Making economics real for egg farmersBy Daniel Drolet
University economics chair finds real solutions to real problems
One of the things Maurice Doyon likes about the work he’s doing is that he is actually helping farmers.
Not many economists, he adds, have the satisfaction of knowing they are making a tangible difference in people’s lives.
As holder of the first Egg Industry Economic Research Chair at Université Laval in Quebec City, Doyon gets to do economics research with very direct applications.
As the son of a farmer–Doyon’s father built a dairy farm in Quebec’s Eastern Townships–he knows first-hand what farmers face.
Doyon himself was never going to be a farmer. He studied the sciences–microbiology and biology–before heading off, by accident, into agricultural economics.
“One of the reasons I went into economics is that I didn’t like the way economists thought,” he says. He ended up becoming passionate about a relatively new branch of economics that takes an empirical approach to economic theory by generating its own data.
“It was a perfect fit for me,” he adds.
Doyon, who has been working with Egg Farmers of Canada since 2009, holds one of four research chairs sponsored by the organization. These chairs work towards sharing knowledge and evidence-based research with farmers, industry and the public in the pursuit of continuous improvements in key aspects of operations.
His challenge and goal are to generate research that is valuable (applied) for egg farmers, while having a significant academic contribution. In economics, it is a goal traditionally more difficult to achieve.
For example, the Canadian egg industry operates on a quota system. But until recently no market had existed in Canada for egg quotas.
Egg farmers, says Doyon, were interested in creating a centralized market in which they could buy and sell egg quotas.
Doyon and his collaborators began working on the design of an auction with specific characteristics demanded by egg farmers. “One big challenge for us,” he explains, “was to create a centralized auction that would not inflate prices but still be efficient.”
Doyon’s team created a base quota auction design, called the truncated auction, which was first used after it had been tested in economic laboratory. Then, using feedback from egg farmers, they worked on rules to improve the auction and tested them in the laboratory and finally implemented them. It was used in Quebec for three years and recently came into effect in Ontario.
Under the system, buyers and sellers of Ontario egg and pullet quota conduct transfers through a transparent and accessible electronic transfer system.
There is a published schedule for the exchange to operate quarterly. If sufficient quota is offered to operate an exchange, the volume on offer is made public so potential bidders can take part in the exchange.
“It’s a big success,” says Doyon. “Two students did their master’s thesis on it, it was presented in scientific conferences in three countries and it was published in an academic journal. Most importantly, it has been useful for egg farmers.”