Equally Divided Allocation

Equally Divided Allocation

An allocation that is divided equally is distributed to each individual farm in exactly equal pieces. 

Example of how an allocation is divided:

Assume the total quota held in the egg industry is 100,000 units and that the industry is comprised of four producers. Prior to the allocation, the quota was distributed amongst the four farms.

  Quota Holdings
Farm A 10,000
Farm B 45,000
Farm C 25,000
Farm D 20,000
Total 100,000

  • Combined, the four farms hold 100,000 quota units.
  • Now assume that there was a growth issuance for 11,111 birds.
  • BCEMB current practice is to set aside the first 10% of a growth allocation for the New Producer Program (NPP).  As a result, 1,111 birds are set aside for the NPP. 
  • The remaining 90%, which in this example is 10,000 quota units, is distributed via a varied method of allocation amongst the four farms. 

An equally divided allocation involves two steps:

  • Step #1: Divide the total number of producers to determine the allocation amount.

                                                                (10,000 ÷ 4 = 2,500) 

  • Step #2: Distribute the quota to each individual producer by the number calculated in Step #1.
 

Quota Holdings

(A)

Quota Issued

(Step #1) = (B)

New Quota Holdings

(A) + (B) = (C)

Allocated Percentage

(C - A) ÷ A = (D)

Farm A      10,000 2,500 12,500 25.0%
Farm B 45,000 2,500 47,500 5.6%
Farm C 25,000 2,500 27,500 10.0%
Farm D 20,000 2,500 22,500 12.5%
Total 100,000 10,000 110,000  

After the allocation, the quota held by the four farms is distributed as follows:

  Quota Holdings
Farm A 12,500
Farm B 47,500
Farm C 27,500
Farm D 22,500
Total 110,000

 

 

 

 

 

 

When each farm is allocated the exact same number of quota units, the percentage held by each individual farm shifts.

Advantages

  • Gives every farm the same number of quota units.
  • Gradually creates more parity in farm size.
  • When flocks are depopulated because of disease, there would be a decreased industry risk of supply disruption due to a smaller flock size.

Disadvantages

  • Discourages the natural market behaviours that drive the movement of quota and instead may promote land purchases and farm splitting.
  • Uncertainty in allocation size creates production and business planning challenges, and impacts efficiencies.
  • Allocation method is not market-responsive.