The U.S.-based food processing giant and the Quebec government on Nov. 17 announced the expansion plan for the company’s Mont Royal plant, which today makes products such as KD Mac + Cheese, Philadelphia cream cheese, Renee’s dressings and Kraft peanut butter.

The new ketchup line is expected to start operating in late summer of 2021 and produce over 100 million pounds of Heinz ketchup for the Canadian market within its first two years, “as production ramps up.”

The expansion is expected to add about 30 jobs at Mont Royal and help maintain about 750 more, provincial Transport Minister Chantal Rouleau said in a release from investment agency Investissement Quebec International.

Heinz ketchup sold in Canada has been made at plants in the U.S. since 2014, shortly after the company said it would shut its processing plant at Leamington, Ont., southeast of Windsor. Kraft Heinz reached a deal the following summer to sell that plant to a consortium of Ontario investors operating as Highbury Canco.

Kraft Heinz today bills itself as Highbury Canco’s largest customer, using Leamington-grown tomatoes in Heinz tomato juice and canned beans and Classico pasta sauces, among other non-ketchup goods. Kraft Heinz also still runs a tomato seed operation out of Leamington, supplying most processing-grade Heinz tomato seeds used on farms in Eastern Canada and the eastern U.S.

But the provenance of Heinz ketchup sold in Canada since 2014 has been a sore spot for some consumers, who vowed on social media to seek out rival ketchups made at plants within Canada.

“Kraft Heinz Canada is pleased to partner with the Quebec government on this investment in bringing ketchup production back to Canada from the U.S.,” Bruno Keller, president for Kraft Heinz Canada, said Nov. 17 in the company’s release.

“Through our partnership with Quebec and increased efficiencies at our Mont Royal facility, it became possible to return this iconic product back to Canada for Canadians at this time.”

Other media outlets have quoted company representatives as saying the tomatoes feeding the Montreal plant will at first continue to come from U.S. farms with which the company has contracts, though more of those tomatoes may be sourced from Canada in the future.

The Montreal plant, Keller said, “has been an important part of the Quebec economy for over six decades, and we are delighted to be able to help feed more Canadians every day thanks to investments like this one.”

The Quebec government’s hand in the project is a $2 million loan from Investissement Quebec’s ESSOR program, which offers loans, loan guarantees or financial assistance to”substantial long-term development projects” carried out within Quebec involving eligible expenditures of at least $100,000.

“With this new production line, (Kraft Heinz) is taking concrete steps to ramp up local production and continue its growth here,” Stephane Paquet, CEO of Montreal economic development agency Montreal International, said in Investissement Quebec’s release.

“This decision is proof positive that foreign subsidies too have a role to play in promoting and expanding local sourcing.”

Heinz’s relationship with Canada dates back to 1909, when Henry Heinz picked Leamington as “the most suitable site” for a pickle packing plant, the first expansion of his company’s operations outside the U.S. — Glacier FarmMedia Network

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That’s what Ontario’s processing vegetable growers heard at their annual meeting from the chair of the group that regulates farm marketing in the province.

That doesn’t mean some farmers didn’t still question the province’s move to fire the board of the Ontario Processing Vegetable Growers (OPVG) and its staff in 2017.

Jim Clark, the chair of the Ontario Farm Products Marketing Commission (OFPMC), said changes to the industry were necessary to continue to break down silos between parts of the value chain and move the sector forward.

The bottom line: Challenges remain in sorting out the new regulations imposed on the organization, but most of the way forward has been set for the sector.

Arpad Pasztor spoke to the concerns of many growers in the industry over the past year, as he addressed Clark during a question and answer session at OPVG’s annual meeting last week.

“I’ve been trying to get my head around the whole situation since it started,” said Pasztor, a cucumber grower. “For the life of me, I don’t understand why this is happening even now. I’ve been involved in other marketing boards. This is one of the best run and best for the growers’ sake.”

Pasztor challenged the marketing commission’s record and suggested it favoured processors over producers.

That prompted Clark, whose main job is the executive director of the Ontario Cattle Feeders’ Association, to defend his farming credentials.

