Tobacco growers ponder federal buyout

Wednesday, February 18, 2009

© AgMedia Inc.

by GEOFF DALE

Producers deciding on whether to accept Ottawa’s $286-million buyout package filled 2,000 chairs set up at the Delhi Tobacco Auction Exchange Wednesday night.

Those who attended the information session say it’s unclear just how many in the region still growing tobacco would accept the federal government’s offer of $1.05 per pound of quota. What is clear is that producers are angry with the Ontario government for not contributing to the buyout.

Fred Neukamm, past chair of the Ontario Flue-Cured Tobacco Growers Marketing Board, says while the federal money may be enough to eliminate the quota, it’s likely insufficient for those still wanting to make use of their operations. “It is possible some may decide to rent their farms or infrastructures to others still eligible to grow,” he explains.

Neukamm, who still farms near Aylmer, says he “can’t afford not to take the money.” He has yet to make a final decision but says he’s looking for someone in the area interested in using his infrastructure.

“What was particularly disappointing about this package was the lack of provincial participation,” he says. He calls it a “matter of fairness,” noting Ontario introduced a $50 million buyout program in 2005. “There is a valid argument to be made that the remaining people shouldn’t be treated any differently.”

However, last summer, after a federal buyout for growers was announced, Leona Dombrowsky, Ontario’s minister of agriculture, said it was tobacco users’ turn to support exit strategies. “(W)e believe the taxpayers of Ontario have supported the industry (through the transition fund) and now it’s the users of the product who should fund an exit strategy,” Dombrowsky said.

Aylmer grower Alvin Lindsay says the lack of provincial dollars into the package was hard to understand because funds had been secured from the federal government’s $1.5-billion lawsuit against contraband tobacco products launched about five years ago.

Meanwhile, Ontario raised taxes, “which resulted in the floodgates opening for illegal tobacco in this province.” He estimates illegal tobacco products account for 70 per cent of Ontario’s sales. That’s more than provincial estimates of 50 per cent “and the province doesn’t even get taxes from any of that.”

While he used to grow tobacco on 60-70 acres, his sales last year were based on a carryover of product from the previous season. “We’re still thinking about what to do,” he says. “The majority will probably reluctantly take the offer because they don’t really have any other real choices. I don’t know how viable renting is. And you have to make up your mind soon because the deadline is getting close.”

Admitting the mood in the Delhi hall was “somber” and the decision facing producers “bittersweet and very difficult”, board chair Linda Vandendriessche says efforts will continue to “complement the federal dollars.”

Pointing to the need for an “effective transition” and ways to “re-stimulate the economy” in the area, she adds the board will continue efforts to talk with provincial government officials. “Going after federal money wasn’t a piece of cake,” she says, noting negotiations “took years.”

In a region covering five counties with more than 100,000 acres of sandy soil, the industry boasted more than 2,600 farmers back in the 1980s when tobacco was Ontario’s most valuable crop. After the final auction was held last week, less than 500 were growing tobacco.
 
Producers have until end of the day March 23 to notify officials whether they will accept the buyout. BF