VIRTUAL REGIONAL MEETINGS SPRING 2020 - Chicken ...
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VIRTUAL REGIONAL MEETINGS SPRING 2020
Greetings from your CFO Board of Directors
CLICK HERE to watch video
Greetings from the Hon. Minister Hardeman
CLICK HERE to watch video
AGENDA 1. Our Commitment 2. 2020 An Unusual Year 3. COVID-19 Outbreak and Business Update 4. Strategic Plan 2020-2022 5. Live Q+A Session
THE WORLD AROUND US:
OUR ROLE
Every day: CFO plays a unique role in
Ontario’s and Canada’s supply-managed
chicken protein industry
• Growing and marketing safe, high quality chicken
protein for the marketplace
• Addressing market and sustainability needs
Today: COVID-19 global pandemic makes our
role even more essential
• People staying home to stay safe
• Supplying food to the marketplace. Our food is
critical to sustaining life and sense of safety
AGENDA 1. Our Commitment 2. 2020 An Unusual Year 3. COVID-19 Outbreak and Business Update 4. Strategic Plan 2020-2022 5. Live Q+A Session
2020: AN UNUSUAL YEAR
COVID-19
Base Business Rest Of Year
Impacts
• Strong • Unprecedented • Q2 and Q3
Foundation & environment should see
Momentum starting late March continued
• Good business • Focused on safety impacts
start Q1 2020 and supply
GOING INTO 2020:
CONSISTENT GROWTH
Ontario Domestic Allocation
600 2012 – 2019 Compounded Annual Growth of 3.7%
500
400
Million kg
300
?
200
100
0
2012 2013 2014 2015 2016 2017 2018 2019 2020
2020 GROWTH
IMPACTED BY COVID
Allocation growth has turned negative with four months in
2020 remaining to be allocated
10% Domestic Allocation Growth - Ontario
5.7% 5.7% 5.7% 5.1%
4.6% 4.1% 4.0%
5% 3.6% 3.0% 3.5% 2.9%
2.4% 3.0% 1.9% 1.9%
0%
Average Growth*: Average Growth*:
-5% National: 4.52% National: 2.38%
Ontario: 5.20% Ontario: 2.83%
-10%
-11.35%
-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
Growth Over Adjusted Base
2018 2019 2020GOING INTO 2020
EXECUTING OUR STRATEGY, DRIVING NEXT LEVEL RESULTS
CREATE VALUE
BE ACCOUNTABLE IMPROVE QUALITY
BUILD TRUST LOWER RISKGOING INTO 2020:
New Ontario Pricing Still To Be Resolved
PROFITABILITY Q1 GROWTH Q1 STRENGTH
Improved COPF Improved operating
delivers significant Increased chicken and financial
consumption delivers performance above
farmer value-
sustained growth budget and
creation
historicalsCOVID-19 OUTBREAK & BUSINESS UPDATE
Responding To COVID-19:
Unprecedented Times, Significant Impact On Food
• The global COVID-19 pandemic has an impact on each and every one of us, on all areas
of our lives. The situation is unpredictable and challenging.
• Having started as a health crisis, public health “lockdown” measures to protect citizens
and slow the spread of the COVID-19 virus has led to major economic and social
repercussions
• CFO, AOCP and the Industry Value Chain continue to work closely to secure business
continuity throughout our chicken protein supply chain and maintain supply
• Our common objective of keeping the chicken protein food chain safe, responsive and
resilient is in full alignment with public policy: supporting the Federal and Provincial
authorities in their work to contain the spread of the coronavirusResponding To COVID-19:
Our Priorities Are Clear In A Volatile COVID-19 Environment
Our Goals
• We are understanding and adapting to the realities of a reset food industry
• CFO is managing to three objectives through the COVID-19 pandemic
1. Keeping our people safe while securing business continuity
2. Feeding Ontario and Canada
3. Protecting our business and emerging from COVID-19 stronger than before
• We will actively manage and communicate in response to the dynamic changing needs of
industry value chain and specific government directives
13Responding 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
Protect Lives & Markets & Understand New Challenges Need For Food
Livelihoods Channels Issues & At Plant Donations
Impacted Respond Facilities
Differently Quickly
14Responding To COVID-19:
Focus Is on Running Operations Safely & Smoothly: Five Workstreams
Keeping the chicken protein food chain safe, responsive and resilient
Our Guiding Principles and Goals
People Committed to keeping our employees, farmer-members and industry
colleagues healthy, safe and supported while securing business continuity.
