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Ontario grape growers have biggest-ever payday, lose major juice processor


April 25, 2008
By Jim Meyers

Topics

Ontario’s 540 grape growers, who are celebrating the
60th anniversary of their marketing board this year, hope to make it a
memorable one by topping last year’s record $68-million harvest, which
was also the second largest crop in the past 25 years. 

Ontario’s 540 grape growers, who are celebrating the 60th anniversary of their marketing board this year, hope to make it a memorable one by topping last year’s record $68-million harvest, which was also the second largest crop in the past 25 years. 

Prices wineries pay for grapes will increase two per cent on all varieties in the final year of a three-year Memorandum of Understanding after increasing three per cent last year. Next summer, it’s back to the negotiating table as usual.   

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But any champagne that may be popped for this fall’s harvest has already lost some of its fizz – made flat by the loss of the only major local processor that processed half of the 10,000 tonnes of juice grapes in last year’s 64,178 tonne crop.

Cadbury Schweppes Beverages (Mott’s division) announced in mid-March that it would be closing its plant in St. Catharines in June, affecting 105 of some 240 juice grape growers and putting 26 people out of work. Growers under contract with Mott’s will have the option of having this year’s crop processed at the company’s plant in upper New York State with transportation expenses paid, or taking a $75/tonne payment not to supply grapes based on last year’s tonnage.
 
The announcement came three weeks before the Grape Growers of Ontario (GGO) annual meeting on April 4. It wasn’t a surprise. The international beverage company said last summer it wouldn’t be buying Ontario juice grapes after this year’s harvest.

It still put a damper on the silver anniversary of the marketing board that was founded in large part in September 1947 by growers who wanted to take control of their own destiny and expand the market for grape juice. The Ontario Grape Growers’ Co-operative opened its own processing plant a year later and operated it under contract with Welch’s in the U.S. It was acquired in 1954 by the Powell family of Montreal, which had acquired rights to the Welch’s label in Canada. Powell Foods was sold to Cadbury Schweppes with the licensing agreement to process and market Welch’s products in Canada.

Second threat to juice growers
This isn’t the first time Niagara’s juice grape growers have faced the prospect of having the rug pulled out from under them. Some 260 juice grape growers were told in April 1996, that the Mott’s plant would close that December at a cost of 176 jobs. Mott’s reversed its decision to close the plant following a range war that summer with Welch’s that came into Ontario through its grower arm, the National Grape Co-operative. For the first time in 50 years, National offered free long-term contracts worth $600/acre to Ontario growers in order to source hard-to-get white grape juice varieties that were in demand by health-conscious U.S. consumers. Cliffstar, another American processor, also showed some interest. Growers, who had feared becoming paupers that spring, felt more like kings with buyers lining up at their door.

Welch’s was willing to buy surplus red Concord grapes to get growers under long-term contract for white varieties. Mott’s responded by also offering growers similar long-term contracts instead of year-to-year contracts negotiated at harvest time and held on to about three-quarters of the 1996 crop of some 12,000 tonnes.   

Those seven-year contracts ended in 2002 and the juice industry has been in decline ever since with the price paid last year ($299/tonne for red Concords and $305/tonne for white Niagara) much less than what was paid in 1996 ($331/tonne for Concords and $365/tonne for Niagara).

No word on replant program
Outgoing GGO chairman Ray Duc blames the reversal of fortune on a global glut of juice, lower per acre yields in Ontario, and the stronger Canadian dollar as well as greater hassle at border crossings into the U.S. that jeopardizes the speedy delivery juice grapes that have to be delivered within eight hours of picking. But he does see hope for juice grape growers in the international icewine market that accounted for 7,000 tonnes of last year’s crop. 
 
For the past two years, the GGO has worked diligently to get a government compensation program for juice grape growers who are willing to make a transition to other crops. They were not part of the $100-million national wine grape replant program under the North American Free Trade agreement in the ‘80s and have a right to feel they are owed something, Duc has said.

It was hoped a program to jointly fund a $49-million national grape and tender fruit replant program over seven years would have been announced in either the federal or provincial government budgets this spring, but there was no mention. The affected growers are willing to put in an additional $72 million into a replant program.   
 
Debbie Zimmerman, CEO of the marketing board, says the $3.5 million/year cost to the federal government is minor. It’s waiting to see a plan on paper from the grape and tender fruit producing provinces (Ontario, Quebec, British Columbia and Nova Scotia) before committing. Ontario, where the most money would be spent, is the only one without a replant program.