DISTRICT MEETING Fall 2020 - Chicken Farmers of Ontario
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
DISTRICT MEETING
Fall 2020
TODAY’S DISCUSSION
1. COVID-19 IMPACTS & 4. CFO NEWS & UPDATES
RECOVERY
5. Q&A SESSION
2. REVIEW OF 2021 BUDGET
& OPERATING PLAN
3. AN INTRODUCTION TO OVER
MARKETING CONTROLS
RESPONDING TO COVID-19 • COVID-19 impacts all areas of our lives • The situation is unpredictable and challenging • CFO and the Industry Value Chain must continue to work closely to secure business continuity throughout our chicken protein supply chain and maintain supply for Canadians • Our common objective of keeping the chicken protein food chain safe, responsive and resilient is in full alignment with public policy
RESPONDING TO COVID-19:
Prioritizing Safety, Continuity and Support Efforts: Five Workstreams
Keeping the chicken protein food chain safe, responsive and resilient
We must both act now and plan for tomorrow
People Demand Supply Processing Community
Lives & Markets & Understand New Challenges Need For
Livelihoods Channels Issues & At Plant Financial &
Impacted Respond Facilities Food Donations
Differently Quickly
4
FARM-GATE MINIMUM LIVE PRICE
PLANNED PRODUCTION IS IMPROVING FOLLOWING DEEP CUTS
Allocation relative to
Adjusted Base
10% Domestic Allocation Growth - Ontario
5.7% 5.7% 5.7% CAGR 2012 to 2019: 3.6%
5.1%
4.6%
5% 4.1%
2.4% 1.9% 4.0%
3.6% 3.0% 1.9% 3.0% 3.5% 2.9%
1.3%
0.8%
0%
-2.0%
-2.5%
-5%
-10%
-11.3%
-12.6%
-15%
A-148 A-149 A-150 A-151 A-152 A-153 A-154 A-155 A-156 A-157 A-158 A-159 A-160 A-161 A-162 A-163 A-164 A-165 A-166 A-167 A-168
2018 2019 2020 2021
6
2020 ALLOCATION IS 1 .7% BELOW 2019 ALLOCATION
Ontario’s Domestic Allocation:
• 3.6% compounded annual
growth from 2012 to 2019
• 1.7% decline in 2020
BUDGET & OPERATING PLAN 2021
PERFORMING WHILE TRANSFORMING: KEY MESSAGES
• Advancing an evolved purpose-driven strategy
Strategic Focus
• Remaining focused on positioning the business to
thrive as COVID-19 conditions improve
Execution • Employee engagement and solid operational
disciplines are foundational to our success
Performance Management • Clear value-creation milestones (impact, time)
• Board Performance Report provides visibility
Financial Strength
• Strong cash flow, balance sheet and
Strong Governance disciplined capital allocation
2021 Approved Annual Operating Plan: 11-11-2020
STRICTLY CONFIDENTIAL Not For Distribution
STRATEGIC PLAN 2020 -2022
OUR STRATEGY IS CLEAR AND CONSISTENT
9
2021 will build on the accomplishments of 2020
Continuity of priorities with some areas of significant amplification
2020 TOP 10 PRIORITIES 2021 TOP 10 PRIORITIES
1a. Pricing and COPF Pricing and COPF
1b. Market Demand & Production Allocation Market Demand & Production Allocation
2. Modern, Minimum Effective Regulations New Value and Growth Programs
3. CFO Strategic Plan 2020-2022 Modern, Responsible Regulations
4. Data and Analytics
Data and Digitization
5. 100% Production Performance
Production Optimization
6. Animal Care & Food Safety
Animal Health & Care
7. Broiler Supply Chain Optimization
8. Venturing New Growth Programs Broiler Supply Chain Optimization
9. Organization Foundation Stakeholder Relations
10. Governance & Leadership Governance & LeadershipBudget 2021
Strategic Focus • The 2021 Budget is the operationalization of the 2021
Strategic Plan objectives and deliverables by providing
the necessary funding and support
Execution • Adopting a People culture of continuous process
improvement and technology tools will improve
efficiencies without increasing headcount
Performance Management • Our focus is on excellent cost discipline to minimize
expenditures. Do more with less
• Continued strong, predictable surplus expected from
Regulatory Operations
Financial Strength • Increased cash flow generated from Regulatory
Operations and monetizing working capital sufficiently
funds the Consolidated deficit and Capital required
Strong Governance • A robust Return on Investment project criteria was
launched and utilized for 2021 Capital Project
Investment Allocation
2021 Approved Annual Operating Plan: 11-11-2020
STRICTLY CONFIDENTIAL Not For DistributionMODERNIZING
OVER MARKETING CONTROLS
As of quota period A-168 (February 14, 2021), we will be doing things differently!
