Tobacco Growers Await Agreement

Source from:  Jeff Kempenaar/The Chronicle Thursday June 07, 2007 06/08/2007

Planting has begun but the two remaining tobacco farmers in the area don't know what they will get for the crop. It's not the first time growers have planted without knowing a crop size or value. Members with the Ontario Flue-Cured Tobacco Growers' Marketing Board were meeting with cigarette companies last week. "We've had a bit of a history of late, late conclusion of the negotiating process to set the crop agreement," said Fred Neukamm, chairman of the Ontario Flue-Cured Tobacco Growers' Marketing Board. "The negotiating process is kind of underway. Difficult, very difficult circumstances," he said. Local growers expressed frustration with the negotiations and an uncertainty with the future of the crop. "One thing is for sure. We're the last generation of tobacco growers here," said Peter Vergeer, one of the brothers, owning Hollanada Farms. Over the winter, growers planned for a crop size well below their own quota. Labour was hired and early input costs, fumigant at $250 per acre were incurred. Neukamm said a letter was sent to growers last month stating the crop maybe around 31 to 36.5 million lbs. "That translates into a range of growables between 11.4 and 13.4 per cent. We've advised our growers that we don't have any confidence in the upper end of that range and that they would be well advised to plan for the lower end," he said. The cigarette manufacturers import a fair amount of tobacco too, said Neukamm, as the companies try and compete with contraband. "The major manufacturers, in an effort to protect their market share, discount a number of their brands in order to try and compete with this illegal segment. In order to protect their profit margins and returns to their shareholders they've chosen to displace our tobacco with a significant amount of much cheaper imported tobacco," said Neukamm. Meanwhile the board continues to negotiate with the federal government on an exit strategy from the industry. "We've been lobbying government to set in place a comprehensive exit plan to help people transition out of tobacco. Reality is we have 1,559 quota holders and what the manufacturers are telling us is that approximately only 200 medium to large size farms are needed to grow the required volume. That's how grossly under utilized our infrastructure is," he said. "What we are seeking now is something comprehensive that will deal with all the remaining quota holders over the remaining life of production here. We do see the end in sight. We don't know exactly when. We've proposed to government to help exit in however many years until such time there is no more required production here," he said. "There's no doubt. we have many constituents who are ready to go. They hear the government their ready to throw in the towel. they're ready to go on with their lives. we need help to do so. we have more meetings as part of this process within the next week," said Neukamm. Enditem