for pullet imports into Canada (ie. only PGC can import at the reduced duty of 6% or so, while all others would pay exorbitant duties, 300% or more).  What does PGC feel are the pros and cons of this approach, other alternative considered, and how do you justify this as the best solution?
  21. For farmers who raise their own pullets (ie. closed loop), PGC proposes they would be exempt from supply management quota and levies.  Is this an escape loophole available for all?  What prevents a growing number of customers who are disillusioned with PGC from taking this approach?
  22. PGC provided a Risk Assessment in their filings.  On reading the risk assessment, it was mainly directed at PGC's success with its Part II application.  Little or nothing was done on the risks for the Canadian public, upstream suppliers, downstream customers, exporters, importers, or any other stakeholder groups.  Why was PGC excluding all of these important stakeholders from consideration in their meager risk assessment?
  23. In PGC's draft Federal-Provincial Agreement, PGC proposes that pullet growers in non-SM provinces would have to charge the highest of two prices.  Under some or most circumstances, this can result is all competitive advantage being lost by the best supplier, and artificial shelter provided for the worst suppliers.  This seems to defeat the mandatory consideration of a balanced approach which considers the interests of the consumer.  It also seems to defeat the preference for the best and lowest marginal cost producer.  Please explain PGC's rationale for this pricing restriction. 
  24. On numerous occasions, PGC stated that pullet growers in SM provinces can ship everywhere, but pullet growers in non-SM provinces cannot ship to SM provinces.  That does not seem to be described anywhere in the official documents.  Please explain where this is part of the formal system, rather than just rhetoric.  Please describe the pros and cons of this approach, other options considered, and the justification for choosing this option.
  25. In PGC's submission package, it appears that PGC was encouraged to make a Part II application by one or more speeches by FPCC, which I assume refers to Mr. Laurant Pellerin, FPCC's Chairperson.  If Mr. Pellerin has been actively encouraging Part II applications, how is FPCC supposed to make an objective, unbiased decision to recommend or reject PGC's application?  Some might consider this encouragement to be similar to a criminal court judge advocating for drug dealers to step up their criminal activity so that the Judge and other courts have sufficient work and job security.  Should Mr. Pellerin and all other FPCC personal who actively promoted Part II applications from PGC or others, recuse themselves from involvement in the PGC hearings and decision process?

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