• Provincially, objective is to achieve 100% planned provincial production each quota
period
• It is equally important that all CFO farmer-members achieve 100% planned
production within their individual farm businesses
• Achieving 100% planned production is very important to the supply management
system – it ensures that our industry can match supply with demand – which is
something that consumers count on and expect!THE FOLLOWING CHANGES WERE DESIGNED THROUGH A COMPREHENSIVE “FARMER-FIRST” MODERNIZATION APPROACH
KEY TAKEAWAY #1
Farmer-members will no longer be penalized for growing between
100 - 102% of their allotted kilograms. We hope that this new
change further enables farmer-members to achieve 100%
individual production performance each quota period:
OLD LEGACY SYSTEM NEW MODERNIZED SYSTEM
(as of A-168)
All kilograms over-grown between 100- All kilograms grown between 100-102%
102% of a farmer’s allotment would be of a farmer’s allotment are now
penalized (taken away from the farmer permissible without penalty.
six and seven quota periods in the
future). There will be no kilogram reduction
control applied in future quota periods
for kilograms grown between 100-
102%.KEY TAKEAWAY #2
Farmer-members will no longer incur financial penalties for
growing between 104 - 108% of their allotment, and the
subsequent production level financial controls are less:
OLD LEGACY SYSTEM NEW MODERNIZED SYSTEM (as of A-168)
Ontario monetary controls of $0.50 per kg Ontario monetary controls do not start until farmer-
(between 104 - 106%) and $1.00 per kg members reach 108% over production.
(between 106 - >110%) were applied. The new amount is as follows:
The legacy amounts are as follows: Production Level New Control
Production Level Legacy Amount Amount ($/kg
($/kg over sleeve) over sleeve)
100-104% N/A 100-108% N/A
104-105% $0.50
105-106% $0.50
106-107% $1.00
107-108% $1.00
108-109% $1.00 108-109% $0.50
109-110% $1.00 109-110% $0.50
>110% $1.00 >110% 15
$1.00CURRENT & REVISED GRADUATED OVER MARKETING
FINANCIAL CONTROLS
Production CURRENT REVISED
Level OQL Amount OML
($kg/over Amount
sleeve) ($/kg over
sleeve)
100 – 101 % NA NA
101 to 102 % NA NA
102 to 103 % NA NA
103 to 104 % NA NA
104 to 105 % $0.50 NA
105 to 106 % $0.50 NA
106 to 107 % $1.00 NA
107 to 108 % $1.00 NA
108 to 109 % $1.00 $0.50
109 to 110 % $1.00 $0.50
> 110 % $1.00 $1.00KEY TAKEAWAY #3 As of quota period A-168, there will be graduated kilogram controls in effect if farmer-members have over-marketed >102% of their allotment: What does this mean? It is the determination and calculation of the number of kilograms that will be taken away six and seven quota periods in the future. As of quota period A-168, the new graduated kilogram control will start at >102%, and it will gradually increase based on the level of over-marketing.
