Monday, June 3, 2013

Clover Farms – Again on the market.




The above link will take you to a 2009 discussion paper prepared in regard to Clover Farms. The document offers some insight in to the concepts the writer intends to deploy. The document is somewhat dated and requires review; however, the operational aspects of the document offer a function perspective on the property. 

The dairy and related manufacturing components have been challenged by regulatory obstruction. In Canada at large, and specifically in British Columbia, there is a Supply Management Marketing System in place. The administrators of that system seem to hold a bias against efficient, at scale, integrated operations; there seems rather to be an interest in subsidizing inefficiency by constraining innovation, processing and production integration, and the natural consolidation that would occur due to advancements in technology. 

I spent a large portion of a year working toward regulatory approval by attempting to negotiate firstly the provincial regulatory system and secondly the federal parallel regulatory system. There is an organization called the Farm Industry Review Board which oversees the Supply Managed industries, it offers mediation and adjudication of disputes with the various “Marketing Boards”.  They employ a quasi – legal process headed by a tribunal to review disputes; my attempts to gain support from regulators ended in October 2011 when the FIRB ruled against me at appeal.

At the link above, there is another enterprise proposal called West Fraser Agro, it was under that name that the interface with regulators took place, my documents are there; you can review them to see my thought process in the context of the regulatory regime and the regulator’s; you may judge where reason lies.
A critique of the system would consume much print, it suffice to say, almost all other products find their way to market absent any market intervention with prosperity as the result. One might also point out that the average farm size in British Columbia is under 200 head, there is a mass of literature to support operations 10 times that size, or greater, as offering greater efficiency. I submit the large farm size permits the optimization of operations so that they are in better harmony with natural systems – a point hotly contested by many of course, many that never let the facts get in the way of having the wrong opinion. Another point worthy of contemplation, is that Skim Milk Power on the world market is always a 1/3 or more less in price than the same product in the Canadian Market. While I understand the farmers need to secure profit, I am unsure they are really better off as individuals and the industry as a whole is certainly less well-off under this scheme. The license to produce milk often comprises 1/3 or more of farms net worth, an accumulated value of some 15 billion nationwide, that is a large amount of latent capital. I will try and contain my ire here, however, the perverse rationale offered for the refusal to permit my having regulatory support, was that an integrated operation would have an advantage over incumbent processors because it would be absent transportation costs; so the people of British Columbia should know that the government of British Columbia is making them pay more for milk so that the regulatory system forces a larger carbon foot print on the industry; if this weren’t so tragic it would be laughable.   

Given the events I encountered in accessing regulatory support. the dairy component is held in abeyance until such time as circumstances change.  The other companion enterprises proposed will find synergy with a large beef component or some other cropping regime.

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