Ontario’s regulatory body still in hot seat

There are fears that the Farm Products Marketing Commission wants to replace final offer arbitration when growers negotiate with processors

DRESDEN, Ont. — The Farm Products Marketing Commission in Ontario continues to come under fire for its unilateral attempt to remove marketing powers from Ontario Processing Vegetable Growers.

According to agricultural economist Larry Martin, the drama that unfolded over the past four months adds substance to concern among Canadian farmers that their political influence is waning.

“This process was a clear manifestation of that fear. Left to its own, a government bureaucracy was persuaded by unknown political influences, based on (U.S. presidential candidate Donald) Trump-like economic analysis, to remove regulatory powers from an agricultural marketing agency,” Martin wrote in his report, Learnings from a Comedy of Errors, which was released Oct. 12.

“Society has granted organizations in the agricultural sector a great deal of power to regulate their markets, but society today is much less informed and sympathetic than it was in the 1940s, 1950s and 1960s when these powers were delegated.”

The OPVG is a marketing board that represents farmers who grow tomatoes, cucumbers, peas, sweet corn and other vegetables for Ontario processors. For 70 years, the organization has negotiated contract terms and prices on behalf of growers with Ontario’s processors.

In the majority of cases, contracts have been finalized through consensus.

When that fails, a process known as final offer arbitration is used to break the deadlock.

“Final offer arbitration means accepting one or the other of the parties’ final offers,” Martin said.

“This system is intended to restrain the parties from wildly unrealistic positions, and encourage them to settle. In the majority of cases, this is accomplished.”

Martin suggested the FPMC action to erode final offer arbitration may have been influenced by members of the vegetable processing community in Ontario.

“One of the frustrations in working with this industry is that senior managers who make strategic decisions for the processing companies tend not to be involved in either the annual price negotiations nor in strategic discussions about the direction of the industry.”

In contrast, the grower’s organization has taken concrete action toward improving the competitiveness of the industry, including targeted actions supporting the interests of processors, Martin said.

One OPVG study even went as far as to suggest field production could be consolidated by decreasing the number of contracts while increasing their size.

The grower organization has also introduced measures to maintain the production of tomato paste in Ontario, developed processor in-centives in an effort to move toward higher-yielding varieties and has increased yields to the point that they rival those of California growers.

Canada’s processing fruit and vegetable sector was a protected industry until the Canada-U.S. Trade Agreement was signed in 1989.

Martin said Ontario processors looking to cut costs might better focus on electricity costs — Ontario has the highest rates in North America — and labour costs.

In deciphering the FPMC’s actions, Martin drew on answers from the chair of the regulatory body to questions posed by Conservative MPP Rick Nicholls.

A particular source of consternation for Martin revolves around Geri Kamenz’s response to the question concerning the proposed industry advisory committee, which is the FPMC’s suggested alternative to final-offer arbitration.

“Kamenz says that industry advisory committees have been extremely effective in identifying and resolving supply chain issues in other commodities and cites dairy and chicken as two shining examples,” he said.

“Huh? How does an industry advisory committee in two of the most highly regulated industries lead to a conclusion that an industry advisory committee in an industry with almost no regulation will be a solution? This smacks of a conclusion searching high and low for a justification.”

Martin supports the decision by Ontario Agriculture Minister Jeff Leal to intervene by stopping the FPMC’s plans and put it on a better and more transparent track.

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