Tobacco Board to Begin Asset Sale

Source from:  The Simcoe Reformer 07/21/2009

A different kind of auction sale will be held this week at the tobacco auction exchange in Delhi. No tobacco will be tendered. Instead, it will be the tools, equipment and furnishings that were used in recent decades to bring the golden leaf to market. The sale is a visible reminder that the Ontario Flue-Cured Tobacco Growers Marketing Board, as previously constituted, is no more. The board, as a marketer of tobacco, passed into history this spring. An interim board was installed June 1 whose major responsibility is getting a fair dollar for its assets. Once the forklifts, pallet carts, roller tables, oak desks and office chairs are sold this Wednesday, the board will set its sights on its real estate. "We plan to advertise for a request-for-proposals for the possible sale or lease of the Delhi Exchange," president Fred Neukamm of Aylmer said last Thursday at the marketing board's 52nd annual general meeting. "We are also assessing our requirements for head office in Tillsonburg and a decision will be made about that shortly." The assets of the tobacco board belong to former quota holders. A report tabled at last week's meeting estimates the board's net worth at $2.7 million. This spring, the federal government bought out 271 million pounds of tobacco quota. At $1.05 a pound, the payout amounted to $285 million. Now that the money has been paid, the board has been dissolved as a marketing agency. Once the board's assets are sold, former quota holders will be entitled to a share of the proceeds based on the total amount of their poundage. They will also have the option of pooling their share into a collective undertaking in some other area such as green energy. At last week's meeting, Neukamm said the tobacco belt has great potential as a producer of biomass for the production of clean electricity. Ontario Power Generation is exploring the feasibility of converting the coal-fired generation station in Nanticoke to biomass. The new tobacco board consists of five members. They were appointed this spring by the Ontario Farm Products Marketing Commission. The board has an interim operating budget of $220,000. The funds are derived from a penny-per-pound charge on the 22-million pound crop being grown this year by licencees under contract to manufacturers. The interim board plans to hold a membership vote this fall on its future direction. It remains to be seen whether the 118 licensees are interested in having a trade group like the tobacco board represent their interests. There were strong indications at last week's meeting that former quota holders don't want their interests entangled with those who continue to grow tobacco. A report tabled at last week's meeting says 13.8 billion cigarettes were sold legally in Canada last year. This compares with 47 billion in 1997. Chris Van Paassen of Port Dover, a director of the five-member board, says parking lot surveys of cigarette butts show that 50% of cigarettes consumed in this province are contraband. If true, that suggests consumption in Ontario hovers in the range of 27.5 billion cigarettes a year. "No one in government is pushing back on that figure," Van Paassen said. The same report identifies 1974 as the highwater mark for tobacco production in south-central Ontario. That year, 238 million pounds of leaf were sold at auction exchanges in Tillsonburg, Aylmer and Delhi. Sales from the 2008 crop amounted to 22 million pounds. Enditem