Funding change tops Ontario Fruit and Vegetable Growers agenda

Wednesday, April 23, 2014

by SUSAN MANN

The Ontario Fruit and Vegetable Growers Association (OFVGA) is developing a different funding mechanism to replace the current system of container tolls as that method is no longer fair to everyone, association officials say.

But Art Smith, association CEO, declined to says what the new mechanism is. “It’s premature to discuss that. We haven’t had our first meeting with government” yet.

Smith says “it’s premature to speculate on what it is and what it might look like because, quite frankly, we don’t know that.”

Association representatives are meeting with officials from the Ontario Farm Products Marketing Commission May 1. It’s the first meeting on the new funding mechanism but informal discussions with people to build awareness of the problems with the current system have been held already, he says.

Smith says container tolls have been in place since the 1940s as part of the Ontario Farm Products Containers Act. The money collected from the container tolls is used to pay for the association’s $1.2 million annual budget.

There have been many changes in horticulture over the years, and today there is a “massive array of containers” compared to the limited choices of different-sized veneer baskets, crates and burlap bags in the ‘40s, he says.

The Act “was developed at a time when most farmers produced for the processing sector as well as the fresh fruits and vegetables market.” Back then, the charge “was a fair way of funding this organization,” he says. But now, “the Act exempts probably 40 per cent of the production” because it only covers containers for marketing fresh fruits and vegetables. Bulk containers or field crates used for processing produce are exempt.

Nevertheless, the association’s work, such as the lobbying it did to get the self–directed risk management program for all edible horticultural farmers, is on behalf of all of those farmers.

“In effect, we’re asking 60 per cent of the production to fund the organization,” Smith says.

Farmers who aren’t assessed container tolls, however, still voluntarily contribute money to the organization, he adds. In addition, the Ontario Grape Growers, the Ontario Processing Vegetable Growers and the Ontario Ginseng Growers Association contribute money to the association on behalf of their growers.

Another disparity is some sectors use very expensive containers and they use a lot of them while other sectors use far fewer containers or use bags, which are cheaper. The 1.5 per cent levy that goes towards the container toll is applied to the price of the container.

Moreover, some growers end up paying a far greater percentage of their cash sales than others for containers even though the value of what they’re selling is the same.

Smith uses the example of a product selling for $20 in a 50-cent container compared to the same-valued product in a $3 container. The farmer with the $3 container pays six times more than the farmer with the 50-cent container, he says.

Association chair Ray Duc says as a grape grower he doesn’t buy any baskets “yet I get the benefits from the OFVGA.” The Grape Growers pays the Association a voluntary fee of $25,000 a year. “We realize we do get benefits from the OFVGA and we’re willing to pay for it,” he says.

The move to make changes to how the organization is funded isn’t designed to collect more money, Smith says. “What we’re trying to do is come up with a system that treats everybody equitably.”

Ideally, the organization wants to see the Container Act removed “because of the disparities in it,” he says.

Duc says with the changed system some people might pay more than they do now while others might paying less, “but everybody will be paying a fair share.”

Smith says 155 years ago when the association began, it was probably operated on a volunteer basis with very minimal costs. But now the association has “costs, we have staff, we have directors. We get involved in projects and there needs to be a fair and equitable funding mechanism,” he notes.

There are still a number of unanswered questions, such as whether new regulations, legislation or a producer vote will be needed to implement the changed system, Smith notes. As for when the new system will likely be installed, he says “there’s no guarantee here that there will be a new system in place. What we have is we have a meeting coming up.” BF