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Ontario: New processing vegetable regulations

08/01/2020 - François-Xavier Branthôme - 2020 Season
"New regulations remove bargaining power from growers"

 Some Ontario processing vegetable sector representatives are concerned about the effects of new negotiation processes on tomato and carrot producers.

The Ontario government has announced changes to the way that growers and processors of processing vegetables, specifically carrots and tomatoes, will negotiate contracts, Ernie Hardeman, Ontario’s minister of agriculture, food and rural affairs, announced in a Dec. 11 statement. The province established these changes without typical consultation with industry groups. “Usually, when the (government) has a consultative process, it involves all aspect of the industry,” said Keith Robbins, the general manager of the Ontario Processing Vegetable Growers (OPVG). This process would typically involve growers and legal representatives. “This didn’t involve the standardized collective consultative process,” Robbins said. As a result, the government seems to have overlooked many key details, while other aspects of the system reduce growers’ agency. “Tomatoes and carrots are two of the commodities that will now have to be either directly negotiated or negotiated through a negotiating agency,” Robbins explained.

Under the new regulations “the processor calls a meeting of their growers in early January. At that meeting, the growers themselves have to determine whether they want to have a direct contract or if they’ll be bound by a three-year agreement with price not really established on year two or year three,” he said. This decision is reached through anonymous vote, however regulations do not specify how many growers must be present for the secret balloting, Robbins explained.

If the growers vote to use a negotiating agency, “the processor, on its side of the table, can have as many individuals negotiating as it wishes. The processor will select three of the growers that it wishes to have on the opposite side of the table, and the growers themselves will elect three (additional) people,” he said. This arrangement, the OPVG said, leads to a power imbalance.
If you were in negotiation with any other industry and it got to determine who’s sitting at the table on the other negotiating side – it effectively removes the bargaining power of the growers,” Robbins said. 

The new regulations have also removed the role of the OPVG
Historically, the board was involved in data collection, establishing comparative markets, knowing what the price discovery process would be, helping the growers and negotiating the pricing agreement based on that historic information and current knowledge. This particular regulation actually removes the board from that role; (the board is) not allowed to be part of the process,” Robbins explained.
If growers choose a direct marketing system, regulations don’t address how specific details will be handled. “A contract would normally stipulate things like grading, inspection, [… and] an arbitration process. In this case, with the new regulations pertaining to tomatoes and carrots, if they go direct, [… the regulations] don’t stipulate an arbitration process,” Robbins said.  
If you remove things like the commonality of services, things that all growers receive as benefits, like gradings and inspections, […] where do they fall back in?

While direct marketing agreements will have a minimum term of three years, the OPVG is concerned about the lack of price certainty in subsequent years. 
If you agree to a price mechanism for three years, you really don’t know what year two or year three prices are. You’re binding yourself and, in year two or three, the price could be established below your cost,” Robbins explained. Growers “would like longer-term contracts that would provide security, but security is knowing what your price is ahead of time … that’s the part that seemed to be missed,” he added. “There’s a lot of details that needed to be included that weren’t,” Robbins said.

Overall, the reaction from the OPVG is one of frustration and dismay. “We will need to analyse the regulations in detail to determine the depth of hurt to the sector. The largest impact is a reduction in collective bargaining power being removed from the growers’ elected representatives and handed to the processors,” Dave Hope, the chair of the OPVG, said in a Dec. 17 statement.
We don’t necessarily know, until we go through a very detailed analysis as to each one of the criteria, what the impacts are going to be for growers,” Robbins agreed. He did not know why the government singled out tomatoes and carrots for these regulatory changes.

Hardeman announced the changes in a statement that included individualized letters to growers of processing carrots, processing tomatoes, and other processing crops.


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