Small Tobacco Crop Irritates Growers

Source from:  TEVIAH MORO, Free Press Reporter  08/13/2004

The tobacco board says farmers are losing ground to foreign imports. Ontario farmers say this year's tobacco crop is healthy despite a cool growing season. But they say they should be growing and selling heaps more. This year's crop size is artificially low because domestic processors are favouring foreign tobacco, said Jason Lietaer, general manager of the Tillsonburg-based Ontario Flue-Cured Tobacco Growers Marketing Board. The harvest is just beginning in Southwestern Ontario, which has traditionally been Canada's tobacco-growing stronghold. But the frenetic pace today in tobacco fields and at kilns around the region masks the fact fewer farmers are growing fewer acres of the crop, Lietaer said. "There's plenty of business in Canada right now. The crop size is artificially low." With a record-low crop quota of 87.9 million pounds, he said domestic producers such as Imperial Tobacco are squeezing the market and choosing instead to purchase cheaper foreign tobacco. The tobacco growers marketing board bases annual growers' quotas on the volume cigarette manufacturers need from them. Farmers' woes are compounded by declining tobacco consumption, federal anti-smoking policies and squabbling between processors and the marketing board. "The largest Canadian cigarette manufacturer, Imperial Tobacco, (is) replacing Canadian-grown tobacco with import tobacco," Lietaer said. Prices are the main bone of contention between processors and growers, Lietaer said. "They're under cost pressures and they've been putting pressure on us to reduce our cost, which we've done," he said. The target average price is $2.23 a pound, about the same as last year. Lower prices on the international market, especially from growers in Brazil, China and some African countries, are tough to compete against for Canadian farmers, Lietaer said. With fewer than 800 growers in the province -- Ontario had more than 2,000 in the 1950s and 1960s -- farmers want to recapture all of the Canadian market, Lietaer said. "There's enough business for substantially more domestic pounds than there are grown right now in Canada." A contract signed between domestic processors and the marketing board this spring guaranteed a certain percentage of purchases of home-grown tobacco, Lietaer said. But he said he's unhappy with the terms of that agreement. Domestic processors should be buying more home-grown tobacco, Lietaer said. Imperial Tobacco spokesperson Christina Dona said negotiations with the board have been an arduous process but the company is trying to address the pricing issue. Dona said Imperial is trying to stay competitive in the face of declining domestic consumption. It's too early to tell if Imperial will rely on more foreign tobacco next year, she said. "We're still looking to find solutions through the negotiations process." Meanwhile, farmers dropping out of the tobacco business are hard-pressed to make the transition to other crops, Lietaer said. Investing in other crops, such as ginseng, is difficult for farmers too cash-strapped by reduced business to go out on a limb, he said. There is also a limited market for those alternative crops, Lietaer added. A $71-million compensation package partly aimed at retraining growers announced by federal Agriculture Minister Bob Speller in May has yet to kick in, he said. Though making the transition to other crops is necessary, Lietaer said, the board is focused on keeping its share of business. "Our focus, first and foremost, is to keep the business as strong as possible." Enditem