Peter Power/The Canadian Press
There is the comforting fiction at the heart of supply management for eggs about a system aimed at preserving the family farm and protecting the rights of the small independent producer. And then there is the reality of Big Egg.
In April, Alberta farmer Henk Van Essen found out how unwise it is to play chicken with the forces of supply management. Police officers arrested him at his farm and took him to jail, where he spent two nights for defying several court rulings, including one that he adhere to supply management rules.
According to that rule book, farmers operating outside of the supply management system can have just 300 laying hens. As Mr. Van Essen has pointed out, that is nowhere near enough birds for a viable business. The average flock size under supply management is more than 50 times bigger. Some producers have more than 100,000 birds.
And the average flock size has risen substantially over time, more than doubling between 1998 and 2024. That growth is in part due to Alberta’s surging population.
But it is also the result of keeping a tight rein on competition from new entrants. The number of egg producers in the province, despite egg consumption more than doubling, was essentially flat in the past quarter-century, declining to 169 producers in 2024 from 171 in 1998, according to figures from the Egg Farmers of Alberta.
In most other industries, such statistics would be confounding: surging demand ought to have created opportunities for new and innovative competitors to grab some market share. Not so for egg production in Alberta.
The reason is easy enough to figure out. The rules of supply management are heavily tilted in favour of existing producers, handing them 90 per cent of new production quota – free of charge. The remaining 10 per cent is set aside for the “new entrants program.”
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Unsurprisingly, the program has not resulted in that many new entrants. Twenty new operations signed up a decade ago, another eight last year. Those new entrants do not have to pay for the 1,500-bird quota they receive under the program. But if they wish to immediately expand to a ceiling of 5,500, they must pay to lease spare quota from incumbents.
Even those willing to pay will be left with a small-scale enterprise and must commit to a decade of operation before owning the quota outright.
The standard two-word response to any critique of such agricultural cartels is: But, America. That rebuttal has extra heft right now, after avian flu decimated the U.S. industry and sent egg prices soaring south of the border. The fallout from avian flu has been far more limited in Canada.
The industry attributes that divergence to supply management, in part because of less consolidation and hence smaller, more dispersed flocks that are less vulnerable to infection. Perhaps, although Canada’s big geography and much smaller population are also a factor in limiting flock sizes.
There is a case to be made for the careful demolition of supply management in Canada but, for the moment, politicians are showing no hint of enthusiasm. Indeed, the House and Senate have just passed a bill formally taking agricultural supply management off the table in trade talks.
What then might be done to revitalize the industry, without a wholesale abandonment of supply management? The most obvious solution is to recast the rules for disbursing quota and tilt them in favour of new entrants. There is no sound reason for incumbents in Alberta to receive 90 per cent.
There also needs to be an end to the practice of giving away quota that can later be leased out or sold. Either unused quota should be surrendered or, even better, farmers should pay for it initially. (New entrants could receive some dispensation in order to level the field with incumbents.) Some limited amount of quota could be given to new entrants, with the rest auctioned off.
Dalhousie University professor Sylvain Charlebois points to another reform that could increase competition within a supply-managed industry: scrapping provincial quota systems in favour of a national system. That would instantly create a more liquid market for the selling of production quotas.
None of those reforms would put an end to the market-distorting policies of Big Egg. But they just might give farmers like Mr. Van Essen a fighting chance to break in.