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Egg management system not all it's cracked up to be, says Nova Scotia farmer

Farmer Aaron Hiltz is seen on his farm in Lake George, N.S. on Monday, Jan. 20, 2014. Hiltz, due to stand trial this fall on a charge under the province's Natural Products Act for owning too many hens without buying quota, says supply management is making it increasingly difficult for young farmers to get a foothold in the traditional industry. THE CANADIAN PRESS/Andrew Vaughan

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Farmer Aaron Hiltz is seen on his farm in Lake George, N.S. on Monday, Jan. 20, 2014. Hiltz, due to stand trial this fall on a charge under the province's Natural Products Act for owning too many hens without buying quota, says supply management is making it increasingly difficult for young farmers to get a foothold in the traditional industry. THE CANADIAN PRESS/Andrew Vaughan

HALIFAX - Canada's egg supply management system, which has landed one Nova Scotia farmer in court over the size of his flock, must be flexible if it wants to satisfy the varying tastes of consumers, says an expert in agricultural economics.

Some critics say supply management, which regulates the number of laying hens a farmer can own, is unfair to newcomers and small producers who can't afford to buy into the system.

Rakhal Sarker, a professor at the University of Guelph in Ontario, said the system remains the best way to manage the country's supply of eggs. But he said provincial egg marketing boards have to meet consumer demand for different types of products, including organic, free-range and free-run eggs.

"If consumers like specialty eggs, if we don't produce it here, people will import them from outside," Sarker said. "Even under supply management, we will lose our business."

Aaron Hiltz of Lake George, N.S., said there's a big demand for the free-range eggs produced on his Annapolis Valley farm. But the 29-year-old said his attempts to satisfy that resulted in him being charged last year under the province's Natural Products Act for owning too many hens.

In Nova Scotia, farmers are permitted 200 egg-laying hens without buying quota under the supply management system administered by the province's marketing board, Nova Scotia Egg Producers.

Hiltz said he keeps between 700 and 800 hens on his farm without owning quota, and sells his eggs at farmers markets.

"When you've got happy customers wanting more and more product, and no one else is producing it and meeting the demand, it's kind of like, why stop?" said Hiltz, who has pleaded not guilty and is due to stand trial in October. He faces a fine of up to $6,000 if convicted.

Hiltz said he earned about $19,000 from his farm last year after expenses. With hens fetching $175 each, he said it's too expensive for smaller producers to buy quota and grow their business.

He said an increasing number of young farmers want to produce organic and specialty eggs but they can't afford to get a foothold in the traditional industry.

"What I first have to do is locate a farmer that has quota who will sell it at what price he dictates, and a lot of those farmers bought it at a really cheap price," he said. "If they bought it in the mid-90s, they may have only paid $15 to $18 dollars a hen."

Peter Clarke, chairman of Egg Farmers of Canada, the industry's national organization, said egg farming is like any other business that has startup fees and ongoing costs.

Clarke, a fifth-generation egg farmer in Woodville, N.S., said plenty of farmers have been able to build their businesses by gradually buying quota.

"I've had to go to the bank, secure loans," said Clarke, whose farm has about 30,000 hens. "Yes, you can grow. Yes, you can start small. But you need to start within the rules and regulations of the system."

He said the supply management system was introduced in Canada about 40 years ago to protect farmers by providing fair, steady prices for their product while meeting the needs of consumers, and continues to do so.

Clarke said his organization tracks consumer data, adding there is no shortage of specialty eggs on the market.

In November, Nova Scotia Egg Producers doubled the number of hens a farmer can own without buying quota to 200 from 100. It also added 2,000 hens to its supply management system as part of a program for new-entrant farmers looking to produce free-run, free-range or certified organic eggs.

Under the program, eligible farmers can enter a lottery to have up to 500 units of quota at no cost. At the time, the board said it was introducing the quotas, which cannot be transferred or sold, to meet the growing demand for specialty eggs.

But Hiltz said he doesn't believe enough is being done under supply management.

"It's basically set up for the producer, to protect the producer," he said. "The main goal is not the consumer."

Ultimately Hiltz said supply management should be scrapped, though he said he's wary about U.S. eggs potentially flooding the market — a concern Sarker shares.

If supply management is here to stay, Sarker said marketing boards should make room for different types of producers.

"If young producers want to get into the industry and produce specialty eggs or specialty products, then egg marketing boards should welcome them," he said. "It would allow young farmers to come into the sector with new ideas and that would help the industry."

Follow @melaniepatten on Twitter.

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