Agriculture minister Chuck Strahl last week cast doubt on the federal government’s willingness to provide the money Ontario tobacco farmers are seeking to close down the once-lucrative industry.
He is in a dispute with industry leaders over how many farmers and farm families would be involved and how much it should cost taxpayers.
The industry has asked for a $1 billion buyout for a sector that has been hit hard by anti-smoking policies of Canadian governments and cheap tobacco imports.
It is looking for a federal signal in the March 19 budget that help is on the way.
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federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
Strahl suggested at the Canadian Federation of Agriculture annual meeting March 1 that tobacco farmers have made their situation worse by asking for too much.
He said 600 commercial tobacco farmers would be the main beneficiaries.
“It is a billion dollar ask for 600 farmers,” said Strahl in response to a question from Ontario Federation of Agriculture president Geri Kamenz, who supports the tobacco industry in its demand for an exit payment. “It is a multiple of too much.”
Strahl said that with several hundred thousand grain and oilseed farmers often looking for help, the tobacco demand is too rich.
“I don’t think politically I could sell that to the broader community,” he told CFA delegates. “I don’t think I could sell it to my cabinet. I could not sell it politically.”
In a later address to the CFA convention, Ontario Flue-Cured Tobacco Growers’ Marketing Board chair Fred Neukamm said Strahl was distorting the numbers.
There are at least 1,500 quota holders who need transition money and the board is fighting for a better deal for 200 farm families who took an earlier buy-out but did not receive adequate compensation, he said.
Neukamm said the tobacco industry has declined because of government health policies and the refusal to control cheap imports.
Many farmers have quota and expensive assets and need help to move into another crop, he said.
“We are stuck in a situation where we cannot move without intervention from government,” said the tobacco farmer. “We’re not looking for farm support. We are looking for a program that will essentially eliminate tobacco production. We are asking government for an exit plan.”
Tobacco production in the Tillsonburg area of southwestern Ontario has been lucrative for half a century. Farmers produced under quota but had no protection from cheap imports. Sales prices were established in negotiations with the processors.
Domestic policies and import competition have reduced domestic production by 63 percent since 1998 with another 30 percent cut expected this year, said Neukamm.
In an interview, Strahl said he has been talking to the industry and the Ontario government about what is possible.
“One of the problems is that I told them up front they asked for $1 billion. There are 600 farmers involved. That’s $1.6 million per farmer and so one of the problems has been the size of their ask,” he said. “It is so out of the realm of reasonable that it has made discussions difficult.”
