December 15, 2016 07:00 ET
MITCHELL, ONTARIO--(Marketwired - Dec. 15, 2016) - The Ontario Fruit and Vegetable Processors Association (OFVPA) is warning that 2017 will be a difficult year for processors and growers if steps are not immediately taken to address the concerns of the industry. "The perfect storm is shaping up that can have devastating affects to our industry," said Don Epp, Executive Director of OFVPA. "The growers cartel is operating in the 20th century by demanding exclusive monopoly pricing for their products. Then we have threats from the Trump administration to tear up NAFTA and impose a twenty percent Valued Added Tax (VAT) for anything that crosses the border. Finally, production costs are increasing as a result of changes to hydro prices. All of these together will devastate the processing industry."
The OFVPA has been working for months to get an agreement with the growers to allow for free and open negotiations between processors and growers. This would allow for more innovation, greater stability and increased investment in the industry. "The Ontario Processing Vegetable Growers, a government legislated negotiating agency, is clinging to an outdated system and preventing individual growers from negotiating and marketing their products directly. Even the government's independent Ontario Farm Products Marketing Commission recommended a change in their August 2016 report," said Epp.
Without changes to the pricing structure processors have begun to cancel future orders. Already 70,000 tons of tomatoes have been cancelled and a further 30,000 tons may not get picked up if the current system is in place. This 100,000 tons represents approximately $25 million in economic activity that will be lost in southwestern Ontario. Additional cancellations in other crops are possible further exacerbating the hard hit part of the province.
"We have asked Agriculture Minister Jeff Leal to heed the advice of the Commission," said Karl Evans, President of the OFVPA. "Orders for seed and crop allocation need to be made before the end of the year. If we cannot get commitments from the growers to move towards a more transparent market pricing system we will have to cancel investments in Ontario and divert these investments towards regions where true open partnerships exist."
Evans added, "The Premier has called on the agri-foods industry to double in the next few years. We applaud that and want to help her realize that goal. However one of our greatest obstacles is a restrictive marketing system allowing contracted producers to act as a cartel, and setting a single, sector-wide price that should be paid for products without any consideration for the long term economic consequences of their actions."
Don EppExecutive DirectorOntario Fruit and Vegetable Processors Association (OFVPA)firstname.lastname@example.org
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