OFVPA says 2017 could be a bad year if changes aren’t made

Dec 16, 2016

Organization says high hydro prices result in increased production costs

By Diego Flammini
Assistant Editor, North American Content
Farms.com

The Ontario Fruit and Vegetable Processors Association (OFVPA) says if immediate action isn’t taken to address current issues, the industry could be in some serious trouble.

According to OFVPA executive director Don Epp, (The Ontario Processing Vegetable Growers) is demanding exclusive monopoly prices for their products and Donald Trump’s administration continues to discuss changes to NAFTA and imposing a Value Added Tax to many imports.

Those issues, paired with Ontario’s high hydro rates and increased production costs, means fruit and vegetable producers could be in for a tough 2017.

“The perfect storm is shaping up that can have devastating affects to our industry," Epp said in a release.

OFVPA said it’s been trying to work out details on free and open negotiations between processors and growers. Without those negotiations, processors could look elsewhere for crops.

“Already 70,000 tons of tomatoes have been cancelled and a further 30,000 tons may not get picked up if the current system is in place,” said the release. “This 100,000 tons represents approximately $25 million in economic activity that will be lost in southwestern Ontario.”

OFVPA said it reached out to Ontario Minister of Agriculture Jeff Leal for support they would like to see sooner rather than later.

"Orders for seed and crop allocation need to be made before the end of the year,” Karl Evans, OFVPA president, said in the release. “If we cannot get commitments from the growers to move towards a more transparent market pricing system we will have to cancel investments in Ontario and divert these investments towards regions where true open partnerships exist."

In an email to Farms.com, Ontario's Ministry of Agriculture said it continues to work with marketing boards across the province.

"Ontario’s agri-food sector is strong when the entire value chain shares the responsibility to address current concerns of the industry that will work for everyone involved – including farmers, food processors and consumers," the ministry said in its email.

"(Minister Leal) has directed the (Ontario Farm Products Marketing Commission) to develop a plan for engagement and consultation with stakeholders concerning any proposed amendments to the regulatory framework for the vegetables for processing industry."

Video: Will the 2025 USDA December Crop Report Be a Market Mover/Surprise?

Historically, the USDA December crop report is a non-event or another dud report as the USDA reserves any final supply changes to the final report in January of the following year in this case 2026. But after the longest U.S. government shutdown in history at 43 days and no October crop report will they provide more data/surprise and make an exception?
Our China U.S. soybean purchase tracker is now at 26.6% or a total of 3.2 mmt but for traders it’s taking too long to unfold.
The final Stats Canada production report was bearish canola and wheat projection a record crop in both (it adds to the global glut of supplies) and bullish local corn and soybean prices in Ontario/Quebec thanks to a drought. It will not help the fund flow short-term, the USDA may need to offset it?
A U.S. Fed interest rate cut of another 25-basis point next Wednesday (probability 87.1%) could help fund flow and sentiment in stock and ag commodities into year end.
More inflows into Bitcoin this past week saw prices rebound back above 90,000 with support at 82,000 and resistance at 96,000.
A V-shaped bottom in cattle suggest the lows are in after Mexico reported another new world screwworm case. Lower weights, seasonal demand and higher U.S. beef select/choice values with a continued closure of the Mexican border to cattle will result in a resumption of higher cattle futures into yearend.
Australia is expected to produce its 3rd largest wheat crop ever at 36 mmt adding to the global glut of supplies.
Reports of ASF in hogs in Spain the largest pork exporter in Europe could see the U.S. win more pork export business long-term.
If the rains verify into next week of 3-5 inches for Brazil it would go a long way to fixing the dry regions from the last 2-months, but the European weather model has been wrong for the past 2-months!
Natural gas futures are surging to the 3rd price count as frigid hold temps set in.
CDN $ is also surging to end the week on a very resilient economy and better employment numbers suggesting no interest rate cuts next week.
Finally, the CFTC report showed funds were net buyers of soybeans but sellers of corn, canola and wheat. In real time the funds have gone back to selling as they take some profits.