Understanding Canada’s Supply Management System

How this quota system keeps supply and prices relatively steady.

By Jodi Helmer | Photos By John Dietz

Farmers live with uncertainty. Yields can be lower (or higher) than projected; weather can wipe out crops; market demands fluctuate. In Canada, the supply management system was designed to provide some protection against the risks inherent in farming.

The federal government passed Bill C-176 in 1972 and created a national marketing agency to regulate the production of eggs. The goal: Sync production with demand and keep volume and prices stable, eliminating reliance on subsidies.

“It eliminates boom or bust cycles and ensures we don’t oversupply the market,” says Cory Rybuck, general manager for Manitoba Egg Farmers, a provincial supply management organization.

Supply management systems apply to eggs, broilers, turkeys and dairy.

Under supply management, farmers must hold quota. For egg farmers, one hen accounts for one unit of quota. To maintain quota, each hen is required to lay 25.44 dozen eggs (or 306 eggs) per year.

All farmers raising more than 300 laying hens must hold quota and register with the provincial egg board and operate under the national program requirements for animal care and food safety; inspectors visit all registered farms. Farmers raising fewer than 300 hens are not required to hold quota or adhere to national program requirements, including inspections.

The cost of quota varies by province (and fluctuates). In March, seven farmers were offering egg quota in Manitoba with bids starting at $288 CDN per hen. Quota is available to both registered farmers and newcomers wishing to enter the egg business.

Provincial organizations, like Manitoba Egg Farmers, set farm gate prices, collect a levy from every carton of eggs produced in the province and serve as a lobbying agency for egg producers.

Each province is allocated production quotas from the national agency. Farmers who want to expand their flocks or establish laying operations, must purchase additional quota—but it’s not always available.

“You can apply for quota through a new entrant draw [for new farmers], purchase a farm with established quota or bid on the quota exchange with farmers who want to sell or transfer quota,” Rybuck explains.

Provincial egg boards maintain lists of farmers interested in buying, selling or leasing quota. When a province increases its quota, half of the increase is doled out to established producers on a pro-rata basis; the other half is set aside for the new entrant program.

To help new farmers establish laying operations, some provinces, including Manitoba, have established New Entrant Programs that offer discounted or free quota.

Egg Farmers of Alberta established its New Entrant Program in 2012 to allot 10% of available quota to new farmers. Quota is issued in lots of up to 1,500 birds. The initial quota is offered at no cost; new farmers are not allowed to sell or transfer quota for 10 years.