Ontario tobacco growers get federal exit money

After months of insisting Ottawa had no new money to buy out the struggling Ontario tobacco-producing sector, agriculture minister Gerry Ritz has come up with $301 million.

Pressure from the farm sector is now on the Ontario government to contribute an additional $190 million to make up the provincial 40 percent of what would be a $475 million buyout.

But since there was no prior federal-provincial agreement, the Ontario government has made no announcement. In the past, agriculture minister Leona Dombrowsky has said Ontario has no money budgeted for a tobacco buyout.

The Aug. 1 announcement by Ritz came as a surprise, since he told the Ontario Flue-Cured Tobacco Growers’ Marketing Board last winter that any aid money would have to come from existing programs.

He was adamant that Ottawa was not interested in setting a precedent by buying out quota despite a motion from the opposition majority on the House of Commons agriculture committee that exit funding be provided.

The program announced by Ritz provides $268 million in transition money and $15 million for development projects in communities that will be affected by the end of what had been until recent years one of southwestern Ontario’s most lucrative farm sectors.

Faced with low prices, falling demand, relentless anti-tobacco programming, taxes by federal and provincial governments and low-priced competition from smuggled tobacco products, the industry had been pleading with the Conservative government, and the Liberal regime before it, for money to allow heavily indebted farmers to leave the industry.

Mark Wales, an Aylmer, Ont., farmer who grew tobacco for 28 years before taking a limited Liberal buyout in 2005, said the federal money marks the end of a farming era.

“This is the end of the industry as we have known it since 1957 when quotas came in and the invisible auction was established,” said the Ontario Federation of Agriculture executive member.

He predicted that some farmers will continue to grow tobacco because they have the specialized equipment and the investment.

But they will be on their own without government support.

“At this stage, I think the federal government has done what it said it would do and I don’t see them doing any more,” said Wales. “I think this is an important first step toward an adequate buyout program. If the province comes up with its 40 percent, it would give producers $1.74 per pound of quota, which was what we received in the 2005 buyout. Now, the attention turns to the provincial government.”

The failure to act by Ritz and his predecessor, Chuck Strahl, had become a touchy political issue for the Conservatives. In 2006, the party won a number of rural tobacco-belt seats in part on the basis of complaints that the Liberals had not done enough to support a tobacco industry exit.

In 2004, current citizenship and immigration minister Diane Finley defeated then-agriculture minister Bob Speller in part with promises that a Conservative government would do a better job on the tobacco file than did the Liberals.

More than two years later and with no help in sight, Liberals were predicting that Finley could be defeated.

Liberal agriculture critic Wayne Easter referred to the minister’s political troubles when he reacted to the tobacco announcement.

“It seems to be getting close to the mark,” said the Prince Edward Island MP of the money offer. “But what has the government been doing for the past two years as farmers lost money, lost their farms and sometimes took their lives? It looks like they are moving now because they realized that Diane Finley is in a losing position with an election coming.”

Although Ritz did not call it a quota buyout, he acknowledged that the payout would be based on Ottawa’s 60 percent share of the tobacco board’s last proposal that growers receive $1.74 per lb. of quota.

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