Growers group gives thumbs up to proposal for Leamington tomato plant

Wednesday, February 26, 2014

by SUSAN MANN

The Ontario Processing Vegetable Growers board is supporting a proposal from a group of investors and current managers with the Heinz plant in Leamington for them to continue operating the facility to make tomato juice for Heinz.

In November, H.J. Heinz Company of Canada LP announced it was closing the 104-year-old facility in Leamington that had been making ketchup, beans, baby food and juice. The closure is slated for this June.

Processing vegetable growers board chairman Jim Poel says “there’s an official announcement coming,” possibly today, about the new entity gearing up to make juice at the Leamington facility.

“Heinz has no comment,” says Michael Mullen, corporate and government affairs senior vice president, by email. He’s based at Heinz’s world headquarters in Pittsburg, Pennsylvania.

Poel says the new entity “looks like it needs between 80,000 and 100,000 tons” of tomatoes, and that’s between 40 and 50 per cent “of what was done previously.”  The main activity at the Leamington facility looks like it will be juice making, but there “may be some paste production” that might be a type of spin-off product.

However, the ketchup-making production at the Leamington plant “is definitely gone,” Poel says.

The reduced amount of tomatoes needed at the proposed new juice making business in Leamington means “there probably won’t be contracts for all the previous growers,” he says, noting up to half of the former Heinz contract growers will be needed to supply tomatoes to the new entity.

If the proposal happens, Poel says “the really positive news is that the plant won’t be mothballed. The problem is as soon as these plants are mothballed they’re really hard to open again.”

It looks like there will be a significant amount of tomatoes processed there “and that keeps the plant open,” he says, adding that the Canadian dollar being at 90 cents compared to the American dollar is a positive contributing factor in this situation.

According to the Canadian Agricultural Products Act, tomato juice in Canada must be made from fresh tomatoes. “At one point there was a thought that they (Heinz) could do this in California but the looming drought in California is such that Heinz can’t realistically get juice made” there, Poel explains.

In Canada, tomato juice is a very popular item, especially in Quebec, he adds, noting Heinz needs a solution “and the solution appears to be in Leamington.” The popularity of tomato juice in Quebec is a “significant enough” market that Heinz doesn’t want to lose it, he says.

If the drought continues in California, tomato production in southwestern Ontario for juice making at Leamington could possibly even expand in the future, Poel notes.

Poel says the deal reached by Heinz and its 43 contract growers earlier this year to compensate them for the closure is not impacted by any proposed continuation of tomato processing at the Leamington plant.

That deal calls for growers to get $9 per ton based on their tonnage contracted in 2013. Heinz contracted slightly more than 200,000 tons in 2013. All 43 growers approved the deal, according to a Jan. 24 news release on the processing vegetable growers website.

A spokesperson for the Ontario Ministry of Economic Development Trade and Employment couldn’t be reached for comment, nor could Leamington Mayor John Paterson. BF

Update Wed. Feb. 26, 2014 3:44 p.m.

by SUSAN MANN

Leamington Mayor John Paterson says he talked to "his point person at Heinz in Pittsburg" who confirmed tomorrow morning Heinz would announce an arrangement it is making “with a Canadian firm" to do with the Leamington Heinz plant.

“In his words, he (the point person) said it would be a good day in Leamington," Paterson says.

Paterson says he couldn't comment on the statements made by the chairman of the Ontario Processing Vegetable Growers about the support they've given to an entity wanting to operate the plant to make tomato juice for Heinz.  "We've been working with several interested parties and Heinz has not told me exactly who it is that they are making this arrangement with," he says. BF