Provincial minister says no one told her federal tobacco buyout details

Thursday, July 31, 2008

by DON STONEMAN

Growers, their families and local business people crowded into a sweaty, overheated auction building that reeked of tobacco in Delhi today to hear federal Agriculture Minister Gerry Ritz and local Members of Parliament Diane Finley and Joe Preston announce a tobacco buyout that had been sought for a long time. Parking space was at a premium. Ontario Provincial Police were clearly in evidence outside. Everyone knew about the announcement except for the provincial agriculture minister.

There was a short, muted groan from the middle of the crowd when Ritz announced that growers would get $1.05 a pound for surrendering their quota. But most growers went away happy. According to Federal Agriculture Minister Ritz, “the federal assistance will be equal to 60 per cent of the board's requested $1.74 per pound. Like you I am hopeful that the province of Ontario will follow this leadership and provide its share."

Contacted by Better Farming, Leona Dombrowsky, Ontario’s minister of agriculture, said she’s “very surprised” if the federal government would leave the impression that the province would support the approach to the buyout. If it has done so, it has been done “totally without any negotiation, any consultation.” She said she didn’t get notice of the announcement until 9:30 am, an hour before the announcement in Delhi was scheduled to start. 

“I have made it very clear (to Ritz) that Ontario’s position is that it is tobacco users and not the taxpayers of Ontario who should be funding an exit strategy,” she said, adding that this approach was also recommended by the Ontario Flue-Cured Tobacco Growers Marketing Board.
 
“This is tobacco money for tobacco farmers,” through consolidated revenues “as a result of the settlement agreement reached with tobacco growers announced Thursday, Ritz said.

Both Rothmans and Imperial Tobacco admitted to guilt and will pay more than $300 million in fines and $815 million in civil damages to Ottawa, and the provincial governments in Ontario and Quebec. According to news reports, no company officials will go to jail. Cigarettes had been shipped wholesale and without payment of excise taxes to the United States, then back into Canada and resold at bargain prices in the early 1990s.

Clearly bristling over the way the buyout was financed, Dombrowsky explained the dollars from the fines on the cigarette companies would normally make up for losses in the federal government’s general revenue fund because of the companies’ efforts to avoid paying federal taxes. This fund supports programs such as health care, education, health promotion and smoking cessation. By directing those dollars directly into the tobacco producers’ pockets it deprives the general revenue fund of those resources, she said. “It’s (the money) certainly not being delivered in a manner that’s consistent with what the Province of Ontario has indicated that we would support,” she said.

“We truly believe that it should be the users and not our taxpayers; we have supported a $50 million transition fund; we believe the taxpayers of Ontario have supported the industry (by financing the fund through provincial general revenues) and now it’s the users of the product who should fund an exit strategy.”

Dombrowsky may be bristling but most producers and their representatives were pleased with the federal announcement, which tobacco board chair Linda Vandendriessche described as “a bittersweet moment” which “signals the beginning of the end of a way of life for generations of tobacco farm families.”

Other growers agreed. “It’s not …everything we wanted but it’s what I expected,” said Norfolk Federation of Agriculture director Vic Janulis, who expressed his view of the buyout in one word: “relief.”

“It’s better than the uncertainty we experienced the last six months,” said John Kecza of Burford who said he was “prepared to grow a crop” this spring but shied away.

While Janulis noted that “the devil is in the details” which are forthcoming, a number of growers said they liked “the language” of the announcement. Ritz was greeted with loud cheers and whistles when he said there were “no strings attached” to the $286 million buyout program.

But there’s the rub, and the contradiction.

Local MP Finley said the buyout was open to tobacco quota holders who wish to continue to produce tobacco, want to exit, or who want to transition to something else.
“Today we are putting farmers first,” said Finley, who described the buyout as “a solution that won’t pit farmers against farmers.”

At the end of his speech, Ritz said the federal government the province of Ontario will work together to develop a new licensing system for new producers and for those who “do not participate in the transition assistance.” Late afternoon Friday, there was no one in the Minister’s office to explain the apparent contradiction.

The selling of the 2008 tobacco crop remains uncertain. Vandendriessche said processors and growers still haven’t signed an agreement on the amount of tobacco growers will pay and the price, even though, as Finley pointed out, Aug. 1 marks the unofficial start of the tobacco harvesting season. BF

- with files from Mary Baxter