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GGO annual meeting


March 31, 2008
By Jim Meyers

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Ontario’s wine grape growers have
good reason to be bursting with optimism this growing season while
juice grape growers are looking at an industry in decline.

ducray
Ray Duc
zimmerman
Debbie Zimmerman 

Grape growers predict a full grape crop,  $2 million from Ontario government, and a new “bully” on the block

Ontario’s wine grape growers have good reason to be bursting with optimism this growing season while juice grape growers are looking at an industry in decline.

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For the first time in three years, vineyards have survived the winter largely unscathed; the provincial government has provided growers with $2 million ($1 million for research and a little over $1 million in direct payments), and, it looks like a $100-million grape replanting program that’s laid dormant for 10 years is finally on the federal government’s radar screen.

As well, the provincial government in its March budget recognized the grape and wine industry by earmarking $3 million for small and medium wineries making premium Ontario wine, and $1 million to all wineries through the Wine Council of Ontario to spend on marketing.

But juice grape growers continue to face an industry in steady decline due to reduced consumption and the lower cost of offshore juice. Last year, an arbitrator accepted the Grape Growers of Ontario (GGO) suggested price for purple Concord grapes and white Niagara grapes that was lower than the previous year, but not as low as processors wanted.

Since then, GGO chairman Ray Duc has often lamented “we lose even when we win.”

Juice grape growers are now pinning their hopes on getting money to replant with wine varieties suitable for marginal grape growing areas where juice grapes are now grown or getting out of growing grapes altogether.

Too early to say
The biggest unknown now facing the marketing board is what Constellation, the world’s biggest winery, will do now that it has taken over Vincor, Canada’s largest winery, the fourth largest winery in North America and the ninth largest winery in the world (by volume). The announcement of the $1.5-billion deal was reported in newspapers April 4 – the same day as the annual meeting of the 500-member marketing board.

“It’s too early to tell,” Duc said when the question of the marketing board’s relationship with Constellation finally came up during a question period at the end of the annual meeting.

Following the meeting, association CEO Debbie Zimmerman said that even after Constellation’s hostile takeover bid failed last fall, many industry watchers – including the GGO – still believed Vincor would accept a higher share price from Constellation.

She expects Constellation will honour existing contracts with growers and respect the rules and regulations of the marketing board. Dealing with growers organized under a marketing board will be a first for Constellation, which is based in small-town Fairport N.Y., across the border from Niagara in upper New York State.

“It bought a distribution system,” Zimmerman said about the deal, which includes Vincor’s 165 off-site winery sales outlets that were grandfathered almost 20 years  ago when the North American Free Trade Agreement between the U.S. and Canada was negotiated in 1987.    

Over that time, Vincor has bought other Ontario wineries with off-site outlets expressly for a larger share of the 290 licences. As Vincor grew, growers often said it was like dealing with a bully; but as long as it was Canadian, it was a bully they knew and respected.

As for the prospects for this year, it’s hoped there will be a full crop of some 50,000 tonnes. Last year’s crop of 26,200 tonnes, with a farm gate value of $22.7 million, was the smallest crop recorded in the 58 -year history of the board and the smallest since 1993. As a result, the marketing board’s revenue collected through grower check-off fees, based on tonnage sold, fell by 56 per cent from $1.1 million to $480,411.

The board dipped into surplus funds to cover an operating loss of  $268,486. Licence fees have not been increased in two years and will not increase this year, Duc said.

The $1 million from the provincial government has been locked away for six months earning interest while the board looks at research programs, he told growers. In his state-of-the-industry address to the media held a week earlier, Duc said vineyards have been heavily damaged by three consecutive cold winters and that hardier clones have to be developed to stabilize “yo-yo” crops that impede the industry’s progress toward developing a niche in the world market.

He added it’s hoped that extensive lobbying being conducted by the Canadian Horticultural Council and individual stakeholders, such as the GGO, will soon result in a $300-million national replanting program. Plans are to spread the program over seven years with funding shared between the federal and provincial governments plus farm organizations. The program would benefit grape, tender fruit, and apple growers.


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