Our Actions
Protect Lives &
• Putting comprehensive preventative measures and focused crisis
Livelihoods
management and communications plans in place.
• Strictly following all government and health authorities’ guidelines and
mandates.
• Continue to have CFO teams work from home. 15Responding To COVID-19:
Focus Is on Running Operations Safely & Smoothly: Five Workstreams
Keeping the chicken protein food chain safe, responsive and resilient
Our Guiding Principles and Goals
Be responsive to lockdown measures and social distancing impacts which has
Demand triggered significant changes in consumer behavior (shopping and consumption)
and demand: 1) reduced out-of-home and foodservice; 2) growth in retail grocery
and e-commerce.
Markets & Our Actions
Channels • Swift response to demand declines and channel shifts commencing A-162
Impacted • Leadership at CFC to reset A-163 and A-164 production allocations
Differently • Frequent and comprehensive farmer and industry communications
16Responding To COVID-19:
Experiencing Significant Changes In Consumer Behavior And Demand
Out-Of-Home & Foodservice/
Hospitality In-Home & Retail Grocery
Rigorous government decisions, lockdown Behavior changes are having huge effects- the
provisions and social distancing impact out-of- grocery industry is having trouble pivoting and
home consumption keeping up
About 35% of Canadian expenditures for food Trying to minimize the risks associated with
used to be at restaurants and other such going shopping, people are buying greater
establishments, now almost all meals are quantities of goods, less frequently
being made in the home kitchen
Initially, out of fear of shortages, Canadians
A food processing and distribution system that were in a cycle of home stock-piling
was built to supply restaurants with bulk items
is struggling to adapt to far smaller packaging New efforts undertaken to protect workers- but
for home use they introduce delays and complications in
getting food to its final destinationResponding To COVID-19:
Focus Is on Running Operations Safely & Smoothly: Five Workstreams
Keeping the chicken protein food chain safe, responsive and resilient
Our Guiding Principles and Goals
Supply Adapt and high agility, ensuring business continuity and maintain supply by
adapting the production levels, operations and supply chain, swiftly reacting
to changing Ontario and National developments and needs.
Understand Our Actions
Issues & • Engage, make fast decisions and deliver comprehensive communications
Respond • Near term, adapted production schedules, and adjusted products grown
Quickly • Continue to comply with all quality, safety and welfare requirements
18Responding To COVID-19:
Immediate Production : Supply Impacts
• Responding to the new demand reality, CFO established new operating objectives for,
• A-162: 03-15 to 05-09 encouraged production resizing; support action with flexibility
• A-163: 05-10 to 07-04 versus the original CFC 02-05 allocation, delivered an immediate -
15% allocation reset
• A-164: 07-05 to 08-29 following a CFC 05-21 allocation meeting, delivered a -12.6%
allocation reset; subsequently updated to -11.35%
• A-165 will be allocated on 06-16 / farmer-members to receive Schedule 1s on 06-19
• Provided clear, consistent communications on production outcomes and risk management
• Farmers encouraged to work very closely with their processors to achieve production goals
19Responding To COVID-19:
Communication Strategy
Deliver timely, accurate and value-added communications to all relevant stakeholders
• COVID-19 Information Section on ontariochicken.ca
• FAQS: Frequently Asked Questions – updated daily
• Repository of CFO’s COVID-19 communications
• Relevant ag industry news
• COVID19@ontariochicken.ca e-mail information line for streamlined and timely communications
• CFO Triage Team for streamlined and timely service with individual farmer-members
• Close alignment with Ontario Government, Ontario Farm Products Marketing Commission + CFC
• Roll-out of “Chicken as Usual” Consumer Relations campaign
20It’s not business as usual on your farms…
But it’s important that we tell consumers they can continue to
rely on our great product
Calming consumers’ fears with the Chicken As Usual consumer relations campaign
CLICK HERE to watch videoResponding To COVID-19:
Focus Is on Running Operations Safely & Smoothly: Five Workstreams
Keeping the chicken protein food chain safe, responsive and resilient
Our Guiding Principles and Actions
Processing Awareness of processing sector operating below normal capacity and challenged by
labor absenteeism, different working conditions, decreased efficiency, higher in-
plant costs, as well as being impacted by market demand volatility.
