Heinz proposes compensation terms to Ontario tomato growers

Wednesday, January 22, 2014

by SUSAN MANN

Heinz is willing to pay up to $1.8 million to compensate the 43 Ontario tomato growers it left in the lurch after announcing plans to close the company’s Leamington processing plant.

So far, more than 40 growers have been contacted about the terms of the deal, says Walter Brown, a member of the Ontario Processing Vegetable Growers board. He says the deal has to be approved by all 43 growers.

Heinz was bought by Warren Buffet’s Berkshire Hathaway Inc. and Brazilian investors, 3G Capital, last year. In November, the company announced it was closing the 104-year-old tomato processing plant in Leamington that makes ketchup and juice. More than 1,000 unionized, salaried and seasonal staff will be out of work. The Leamington plant is Canada’s largest food processing facility and is the only plant Heinz owns worldwide that accepts raw tomatoes to make paste for ketchup. As a rule Heinz buys paste from California for its ketchup making facilities.

Brown says Heinz has agreed to pay growers $9 a ton on last year’s contracted tonnage. The company contracted just over 200,000 tons in total from local growers in 2013. “Whatever a contracted grower contracted last year” that amount will be multiplied by $9 per ton, Brown explains.

The first step in the compensation process is for the growers to sign a “confirmation of agreement.”

“We only have a handful that we need to get this (the confirmation of agreement) back from,” Brown says, adding they will likely have everyone contacted and their confirmation agreements returned by the end of this week.

The second step is Heinz will send “a release directly to each grower that will need to be returned to Heinz in order to initiate the payment.”

If some people don’t agree to the tentative deal, the whole thing falls apart, Brown says, adding, “I do not expect any issues. I really don’t.”

Growers were hoping for more money for compensation considering “what we were left with.” But the growers were willing to accept the Processing Vegetable Growers’ recommendation to take the deal, he notes.

For its part, Heinz hasn’t yet specified what it will do with the Leamington plant once it’s closed in June. Michael Mullen, corporate and government affairs senior vice president at Heinz’s world headquarters in Pittsburg, Pennsylvania, says be email “Heinz continues to review all options for the facility post closure.”

In an earlier interview, Brown said he would be growing more cash crops now that Heinz is closing and many former Heinz growers will be doing the same. Heinz tomato growers were waiting to see if anything would develop with other processors or possibly the Leamington plant “but as of now there is no opportunity for any of the growers to pick up other contracts.”

Brown says there are “43 growers just left sitting with their equipment.” Brown says he’s in that boat too. “I think eventually it (the tomato equipment) will just start going to the scrap heap.”

Brown, who farms with his son-in-law, says they had a base contract of 10,000 tons and needed eight tractors for the tomato operation. Some of those will have to be sold now because “we only need a handful for grain.” For other more specialized equipment that was dedicated to tomato production “there’s just no home for it.”

The Brown tomato operation had 22 wagons for hauling the crop but now “I don’t know what we’re going to do with it all.”

Heinz’s previous owners “had promised us that we would get two years’ notice before we would be shut down,” he says.

“The shock was that not only did they shut down the receiving of tomatoes but they shut the whole factory down,” he says. BF