“At the end of the day (we) have to start moving this thing forward, people. There’s enough blame going around for everybody, trust me.”

However, most of the annual meeting’s comments were saved for details about the way forward, including clarification on contract security language in Regulation 440.

In the room were several of the province’s leading growers and former board members, including Francis Dobbelaar, a Wallaceburg grower, former chair of the board and the leader of a new organization formed for vegetable growers after the OPVG board was dismissed.

“I trust Jim and I trust his direction,” Dobbelaar said. “We’re moving forward and that’s what we should do, but we have to make sure we follow good governance practices.”

The changes to the board practices were necessary to encourage processing to stay in the province, Clark said.

How did we get here?

• In 2016, the Ontario Farm Products Marketing Commission proposed opening up the marketing of processing vegetables in Ontario. Jeff Leal, the Ontario agriculture minister stayed that process after a producer and industry outcry.
• Last winter, after little progress on changing the sector, Leal fired the board and installed a trustee when a major tomato buyer, Highbury Canco, refused to negotiate with the OPVG.
• Most of the rest of the employees were dismissed and the trustee negotiated contracts for the 2017 growing season.
• Half of a new board was appointed, and half was elected last fall.
• A board chair, Suzanne Van Bommel, was appointed for two years.
• The OFPMC, under new chair Jim Clark, was given the task of managing the transition to a new reality for processing vegetable marketing, including the fall release of Regulation 440 a new set of rules for the sector.

Audit called sloppy

Processing vegetable growers, their organization’s board of directors and its lawyer all called for investigation of the details of an audit of the board by the provincial government.

The audit, conducted by the internal audit division of the provincial government’s treasury board secretariat, was critical of the cost of board per diems, calling them four times the average for farmer boards. Language used in the audit has created confusion over whether costs stated are for the entire board or per board member, and the audit makes reference to 12 board members when there are nine.

Van Bommel said the board has requested a meeting with the internal audit division and has been working with its own auditors to check the numbers of the government audit.

“Auditors are very, very careful,” board lawyer Rob Wilson told growers. “It strikes me that this document you’ve got isn’t an audit. It’s a disappointing document and disparaging to this organization.”

— John Greig is a field editor for Glacier FarmMedia based at Ailsa Craig, Ont. Follow him at @jgreig on Twitter.

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The agreement, announced last week, maintains the contracted tonnage of 2016 and follows the five-year pricing agreement set by growers and processors last year.

Final prices, however, aren’t yet set as the Ontario processing tomato price is based on the California Tomato Growers Association price plus Ontario considerations, such as the value of the dollar and productivity.

Though the CTGA price isn’t yet set, the productivity section of the Ontario agreement has — and it includes a discount over last year’s price for extra yield.

Under the new price adjustment, for each one ton increase in yield, starting at 39 up to 40 tons per measured acre, a discount of 0.5 per cent per ton will apply; for each one ton increase in yield from 40 to 45 tons per measured acre, the price will be discounted by one per cent. Over 45 net tons per measured acre, a price discount will apply of 1.5 per cent per ton. The price decreases incrementally as yield increases incrementally.

The formula for productivity has decreased from last year. For example, from 39 to 40 tons last year, there was no decrease, but this year there’s a discount of 0.5 per cent per ton. Some slight increases in payment for replants and transplants are now included.

The three largest processors of tomatoes in southern Ontario reached agreements under the process, including ConAgra Foods Canada, Highbury Canco and Sun-Brite Foods.

The processors had been pushing back against the ability of the Ontario’s Processing Vegetable Growers (OPVG) to negotiate processing tomato contracts for all producers.

Now that there have been contracts created for the same tonnage as in 2016, there will still have to be a permanent solution found to reorganize how tomato and other processing vegetable contracts are negotiated.

“I am pleased that (OPVG) and our three major tomato processors worked together to reach negotiated agreements for the 2017 growing season,” Jeff Leal, Ontario’s minister of agriculture, food and rural affairs, said last week. “I appreciate their hard work during the negotiating process to ensure a deal was reached for the parties involved.”