CURRENT & NEW GRADUATED OVER MARKETING
KILOGRAM CONTROLS
Example Production Current Current Reduction New KG New Reduction
100,000 kg Level KG Factor (split equally in 6th Factor (split equally in 6th
allotment and 7th QP) and 7th QP)
%
Kgs Grown Total Kgs Total Kgs
101,000 100 to 101 % 1.0 1,000 NA 0
102,000 101 to 102 % 1.0 2,000 NA 0
103,000 102 to 103 % 1.0 3,000 1.0 3,000
104,000 103 to 104 % 1.0 4,000 1.0 4,000
105,000 104 to 105 % 1.0 5,000 1.1 5,500
106,000 105 to 106 % 1.0 6,000 1.2 7,200
107,000 106 to 107 % 1.0 7,000 1.3 9,100
108,000 107 to 108 % 1.0 8,000 1.4 11,200
109,000 108 to 109 % 1.0 9,000 1.5 13,500
110,000 109 to 110 % 1.0 10,000 1.5 15,000
120,000 > 110 % 1.0 20,000 1.5 30,000CURRENT & REVISED GRADUATED OVER MARKETING
CONTROLS (KG & FINANCIAL)
Production CURRENT REVISED CURRENT REVISED
Level KG Factor KG Factor OQL Amount OML
($kg/over Amount
sleeve) ($/kg over
sleeve)
100 – 101 % 1.0 NA NA NA
101 to 102 % 1.0 NA NA NA
102 to 103 % 1.0 1.0 NA NA
103 to 104 % 1.0 1.0 NA NA
104 to 105 % 1.0 1.1 $0.50 NA
105 to 106 % 1.0 1.2 $0.50 NA
106 to 107 % 1.0 1.3 $1.00 NA
107 to 108 % 1.0 1.4 $1.00 NA
108 to 109 % 1.0 1.5 $1.00 $0.50
109 to 110 % 1.0 1.5 $1.00 $0.50
> 110 % 1.0 1.5 $1.00 $1.00KEY TAKEAWAY #4 • As of quota period A-168, CFO will be aligning the Over Marketing Controls cycle with Chicken Farmers of Canada’s levy dates • If Ontario finds itself in a national penalty position, the farmer- members who were over marketed within the applicable quota periods will be required to pay their share of the financial penalty • Funds that those farmer-members will have already remitted for the applicable quota periods will be directly applied to Ontario’s CFC over marketing payment
KEY TAKEAWAY #4
More on this…
Each province is responsible to pay a financial levy to Chicken Farmers of Canada
(CFC) if they have over marketed their provincial allocation. Provincial over
marketing is calculated by CFC based on a two-quota period timeframe.
Why is this important?
Going forward, if CFO is over marketed on our province’s share of the national
allocation, the CFO Board will collect additional levies only from the specific farmer-
members who were over marketed within the specified quota periods.
Should the CFO Board find itself in a national penalty position, farmer-members
who were over produced will be required to pay only their share of the financial
penalty (CFC levy) less what they have already paid during the specified quota
periods for Ontario’s financial controls.
21POLICY IMPLEMENTATION
Implement A-168 - Feb. 14, 2021
1. Incent production to grow to 100-102%
2. Align CFO OQL levy cycle with CFC penalty system
3. Over Marketing Controls in Ontario
Project Complete
MONITOR RESULTS AFTER EACH QUOTA PERIOD
AND ADJUST AS NECESSARYWHAT ABOUT CFO CARES?
An annual CFO Cares
donation of 700 live KGs
will continue
to reduce associated CFO
and CFC penalty calculationVIRTUAL CHICKEN DAY 2020
24VIRTUAL TOUR OF AN
ONTARIO CHICKEN FARM
Four complementary videos:
• Caring for Chickens
• Farmers Giving Back
• What Chickens Eat
• Story of an Ontario Chicken Farm
Family
Visit farmfood360.caREMINDER: CHANGES TO ON-FARM WASHROOM AND HANDWASHING FACILITIES
PETERBOROUGH
COUNTY’S 2020
FARM FAMILY
Chris, Angela and Isabella
KlompmakerCHICKEN AS USUAL – CONSUMER
RELATIONS CAMPAIGN
PHASE 1
• Press release
6.1 Million • Radio story distributed to stations across the province
• Animated image and five farmer videos and photos sharing impacts of
Impressions COVID-19 released on social media
PHASE 2
• Update animated image and four new farmer videos and photos with
first-person stories about their experiences throughout the pandemic
released on social media
6.7 million impressions • Metroland article to be posted in the Toronto Star (Saturday edition)
4.5 million video views and Metroland daily papers (Hamilton, Kitchener-Waterloo, Niagara
and Peterborough)CFO CARES FARMERS TO FOOD BANKS ✓ 540 registered farms donating in 2020 ✓ Anticipated total of 1.4 million meals of chicken donated to local food banks this year ✓ $25,000 donation to support Feed Ontario’s COVID-19 Emergency Response program ✓ Recipient of the Paul Mistele Memorial Award for the second consecutive year
TRADE MITIGATION MEASURES • $691 million over 10 years for the poultry and egg sectors • Investment programs for innovation and growth, to be developed in collaboration with CFC and SM4 • No future market access concessions
THANK YOU
You can also read
