Chicken Processing Bonanza Alberta bound

Agriculture, Alberta, Blog, Manitoba, Peter Holle, Rural, Uncategorized

It’s no secret that Canadian so-called supply management marketing board policies are a destructive relic from the 1970s.  Frontier, along with several other Canadian think tanks has written extensively how they artificially raise prices for consumers while prohibiting the industry from taking advantage of growing markets for quality foods. One of the seminal achievements of Manitoba’s Filmon Government during the 1990s was the decision to free up the provincial pork market.   Professor Milton Boyd wrote the following in an early Frontier commentary entitled Are Marketing Board’s Yesterday’s Ideas:

A few years ago, Manitoba provided a sterling example of how to restore markets when it threw out restrictive rules on pork marketing. These rules had allowed the Pork Marketing Board to set the price above market levels, and discouraged processors because they could face a restricted, uncertain, or expensive supply of pork. Following deregulation and restoration of the marketplace, both new and existing pork processors more than doubled production and the pork industry took off. The result is a Manitoba agricultural economy that is much more prosperous and diversified.

Manitoba, of course, benefited by securing massive investments in pork processing – particularly in Brandon – by moving to take something economists call the “first mover advantage” which the Pearson Group defines in the following way:

The basis of first-mover advantage is simple: by being the first to enter a new market, the business gains an advantage over its actual and potential rivals. This is true whether the business is seeking to develop new geographical/demographic markets or segments for existing products, or whether it is seeking to introduce new products to its existing market segments. If the business is first into a market, so the thinking goes, it can establish what the military thinkers would call ‘defensible ground’. First, it can capture market share much more easily without having to worry about rivals trying to capture the same customers. Second, when the rivals do come along – as they inevitably will – the first-mover and its management team will have advantages in the ensuing competition, such as familiar products, brand loyalty, the best retail outlets, up-and-running distribution systems, and so on. By beating rivals into the market, the first-mover can consolidate its position and compete more effectively, not only defending its previously acquired share but even continuing to expand.

In other words, had Alberta moved to liberate pork marketing in that province before Manitoba, it would have gained the massive investments in processing, including new jobs, facilities and related spin-offs that eventually benefited the Keystone Province. So fast forward to a recent article published in the pre-eminent agriculture publication of Western Canada – the Western Producer.  Entitled Alberta withdraws from national quota allocation deal, it reveals that the Alberta Chicken Producers have given notice that they will be exiting the national chicken marketing cartel. What does this crack in the dam mean?   Look for the growth and development of Canadian poultry production to occur in Alberta who are effectively moving to gain first mover advantage in this market. Like Manitoba pork in the 1990s expect Alberta to become the chicken marketing and production power in the future as the supply marketing monolith collapses going forward.  It’s very likely since the federal government is keen to join the Trans-Pacific Trade Agreement which will enable access for Canadian producers to rapidly growing global markets for dairy and poultry products.