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The Poultry Farmer-Processor Relationship: A Relationship Built Upon Trust and Communication

01 November 2017

This article will address how to enhance the relationship between the Poultry farmer and the processor to whom he supplies the chickens grown on his farm. Before we can start this discussion we must first describe the Canadian Supply Management system for the poultry industry, writes Ronnie P. Cons, CEO of leading Canadian Meat and Poultry distributor C&C Packing Inc.

Everybody is well aware that the Canadian chicken industry is regulated by a supply management system which was established during the 1970s through federal and provincial legislation to ensure farmers produce the right amount of safe, quality chicken meat to meet consumer demand.

It’s simple supply and demand: When supply exceeds demand, the price drops to encourage increased chicken sales. This, of course, hurts the farmer while also bringing uncertainty to the market place. On the other hand, when supply is too low, processors compete for supply, bringing prices up for consumers.

This is where supply management comes in, helping to guarantee processors and consumers a consistent supply of high quality chicken at stable prices, while the farmer gets protection as well. Farmers, processors and restaurant trade members from across Canada regularly meet to forecast market demand and then set production levels. Each province receives a percentage of the total estimated production. Finally, in each province, the marketing board distributes the quota among farmers and processors.

What this means is that the poultry processor needs and is dependent upon an expected quantity of chicken from their contracted poultry farmer suppliers. In addition, the processor also depends upon receiving chickens of a certain quality from the farm. Thus, the farmer needs to abide by certain consistent standards and practices so as to deliver the required quality and specifications of the processor and end-consumers.

The processor neither wants nor can afford any surprises their supply is driven by their distributor accounts and the supply management system. Thus the distributor expects that certain standards and government regulations are followed concerning such issues as hatching the eggs, humane treatment of the chicks, feed quality and quantity, disease control, living environment of the chicks and transportation of the chickens to the processor. The more consistent the production methods, the more consistent the quality and quantity supplied to the processor.

The processors' inspection of the supplied product will of course help maintain quality as the farmer will be afraid to provide an inferior product. But fear of losing business or a distributor is not the only way to increase quality. There are certain "soft" behavioral strategies that can be implemented to increase the consistency of quality and quantity of the supply to processors:

  1. Channels of communication should be opened and maintained between the farmer and the processor. The farmer should be made to feel free to call and report any surprises or problems that may affect future quality or quantity. The processor should let the farmer know that he will not be penalized for doing so but will actually be rewarded with appreciation and possibly help to solve the problem. Hence, any problems will be immediately reported to the processor, allowing them to potentially avoid any unnecessarily expensive supply or quality problems.

  2. Social events and contributing to similar charities and local needs will lead to a closer and more trusting partnership-oriented relationship which will encourage the supplier to maintain a higher level of quality.

  3. Trust and appreciation must be enhanced. Farmers must be made to feel that the processor trusts them and appreciates their work in raising the chicks. They will, again, feel more like partners with the processor and thereby feel motivated to work. Positive reinforcement does not only work on children and individuals - it also encourages better results for a whole farming operation. No chicken farmer likes to feel like a low-level supplier to a large processor. The average farmer wants to feel important due to his commitment and attachment to his work, especially considering how pivotal his role is.

Should there be a general breakdown in trust, then this would lead to a vertical integration movement where farm to plate would be the more ideal. This system involves the management of the whole system from hatching eggs to distribution by one firm. Some firms choose this option to maintain control on the quality and quantity of the product.

Still, Canada can see that thousands of family run farms have supplier relationships with processors. This partly reflects the reality that a certain satisfactory level of trust and reliability of supply exists between the Canadian poultry farmer and the processor. Yet, all is not perfect, and therefore steps should be taken when possible to increase the level of trust, communication and respect between the supplier and the processor.

November 2017



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