New Challenges Our Actions
At Plant • Connect with industry to create “common ground” on supply, service,
Facilities processing contingency plans, and emergency management
• Weekly meetings: strategic leadership (14 to date) and operational (16)
• Daily, monitoring plant risk, rates and reliabilityResponding To COVID-19:
Processing Sector Operating In A Dramatically Changed Environment
• 20 Ontario processing plants are in operation; throughput monitored daily
• Majority of plants operate 1 shift, 5 days a week- capacity 4000 to 175,000 birds per shift
• Current reduced capacity reflects adapted ways of working to secure employee’s health
• COVID-19 infections among processor employees has been limited, to date
• Contingency plans are in place to ensure plant continuity in case of increased infection levels
• Plants continue to adapt to customers, product and size mix, weekly demand volatility
• Beyond processing challenges, logistics bottlenecks have also impacted market service
23Responding To COVID-19:
Focus Is on Running Operations Safely & Smoothly: Five Workstreams
Keeping the chicken protein food chain safe, responsive and resilient
Our Guiding Principles and Goals
Community Aiding and supporting our communities where we live and operate/work.
Need For Food Our Actions
Donations • Collaborate with individual processors to secure chicken product supplies
• Increased chicken donations to local food banks where possible
• On an average week, delivering 50,000 chicken meals
24Responding To COVID-19:
A Dramatically Different Environment; CFO’s Financial Approach
• Ensuring a strong financial position, CFO’s commitment to financial discipline is unwavering,
especially in the context of the current volatility
• We are proactively managing those factors upon which we have impact and influence
• Implemented several cost-saving initiatives
• Prudently managing CFO’s capital position- capital investments, working capital, cash/liquidity
25Our Mindset:
Hope For The Best, Plan For The Worst
Unknowns Knowns
Progression of the virus Ongoing challenges for food service
Duration of crisis Short term impact on consumption habits
Scale and impact of government measures Importance of agility
Long term effect on consumer trends Strong cash and liquidity position
Farmer-member updates will be made as our visibility into the
effects of the COVID-19 pandemic on our business improvesCOVID-19 Impacting Short-Term Performance and Decisions,
While Long-Term Direction Remains Unchanged
1. Focused on managing the risks around COVID -19
• Coordinating with AOCP, Ontario industry value chain and CFC on business continuity,
prevention and communications as the situation continues to evolve
• Adhering to latest guidance from governments and public health authorities
• Researching and planning underway for “ recovery/remobilization”
• Note: not currently possible to predict a remobilization date
2. Ensuring a strong financial position
3. Continuing to advance our key priorities to generate long term value for stakeholders
27Responding to COVID-19:
We May Be Keeping Our Distance, But We Are In This Together
Stay Connected
Stay Well
Stay Safe
28STRATEGIC PLAN 2020-2022
Vision A growing, profitable and sustainable chicken industry
Mission To lead positive change and build value as Canada’s premier provider of trusted, family-farmed, safe, high quality chicken
Role Supply Management Leader and Steward
Strategies 1 Profitable,
Consistent Growth 2 Responsible,
Sustainable Production 3 Effective Risk
Management 4 Positive, Productive
Relationships 5 Strong, Progressive
Governance
People & Culture
Financial Discipline
Information Systems & Technology
Enablers
Policy, Regulatory and Legal
Communications & Stakeholder Relations
Values LEADERSHIP ACCOUNTABILITY EXCELLENCE COLLABORATIONWHO WE ARE: A MODERN, RESPONSIBLE SUPPLY MANAGEMENT REGULATOR We are committed to advancing sustainable, high quality chicken agriculture and working to enable Ontario farmers to earn a good living, now and for future generations.
OUR NEXT LEVEL STRATEGY: LEAD THE WAY TO CREATE SUSTAINABLE VALUE Five Key Result Areas to shape our future and help us continue to create value, 1. Ensure the supply management system empowers responsible and sustainable chicken agriculture, adapts to change and creates value 2. Enable our Ontario farmers to earn a good living, now and for future generations 3. Be a recognized agriculture leader in quality, safety, efficiency, reliability, and risk management 4. Achieve continuous improvements and shared success in Ontario’s chicken industry growth and sustainability 5. Build trust with society
STRATEGIC PLAN 2020-2022 Our Five Pillars To Unlock Value 1) Financial return enhancements- in pricing, volume and product mix 2) Modern, responsible regulation- improve regulatory quality and performance 3) Risk management culture- identify, assess and mitigate risks 4) Data and digitalisation- data governance and capabilities enable data-driven value decision making 5) Stakeholder engagement- relentlessly engage the market to identify and capture value
THANK YOU
We May Be Keeping Our Distance, But We Are In This Together
Stay Connected
Stay Well
Stay Safe
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