Alberta’s Egg Supply Management Faces Scrutiny Amidst Calls for Reform

Alberta’s egg supply management system is under intense scrutiny as critics argue it unfairly favors established producers, hindering new entrants and limiting competition within the province’s egg market. The debate centers on the allocation of production quotas and the challenges faced by farmers attempting to break into the industry.

The Controversy Surrounding Egg Production Quotas

In April, Alberta farmer Henk Van Essen was jailed for defying supply management rules, highlighting the strict regulations governing egg production. These rules stipulate that farmers outside the supply management system can only have 300 laying hens, a number deemed insufficient for a viable business. The average flock size under supply management is significantly larger, exceeding 50 times that amount, with some producers housing over 100,000 birds.

Did You Know? The average flock size in Alberta’s egg industry has more than doubled between 1998 and 2024, reflecting both population growth and the constraints on new competition.

Limited Competition and market Dynamics

Despite a doubling in egg consumption over the past quarter-century, the number of egg producers in Alberta has remained virtually unchanged, declining slightly from 171 in 1998 to 169 in 2024, according to data from the Egg Farmers of Alberta. This stagnation contrasts sharply with most other industries, where increased demand typically fosters opportunities for new competitors to enter the market and gain market share.

The current system allocates 90% of new production quota to existing producers free of charge, with the remaining 10% reserved for a “new entrants program.” This imbalance significantly favors incumbents and makes it tough for new farmers to establish themselves.

The “New Entrants Program”: A Limited Solution

While the new entrants program allows participants to receive a quota for 1,500 birds without initial payment, expansion beyond this limit requires leasing quota from existing producers. Even with this option, new entrants face a small-scale operation and must commit to a decade of operation before owning the quota outright.

Canada vs. The United States: A Tale of Two Egg Markets

The Canadian egg market’s supply management system is often compared to the U.S. market, notably in light of the avian flu outbreak that significantly impacted egg prices south of the border. Canada experienced a more limited fallout from the avian flu, which the industry attributes to less consolidation and more dispersed flocks. However, Canada’s geography and smaller population also contribute to limiting flock sizes.

Pro Tip: Diversifying your farming operations can provide a buffer against market fluctuations and disease outbreaks, enhancing the resilience of your business.

Proposed Reforms for a More Competitive Egg Market

While politicians currently show no inclination to abandon supply management entirely, potential reforms could revitalize the industry without a wholesale overhaul. Key proposals include reallocating quota to favor new entrants and ending the practice of giving away quota that can later be leased or sold. Unused quota should be surrendered or, ideally, farmers should pay for it initially, with some dispensation for new entrants to level the playing field.

Dalhousie University professor Sylvain Charlebois suggests replacing provincial quota systems with a national system to create a more liquid market for production quotas. These reforms aim to foster a more competitive environment