Leal had dismissed the board of directors of the OPVG when an impasse to a new contract between tomato growers and the main processors could not be broken. He appointed former agriculture minister Elmer Buchanan as the trustee of the board and he worked to get the contracts done.

“As with any successful negotiations, both sides came to the table and were willing to compromise to reach an agreement,” said Buchanan in a statement. “This resulted in a successful deal that will benefit the industry.”

The Ontario Fruit and Vegetable Processing Association (OFVPA) last week said growers under this year’s interim process “successfully negotiated to get back over 100,000 tons of tomato production previously cut.”

“It is important that (Leal) set in place permanent regulations to the interim changes he made to save the 2017 season,” OFVPA president Steve Lamoure said in a release.

“We can’t be back to the same impasse come September. We have proven that reform leads to investments and jobs. Working directly with our partner growers really worked well.”

— John Greig is a field editor for Glacier FarmMedia based at Ailsa Craig, Ont. Includes files from AGCanada.com Network staff.

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Sun-Brite Foods and Highbury Canco, which describe themselves as two of the three biggest tomato processors in the province, said Wednesday their cutback in orders “will be felt first among seedling producers who normally receive contracts in February and early March.”

The processors, in a release from the Ontario Fruit and Vegetable Processors Association (OFVPA), said they won’t sign contracts “until the recommendations of the province’s independent Farm Products Marketing Commission are implemented.”

The commission in February had proposed to amend Regulation 440, which sets out the process for negotiations, establishment of negotiating agencies and appointments of representatives to said agencies for the marketing of vegetables for processing.

The commission said at the time it had met with vegetable processors and found those companies would rather negotiate “with their own active growers” of a given vegetable.

The commission proposed to take out 440’s provisions on establishing negotiating agencies and put in provisions establishing an industry advisory committee.

The commission’s plan would set out “minimum requirements for active growers of each processor to be participants of the negotiating agency for each vegetable.”

By comparison, the current rule allows Ontario Processing Vegetable Growers (OPVG) and the OFVPA to name up to 10 appointees to each negotiation agency.

OPVG, with support from the Ontario Federation of Agriculture, protested against the commission’s proposal.

The grower group said at the time its board doesn’t believe “changes to a democratic process should occur as a result of concerns expressed by processors or even by a relatively small number of growers.”

Provincial Agriculture Minister Jeff Leal stepped into the fray in August, telling the commission that “concerns have been raised about an apparent lack of both adequate and sufficient information and consultation with interested parties.”

Leal instead directed the commission to “develop a plan for engagement and consultation with interested parties and stakeholders concerning any proposed amendments to the regulatory framework for the vegetables-for-processing industry.”

The Farm Products Marketing Commission had said in February it planned to have its proposed changes in place for use by the industry when negotiating agreements for 2017’s processing vegetable crops.

“After years of thorough review, the commission recognized that the way that vegetables are marketed in Ontario needed to change,” Highbury Canco CEO Sam Diab said in Wednesday’s release. “This was not an easy decision.”

Talks with seedling producers have already wrapped up with no increase in price over the term of the contract, the processors said Wednesday. However, they added, individual processors “determine quantities and initiate orders.”

OFVPA president Karl Evans said the processor group has been “open with the minister, the commission and the growers that we will not negotiate 2017 contracts under the current predatory system. There are other processors who will be announcing their decision early in the new year.”

The tomato processors said Wednesday their action “is on top of the 100,000-ton cutback on tomatoes for processing announced last week.”

“Small growers are the victims of their own association’s cartel, and should hold their executive accountable for their economic losses,” Sun-Brite Foods CEO John Iacobelli said in Wednesday’s release.

“Millions of dollars in economic activity is now at risk as a result of the growers’ decision not to follow the commission’s recommendation.”

In a separate letter to Premier Kathleen Wynne on Wednesday, Evans urged her to “direct (Leal) to immediately implement the recommended changes to Regulation 440… we know you appreciate there cannot be further investment in the sector until the reforms recommended by your independent commission are implemented.” — AGCanada.com Network

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