Farm Products order leaves tobacco board in limbo

Wednesday, April 8, 2009

© AgMedia Inc.

by GEOFF DALE and BETTER FARMING STAFF

The board representing Ontario’s tobacco growers wants to know how an order from the Ontario Farm Products Marketing Commission will affect its efforts to look into a class action suit on behalf of growers.

Board spokesperson Linda Lietaer confirmed the issue was one of a number the Ontario Flue-Cured Tobacco Growers’ Marketing Board wants to discuss with the Commission in connection with its March 25 order that severely restricts the board’s activities.

The tobacco board has asked a Windsor-based law firm to explore a possible class action lawsuit related to the 2008 guilty pleas of Imperial Tobacco Canada Ltd. and Rothmans, Benson & Hedges Inc. to violating the federal Excise Act. The board does not have to pay the firm up front for its work, Lietaer says.

The Commission’s order reduces many of the board’s powers, including:

•    Limiting the board’s spending powers to day-to-day operations to do with tobacco marketing and production;
•    Prohibiting spending on new crop research for former tobacco growers, negotiations with Agricorp about tobacco production insurance or research on the board’s future role; and
•    Requiring it to obtain the Commission’s approval on any new initiatives that exceed $10,000, class action litigation activities and staff reductions.

It will allow the board to charge license fees and service charges to “producers, buyers or other persons over the period April 1, 2009 to March 31, 2010.”

But the order may be the least of the board’s worries.

Elmer Buchanan, the Commission’s vice chair points out that recruiting for the 11-member board could present a huge problem. The regulations governing the board require members to be a grower. “If they take the (federal) buyout and are not growing, then they can’t serve on the board,” he says.

Just how many remain in the industry?

Lietaer says 18 growers did not apply for the buyout.

Under its tobacco transition programs, the federal government allocated $286 million to buy quota at $1.05 per pound on the condition that growers never plant the crop again. Another $15 million will go to community development in areas affected by the industry’s collapse.

Lietaer can’t confirm how many growers have taken the buyout because one grower may have produced tobacco under more than one farm number and each farm number had to have an application. Board documents show there were 1,073 basic production quota holders in 2007.

She says applications representing 99.7 per cent of the provincial industry’s total quota  of 272 million pounds were forwarded to the federal government for approval March 31. “They hope to have a response back to us within 10 working days,” Lietear says, but notes there was no response by April 8.

Lietaer says the board’s only role in the 2009 crop is checking applicants’ eligibility and issuing licenses. Securing a contract for the entire crop is one of the criteria.

Growers have until May 15 to apply for a license. Lietaer says she won’t know until then how many will grow tobacco.

As for the board’s future role, “that is up in the air,” she says, noting the board is hoping to discuss the issue with the Commission.

Buchanan says the federal government has promised licenses to grow and sell tobacco, but how system will evolve and what the board’s role will be – or if there will even be a board - are open-ended questions. BF