Ontario tobacco board loses more marketing authority

Tuesday, September 8, 2015

by SUSAN MANN

The Ontario tobacco board’s powers have been drastically reduced after the Ontario Farm Products Marketing Commission passed regulations in the summer revoking most of the board’s marketing authorities.

The board must still even obtain permission from the commission for any expenditure of more than $25,000 – a provision that has been retained from an earlier adjustment to the board’s marketing regulations.

Commission chair Geri Kamenz says since the Ontario Finance Ministry has taken on the responsibility for licensing and regulating the tobacco crop, “those authorities are now found with the government and no longer with the board.”

Kamenz says the commission amended its tobacco board regulations to support the shift in authority.

A summary of the changes on the government’s regulatory registry says the amendments revoke the majority of the authority assigned to the Ontario tobacco board. The changes became effective July 27.

The tobacco board retains the authorities of being able to stimulate tobacco marketing and promotion, provide voluntary services and charge fees for services requested by producers.

Kamenz says the $25,000 spending cap was put into place around 2010 to protect the tobacco board's legacy fund.

"At that time we were very clear and said that money is to be protected and the growers will at some point decide what the best use for those funds would be," he said. "At the time we wanted to send a very clear message to all of the growers that we were very intent on not losing track of that money."

The provision was retained in the most recent regulatory change because the tobacco board "will continue to exist," he said. "We wanted to ensure that fund is preserved."

Fred Neukamm, chair of the Ontario Flue-Cured Tobacco Growers’ Marketing Board, says the board’s role has been quite a bit diminished in the industry but “there’s still what we consider to be some valuable things we’re able to contribute.”

The board for several years has worked as an advisory group to the finance ministry informing ministry officials how it handled licensing and enforcement when it had authority for those functions. The finance ministry now has that authority. The board’s advisory role will continue, Neukamm says.

The tobacco board will also continue jointly managing the Tobacco Research Foundation with tobacco buying companies. The foundation works on agronomic and crop protection research.

Board vice chair Harry Bergeer is the grower’s representative on the board of the Foreign Agricultural Resource Management Services, which links seasonal agricultural workers from Mexico and the Caribbean with employers in Ontario.

Tobacco board representatives will also continue participating in the Ontario Federation of Agriculture and other “advocacy groups just to make sure our sector doesn’t get left out when the government is making decisions on various safety net programs and those sorts of things,” he says.

For the future, “we’re going to continue to explore ways to provide meaningful services to the growers through talking to them one-on-one and making sure we’re there when they need us,” Neukamm notes.

The government took over oversight of raw leaf tobacco production Jan. 1. As part of the changes, people wanting to grow or buy raw leaf tobacco in Ontario must apply for and obtain a registration certificate from the finance ministry. There are exemptions for people producing and processing tobacco for their own personal use but not for sales.

People don’t have to pay fees to the finance ministry for their registration certificates.

The tobacco board, which has been around since 1957, used to license growers, negotiate with cigarette manufactures on the crop size and price, and lobby governments on matters related to the tobacco industry. Now farmers obtain contracts themselves from manufacturers for their crop.

The finance ministry’s website says the government’s raw leaf tobacco program under the Tobacco Tax Act includes:

• A registration and reporting system for growers, processors, transporters, exporters, importers, buyers and sellers of raw leaf tobacco. Raw leaf tobacco is all varieties of unmanufactured tobacco, including flue-cured, dark-fire-cured/dark-air-cured (also known as black) and burley tobacco. Seedlings are not included.
• Inspection and audit oversight.
• Seizure authority.
• Civil penalties for failure to comply with registration and reporting requirements.

The ministry says its raw leaf tobacco program “helps to manage and monitor the movement of tobacco products and impede the flow of untaxed products.”

For 2015, there are 210 licensed growers of flue-cured tobacco growing the crop on 15,087 acres and 50 licensed non flue-cured growers growing on 1,019 acres, according to the ministry’s web site.

The flue-cured tobacco crop size is projected to be about 42 million pounds while the non flue-cured crop is anticipated to be about three million pounds, the website says. BF