by BETTER FARMING STAFF
Count a strong Canadian dollar as the lead factor in depressing prices for this year’s processing vegetable crops, say those involved in negotiations with processors.
Crop negotiations for green peas, carrots, squash, sweet corn, lima beans and tomatoes are now concluded and many of the agreements feature price decreases compared to 2009.
“The exchange rate volatility we’ve seen over the last three years isn’t really helping us at all,” says John Mumford, Ontario Processing Vegetable Growers’ general manager. “That has an impact on our customers who export and on the competing prices for the raw material.”
Phil Richards, the organization’s chair, adds that a large surplus worldwide from last year’s crop have reduced tomato prices in California, which Ontario growers use as a benchmark for their price agreements.
Sun-Brite Foods Inc. and CanGro Foods, Inc. agreed to pay $96.50 per ton for tomatoes for paste and $108.50 per ton for whole pack. The vegetable board and H.J. Heinz Company of Canada LP could not agree on a price for paste and juice tomatoes. This dispute will go to the Ontario Farm Products Marketing Commission in April. The Commission is responsible for appointing an arbitrator.
While paste tomato prices are down $20.50 per ton from last year (paste tomatoes going to H. J. Heinz Company of Canada LP brought $122 per ton, about $5 more than to CanGro and Sun-Brite), the prices are still $2.85 higher than they were in 2008, Richards adds.
Volumes for tomatoes have not yet been set.
Jim Reith, the organization’s past chair, was involved in negotiations for green peas and says there have been some significant changes to the contract, including the elimination of tare, a price deduction applied to compensate for the amount of unusable product in a delivery, and a decision to pay growers for gross weight.
“We think it should be a win/win here actually, that the processor is now in a position to optimize the cleaning and any processes involved in cleaning to his advantage,” explains Reith, adding the elimination of tare makes the price more straightforward for growers.
Ultimately, though, the contract will mean prices about 10 per cent below what they were last year, he says.
Reith also blames the exchange rate as well as low prices for product in competing production areas, such as Minnesota and Wisconsin.
He anticipates the price drop won’t affect farmers’ decisions on whether to grow green peas. “This is a bit of a specialty crop and it has been perceived as being somewhat more lucrative than just your straight commodity crops,” he says. Unless growers have experienced unsatisfactory returns for a period of time, “they tend to be fairly loyal.”
Tare has also been removed from lima beans, for which the price has been set at $428 per gross ton for this year’s crop.
Mumford notes that producers did not reach an agreement with processors for sweet corn and this dispute is also headed to arbitration in April.
Richards says part of the balancing act in negotiations is to ensure that local processors can remain competitive while obtaining as much produce as they can from Ontario growers.
The board is still negotiating agreements for green wax beans and beets. BF
