Relief on way for tobacco growers

Ontario tobacco growers caught with lingering financing problems in the collapse of buyers for their 2010 harvest contracts now can get some relief, allowing them to plant a crop this year. Haldimand-Norfolk MPP Toby Barrett has written to Agriculture, Food and Rural Affairs Minister Ted McMeekin about the problems experienced by 66 growers in his riding who suffered from the financial problems of Tillsonburg- based True Blend. The company had contracted to buy all their 2010 harvest but could not pay after the first loads were delivered, and the contracts fell into default. Most of the affected growers are in Norfolk County. There also were problems with a surety bond that was supposed to back the product that year.

"These farmers were assured that True Blend was a stable company and that a surety bond was in place and would be immediately payable if the company could not fulfill its end of the contract," Barrett wrote. Consequently, the growers became vulnerable to penalty in attempts to get backing from Agricorp to grow future crops, and assistance in the AgriStability program. "Many of these farmers were unable to grow in 2011 because the bond was not activated to give them the necessary funds to grow, or they were unable to get a contract because of unsold tobacco in their barns from True Blend failing to meet their obligations," Barrett's letter to the minister says. Barrett asked for those growers to be spared penalty by having Agricorp waive the downsizing of "reference margins" -insurance terminology for net profitability -through a lost or reduced contract due to circumstances beyond their control.

Since tobacco producers grow on licence to a fixed contract that includes price, the expected margin is of importance in getting surety and insurance on a crop for a particular year. Barrett pointed out that in 2008 Agricorp waived the downsizing of reference margins due to a sudden downsizing of the market that affected the entire sector. In a response letter, McMeekin assured Barrett that the ministry will take into account the affected tobacco growers' problems, and that steps are being taken to ensure that they are not penalized for future crops. "In 2008, Agricorp waived the downsizing of reference margins for tobacco producers with a lost or reduced contract. The same process will apply in 2011," he wrote. To qualify, he added, "eligible producers must have demonstrated the intent to grow tobacco in 2011."

Demonstration includes having completed and filed an application for a licence to produce for the 2011 crop year. McMeekin also suggested that the affected growers contact Agricorp directly to discuss their situation, and speak about an interim AgriStability payment. "I am heartened to receive this letter from Minister McMeekin confirming that Agricorp will waive the downsizing (of profit margins) once again," Barrett said in an interview. The growers are anxious to reach a settlement for the disaster that befell them in 2010, as they pursue licences and contracts for the 2012 crop year. "These farmers have endured endured a lot of financial stress," said Barrett. "Hopefully this will help them."