Fresh Ideas, Growing Together

Glossary of Farm-Gate Minimum Live Price Formula Terms

Regulation 402
The regulatory framework under the Farm Products Marketing Act that governs the determination of the farm-gate minimum live price of chicken in Ontario.
Farmer Survey
A survey of randomly selected Ontario chicken farmers conducted by BDO. The Farmer Survey was used directly to calculate about 80% of the cost of production. Specifically, the Farmer Survey provided costs for feed, chick, energy, repair and maintenance, insurance, office and overhead and in-barn contract services.

The collected data was reviewed and validated by third party professional statisticians to ensure consistency and validity. The validated data was analyzed by the statisticians to provide per-unit costs by category using volume-weighted averaging.

The Farmer Survey initially contacted 205 Ontario chicken farmers. After validation, usable data was obtained from 180 farmers, leading to a response rate of almost 90%. The relatively large sample size of about 20% of Ontario chicken farmers, coupled with an exceptionally high response rate, has provided highly credible and reliable survey results.

Model Farm
A hypothetical efficient chicken operation with certain defined farm parameters. This hypothetical farm was used to estimate production costs that cannot be measured reliably using a survey of actual chicken farms. These difficult-to-measure costs include labour and capital costs.
 
The Model Farm has been defined to have the following characteristics:
 
  • Farm size of 431,335 kg of annual production or 35,677 quota units. This is based on the 2012 average size in Ontario for farms at or above the minimum quota size in 2012.
  • Production cycle of 8 weeks
  • Barn density at the 2012 median density in Ontario which is 2.46 kgs/sq ft
  • A land base of 5.74 acres - the land necessary for annual production of 431,335 kg without introducing the added complexity of cropping revenues from additional land
  • Useful lives:  40 years for buildings and 20 years for equipment
  • Average age: 16.25 years for buildings and 11.77 years for equipment

Labour Hours Study
A survey of 41 randomly selected farmers conducted by a third-party firm engaged by CFO to determine labour hours.

The study determined labour hours to be 1,090 for general labour and 641 for management labour.
General Labour
A type of labour that involves the day-to-day activities related to the growing of broiler chickens. Example of activities include: setup of feed equipment, preparation of water supply and equipment, operation and maintenance of environmental and lighting controls, maintenance of record of hatchery information, etc.
Management Labour
A type of labour that involves the management of chicken production from ordering chicks - to payroll management - to attending farmer meetings. Other examples of duties include: ensuring operation is in accordance to the Animal Care Program rules, managing accounting and legal interactions and records, monitoring industry trends, etc.
Feed Conversion Ratio (FCR)
A ratio that captures the kilograms of feed required to produce 1 kilogram of chicken that has been paid for by processors. The FCR value from the 2012 Farmer Survey is 1.81302 for a live bird weight of 2.225 kg.
Chick Conversion Ratio (CCR)
A ratio that captures the number of chicks required to produce 1 kilogram of chicken that has been paid for by processors. The CCR value from the 2012 Farmer Survey is 0.46638 for a live bird weight of 2.225 kg.
CFC
Chicken Farmers of Canada.