Agriculture and Agri-Food Canada

Agriculture and Agri-Food Canada

August 01, 2008 11:42 ET

Government of Canada Delivers Real Action for Tobacco Farmers and Their Communities

DELHI, ONTARI0--(Marketwire - Aug. 1, 2008) - The Government of Canada is providing more than $300 million to Ontario's flue-cured tobacco producers, including $286 million for a Tobacco Transition Program to help them exit the tobacco industry, and $15 million for community development initiatives.

The announcement was made today by the Honourable Gerry Ritz, Federal Agriculture Minister, at the Delhi Tobacco Exchange Auction, joined by the Honourable Diane Finley, Minister of Citizenship and Immigration and MP for Haldimand-Norfolk, and Joe Preston, MP for Elgin-Middlesex-London.

"Minister Finley has been a tireless proponent of an exit package for tobacco farmers," said Minister Ritz. "As such, the Conservative government has been committed to finding a responsible solution. I've said it before and I will say it again: the Conservative government is committed to putting farmers first."

The Tobacco Transition Program will provide transition and exit assistance to producers interested in exiting the sector. Payments will be based on proposals by the Ontario Flue-Cured Tobacco Growers' Marketing Board and accepted by the government. The program will provide federal funding of $1.05 per pound per quota, which is consistent with the federal portion of the Board's latest request.

"Through our work with the Ontario Flue-Cured Tobacco Growers' Marketing Board our government has produced real results and shown our commitment to farmers," said Minister Finley. "Tobacco producers and their families will be able to bring closure to what has been a very stressful time. This program is available to help producers exit the industry, transition to other crops, or find new opportunities outside agriculture."

"This is not only a win for farmers, it's a win for all tobacco-affected communities," said MP Preston. "Since the Community Task Force was established by Minister Ritz, we have been working with mayors and community leaders, and the task force to find solutions that will address the long term impact this challenging year has had on local communities."

The $15 million being provided for community development is to help communities transition to a non-tobacco based economy. Also in attendance was the Member of Parliament for Oxford, Dave Mackenzie, who is Parliamentary Secretary for the Minister of Public Safety, as well as Members of Parliament Dave Van Kesteren and Bev Shipley.


Tobacco Transition Program

Assisting agriculture producers in adjusting to market realities and capturing new opportunities is a priority for Prime Minister Stephen Harper and this Government. Ontario tobacco producers have faced significant and unique challenges that have made it difficult for them to transition out of the industry.

The industry has been facing a dramatic drop in demand for flue-cured tobacco over the last number of years. In 2005, producers grew nearly 84 million pounds of raw-leaf flue-cured tobacco. The expected crop size for this growing season is estimated to amount to approximately 20 million pounds, a decline of approximately 75% since 2005.

Increases in domestic manufacturers' use of cheaper raw tobacco imports as well as offshore production and reductions in Canadian smoking rates have all contributed to the decline in demand for Canadian flue-cured tobacco.

Tobacco producers also rely on specialized equipment required for tobacco farming, and because they operate on small plots of sandy soil diversification is difficult.

The Tobacco Transition Program will provide federal funding of $1.05 per pound per quota, which is consistent with the federal portion of the Ontario Flue-Cured Tobacco Growers' Marketing Board's latest request. This is equivalent to funding provided to producers under the $67 million 2004 federal Tobacco Adjustment Assistance Program which did not transition or exit all producers.

A key component under the Tobacco Transition Program will be working with the Province of Ontario to repeal the current provincial production controls placed on flue-cured tobacco and implement a provincial licensing system for tobacco growers. Repealing the current production controls will allow producers that stay in the sector to make production decisions based on new market realities. Tobacco producers who accept transition assistance and exit the industry will not be able to re-enter tobacco production.

Today's funding announcement is just the most recent example of how this government is supporting Ontario's tobacco farmers. Since this Government has taken office, existing programs have delivered almost $20 million in support for the tobacco sector. These programs provide farmers with financial stability, access to tools such as business planning that can help them diversify and identify new opportunities, and programs that support community development.

The federal Minister of Public Safety also recently unveiled the RCMP's new Contraband Tobacco Enforcement Strategy, which aims to nationally reduce the availability of and decrease the demand for contraband tobacco.

Tobacco is a provincially managed commodity in Ontario where production and sales are regulated by quota systems. Responsibility for Ontario's tobacco quota system falls under the purview of the Ontario Flue-Cured Tobacco Growers' Marketing Board.

Contact Information

  • Agriculture and Agri-Food Canada
    Ottawa, Ontario
    Media Relations
    The Office of the Honourable Gerry Ritz
    Margaux Stastny
    Press Secretary