Tribunal orders board to issue tomato producer licence

Tuesday, December 29, 2015

by SUSAN MANN

The Ontario Processing Vegetable Growers board is considering its options as it continues reviewing an agricultural tribunal’s decision ordering it to grant a producer licence to a joint venture between a tomato grower and processor for the 2016 season.

“We’re still figuring out what the best response is,” says Jim Poel, processing vegetable board chairman. “We haven’t finalized anything yet.”

The board refused to give Integrated Farming Ltd. a producer licence earlier this year.

The company was formed in April and is jointly owned by processor Highbury Canco Corporation of Leamington and grower Eau Road Farms Ltd. owned by Art DeBrouwer.

DeBrouwer has grown tomatoes for 28 of his 30 years farming and previously grew for the H.J. Heinz Company before it closed the Leamington plant and then sold it to Highbury Canco.

The Agriculture, Food and Rural Affairs Appeal Tribunal says in its Dec. 18 written decision the processing vegetable board erred when it considered the only possible purpose for the joint venture was “to achieve a lower tomato price.”

Both DeBrouwer and Sam Diab, Highbury Canco president, testified at the hearing in Guelph on Nov. 30 that the contract for tomatoes between Highbury and Integrated Farming Ltd. would be at the negotiated contract price, the decision says.

“The board’s view that the joint venture arrangement was likely an exchange for a lower price for tomatoes was not supported by the evidence,” the decision says.

At the same time as Diab was working to develop the joint venture with DeBrouwer, he was also involved in requesting that the processing vegetable board establish a fourth price class for tomatoes, an industrial paste class at a lower price than the existing paste class price.

“This was separate and distinct from the joint venture” with DeBrouwer, the decision says.

The tribunal accepted Diab’s evidence that Highbury Canco was pursuing two distinct business strategies. One was the joint venture with the aim of producing tomatoes more economically and developing a differentiated product for consumers through “field to plate” production and marketing. The other was the industrial tomato paste class and price.

“There is a point of differentiation for Highbury in buying tomatoes that are grown by a joint venture in which it participates,” the decision says.

The tribunal also disagreed with the board’s assertion that Highbury Canco did not bring anything of value related to production to the joint venture. Highbury Canco “would contribute expertise in logistics, supply chain management, risk management and currency hedging,” the decision says.

Still, the tribunal acknowledged the timing of the joint venture announcement might appear suspicious to the board as it came just four days after the Ontario Farm Products Marketing Commission announced on April 10 it would not allow a dispute over Highbury Canco’s proposed tomato paste class to go to arbitration.

Highbury Canco had asked the commission for the matter to go to arbitration after the processing vegetable board refused the processor’s request to establish an industrial paste class and price for tomatoes.

The tribunal also disagreed with the board's interpretation of the rules in the Farm Products Marketing Act related to producers and processors. The tribunal says there's nothing in the rules and regulations in the Act that precludes a producer and processor from forming a joint venture to produce tomatoes.

DeBrouwer, Diab and John Mumford, general manager of the processing vegetable board, couldn’t be reached for comment. BF