The Ontario Processing Vegetable Growers says that instituting direct contracting for Ontario growers of processing tomatoes will “devastate rural Ontario growers and potentially kill thousands of jobs.”
The Ontario Farm Products Marketing Commission (OFPMC) – the provincial government agency that regulates farm marketing boards – has proposed opening up marketing for tomatoes to direct contracting between farmers and processors. The OPVG has for years negotiated pricing for most processing vegetables on behalf of growers.
Why it matters: The decisions of the Ontario Farm Products Marketing Commission on this topic will have a profound effect on how processing vegetables are marketed in the province.
The organization recently submitted its response to a request for input on the OFPMC’s proposed changes to the organization and marketing in the sector. The deadline for input was June 6. The submission was signed by Dave Hope, the government-appointed chair of the board.
“Direct contracting heavily disadvantages small and medium-sized growers as they have little to no bargaining power to negotiate with larger independent and multinational processors,” the submission says.
It points to Australia, where deregulation in the tomato market meant a decline in tomato growers from 107 to 16 from 1991 to 2016. Processor numbers also declined from 10 to three.
The OPVG says that in its current form, the organization embraces free trade, thrives in an international market and attracts investment.
There has been more than $300 million in investment in the processing vegetable industry in Ontario since 2015.
The OPVG says that it believes there’s room for improvement in the industry and wants to be part of the plan, including proper consultation.
“We request that the government establish a fair and transparent consultation committee with appropriate time frames.” The OPVG previously expressed concern about the fact that the consultation period was during spring planting time.
The OPVG has four key areas it says are needed to maintain sector profitability, including:
- Pricing framework – An industry-wide multi-year pricing framework for tomatoes that fosters investment in the industry.
- Grower security – A previous round of changes created a provision that allowed a processor to not renew contracts with a farmer without cause with a year’s notice. The OPVG wants a return to the previous two-year notice.
- Fairness – Ensuring that processor capacity changes and need for more product be evenly dispersed among growers.
- Governance and accountability – The OFVG wants the current governance structure for growers to remain and says that any changes should focus on increasing participation from growers.
The organization says that in 2016 98.9 per cent of growers wanted the existing model of annual negotiations maintained.
Some growers looking for change
There are, however, growers who support opening up marketing of processing tomatoes.
Eric Allaer, a Lambton-Kent grower of several processing vegetables, says he believes farmers that grow about 35 per cent of the tonnage of tomatoes produced in Ontario support increasing direct marketing with processors.
“I think it’s important to note that it’s not at all one or two rebel growers out there,” he said. “I farm with my brother, my son and my nephew. Every farmer involved on the side of wanting change are family farms. They are not run out of some corporate office,” he said. He contacted Farmtario because he says those who support change are not getting the same voice as those who are opposed.
Allaer grows for processors in Ontario, but also grows peppers and pickling cucumbers for U.S. processors where he sells directly.
Peppers were once under the authority of the Ontario Processing Vegetable Growers (OPVG), but when almost all processing left, price negotiation was dropped. Allaer says there are now significant acres of peppers grown in Ontario and shipped to the U.S. and he points out that some of the growers shipping to the U.S. where they direct market, are vocal about supporting the continued collective marketing of processing vegetables in Ontario.
Allaer was one of the growers appointed to the board by the government when the previous Liberal government dismissed the board of directors and appointed a board and a chair for a year. The board is now fully elected, and Allaer wasn’t elected to the board in elections earlier this year.
He points to other times in Ontario’s agriculture marketing history when marketing was liberalized including wheat and hogs and both those sectors have continued to grow.
The sector needs to remain competitive, he says and the board helps protect inefficient growers.
“Growers not in the industry today, other than those who have retired, it was not price that made them exit the business. It’s always consistently been a lack of good production,” he says.
Allaer is also a turkey producer and therefore works under an even-more-highly regulated market system under supply management. The difference, he says, is that there are tariffs that protect the border under supply management, whereas in tomatoes “we have to compete with the big boys, the Californias of the world.”
Allaer believes there’s still a role for the OPVG board, in research, government relations and in grading. However, he doesn’t believe the board will change, or lead significant change in the sector.
“They should be spending time and energy and be open minded about what do we have to do to make the change.”
Instead, he says the board is trying to maintain the sector where it was 10 years ago, not where it needs to be 10-years from now.