Tomato processors seek changes to Ontario marketing board

Ontario processing growers delivered 500,000 tons of tomatoes to processors in the province last year. They’re under pressure to change the way the crop is contracted.  |  Jeffrey Carter photo

Growers argue proposed changes to provincial farm products marketing act could render marketing boards toothless

LONDON, Ont. — Ontario’s marketing board for processing vegetables is under attack, according to its chair.

Francis Dobbelaar said Ontario Processing Vegetable Growers has rejected the latest proposal from the Ontario Farm Products Marketing Commission that would open the door to direct contracts between processors and growers for tomatoes.

“Their definition of direct contracts is clearly an end-run around the board,” he said, speaking here at the Ontario Processing Vegetable Conference Jan. 30.

Contracts between growers and processors for most vegetables are now negotiated through a system known as final-offer arbitration. If an agreement cannot be reached through mutual consent, each party submits a final offer to an appointed arbitrator who chooses between the two.

It’s a process that encourages reasonable offers to be made in the first place, Dobbelaar said.

Last year, while growers were in the middle of harvest, the commission announced its intention to change the Ontario Farm Products Marketing Act. Growers worried that its marketing board powers would be lost completely.

Ontario’s agriculture minister, Jeff Leal, intervened, directing the commission not to implement any regulatory amendments until there’s a detailed economic analysis and consultations among all stakeholders.

The economic analysis isn’t complete but the commission, growers and processors did meet in December.

Now the commission has proposed a three-year pilot project affecting only tomatoes, the largest volume processing crop in Ontario. It would open the door to direct processor-grower contracts for up to 20 percent of contracted volumes greater than the past three-year average.

Eric Allaer, a tomato grower near Wallaceburg, Ont., said the proposal is a good first step and feels direct processor-grower contracts could replace the current model entirely. He said about 25 percent of growers support some kind of change.

“To stay in business, I need him (my processor) and he needs me,” Allaer said.

“We already do it with processing peppers.”

Jim Clark, recently appointed as the new chair of the commission, sees the proposal as a compromise and a way for the processing tomato industry to grow.

“The world is changing,” he said.

“I do see an opportunity here to land in a good spot that benefits all the parties involved.”

Kaal Evans, chair of the Ontario Processing Vegetable and Fruit Growers Association, agrees. “Our fear is for the long term. We’re looking for growth and we haven’t seen sustained growth,” he said.

Clark said there’s talk among tomato processors of cutting production by 75,000 to 100,000 tons this year.

Dobbelaar has heard the same thing. “Farm products is convinced the processors, especially Highbury-Canco in Leamington, Ont., will reduce grower numbers and acres,” he said.

Dobbelaar said the proposal to have direct contracts between growers and processors would undermine the transparency of the system. As it now stands, all growers delivering to a processor have the same price, terms and conditions. That would not necessarily be the case under the commission’s proposal.

The call for change comes at a time when there’s a glut of tomatoes on the North American market. In California, production is to be reduced from 13.2 million tons to 11.6 million tons to reduce inventory.

While processing tomato prices are soft, the Ontario industry does have the advantage of the relatively low Canadian dollar.

Ontario growers delivered close to 500,000 tons of tomatoes to Ontario processors last year through 105 contracts, the third consecutive year of increased production but less than the 555,000 tons that were harvested in 2012.

In 2013, the industry was thrown into turmoil with the announced closure of the Heinz plant in Leamington. The plant was later purchased by Highbury Canco, an Ontario-based company.

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