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Source: http://www.thespec.com/News/Discover/article/394243
CanGro's shock waves
Cathie Coward, the Hamilton Spectator
As Canada's last fruit canning plant closes, what happens to the farmers, the markets and the consumers?
June 28, 2008
June 28, 2008
Lisa Grace Marr
The Hamilton Spectator
Click here to read a special report.
ST. DAVIDS (Jun 28, 2008)
The doors of the country's last fruit canning plant closed yesterday with a soft thud that echoes beyond Niagara. It was a pragmatic decision on the part of CanGro, owned by American private equity firms Sun Capital and EG Capital Group.
Quite simply, the products can be made cheaper elsewhere.
Many union reps, growers, economists and even consumers reluctantly acknowledge the canned products put out by the plant, Del Monte fruit cocktails and the like, were approaching their best-before date. Consumption of canned goods is near stagnant (about 2 per cent growth a year), fruit production costs (particularly labour) are escalating, and the plant, while it made money, was not considered efficient in global terms.
The St. Davids canning plant operated for more than a century. But there's a lot more at stake here than one plant closing.
It marks a crossroads for Niagara's tender fruit industry that has flourished for more than a century. Acres of peach and pear trees have been pulled from their roots since CanGro made the closure announcement in January. Niagara fruitlands hold the designation of prime agricultural land -- a designation given to only 5 per cent of Canada's entire land mass.
It also calls into question our country's very ability to feed itself, let alone others.
It just seems crazy that locally grown peaches holding an international reputation for being the best in the world will no longer be found in cans on local grocery shelves.
"Last night, thousands of children on this planet went to bed hungry and we're pulling out trees. It's immoral," said Ray Bromley, a director of the United Food and Commercial Workers (UFCW), which represents about 150 full-time workers who lost their jobs at the St. Davids plant and the 130 who lost their jobs at the CanGro vegetable cannery in Exeter, which closed a few weeks ago.
"Del Monte is going to China. We're going to be feeding our children peaches from China. Sun Capital is just an investment firm, it's worried about profits to shareholders.
"(The union) is worried about the communities and the people, but we're also worried about food security."
The company has not returned phone calls to confirm this information.
Tompkins Associates, a consulting firm affiliated with Sun Capital, indicated in a press release the closure of the Canadian plants will exceed $1 million annually in savings.
"With the distribution activities successfully outsourced, we are now focusing on further reducing our supply chain costs and becoming our customers' 'best in category' supply chain partner," Geoff Scholes, vice-president of CanGro Foods, said in the statement.
Kate Stiefelmeyer, a research associate at the George Morris Centre, an independent think tank, conducted a comparative study of the U.S. and Canadian agri-food processing sector and found the Canadian sector needs an overhaul.
She said the Canadian tender fruit processing sector is suffering from regulatory, and to some extent, taxation issues. They're also just not keeping up in terms of capital investment and automation.
Negotiations between the government, the company, investors and fruit growers failed to save the plant, even with an extension to the March 31 deadline.
Then in May, Niagara businessman Rainer Hummel and two silent partners made a deal to snap it up.
Hummel owns a Niagara telecommunications company but now primarily focuses on his land development firm.
Hummel has not said what his plans are for the site, but he appears to be keeping an open mind, with the potential of a canning plant being a remote possibility.
The 20-hectare plant site is near the centre of the hamlet of St. Davids and comes with a heavy industrial zoning.
"This is a problem -- you have a gigantic plant in a hamlet with no major transportation to it," he said. "This is going to require some serious thinking, but in a short period of time because it's an investment.
"We are a for-profit company. We will balance that off of what our friends and neighbours in the community want."
As a child, Hummel delivered peaches to the plant and went to school with many of the affected growers.
He has met with local grower groups, including a committee struck by Donald Ziraldo, the flamboyant chairman of the Vineland Research and Innovation Centre and co-founder of Inniskillin Wines and VQA.
Ziraldo said the challenge before the fruit growers is much like that experienced by the grape growers in 1989, just after Ottawa signed the North American Free Trade Agreement (NAFTA).
"We were wiped out. We were told we were going to keep the beer industry and throw away the wine industry and give it to Ernst and Gallo. In 1990, we were given a grant to tear out old vineyards," he said. "There are now about 120 wineries."
He sees opportunities for the tender fruit industry in a jazzed up marketing program, branding Niagara and southern Ontario's fruit for what it is: Top-notch. The trick will be to get people to pay for it.
"It really depends on what you want to do with the industry," said Ziraldo. "It's a tipping point on local food, the whole world. Toronto, (chef) Jamie Kennedy, everyone wants local food. There have been some very strong initiatives."
Len Troup is banking on it. The chairman of the Ontario Tender Fruit Marketing Board said about 800 hectares of peaches and pears were affected by the plant closure.
By now, most peach farmers have already pulled out canning variety peach trees and replanted with fresh market peaches, nectarines, pears, plums or grapes.
The board and growers have also consulted with nurseries to prepare a strategy for future markets, aiming for the fresh products consumers want.
But changing direction in fruit production is a long, expensive process.
Trees can take years to come into production, and the return on investment can be even longer. [/]Many tender fruit growers were already grappling with plum pox -- a virus that has plagued the peninsula for about eight years --when the plant announced it would close.[/B]
"We were just crawling out of that and then this came," said John Thwaites, a Niagara-on-the-Lake grower. "We've gone through the expense of replanting and we have to live with the loss of that lost market. It won't be until four years from now when these trees start bearing fruit that we'll start recovering."
He's worried about what will happen to the market in four years. He's also worried about the effect on an industry he has seen gradually fade.
"The whole north end of St. Catharines was (once) peach orchards. It's all gone.
"You can't grow peaches like this anywhere else (in Canada)."
That's because Niagara's position between Lake Ontario and Lake Erie creates a microclimate that is one of the best tender fruit/grape growing regions in Canada, creating mild winter conditions and enough heat to ripen fruit. In addition, the region is blessed with a supply of fresh water and soil textures that are ideal for growing specialty crops.
Few pear growers affected by the plant closure have had to pull out trees because canning pears - Bartletts - are also great fresh market products.
But out of necessity comes invention.
/B]Just last week the use of a new agricultural product, Smart Fresh, was approved for use in Canada.[/B]
It's a critical development that will double the storage length of pears to prevent flooding the market with extra pears this fall and will also help the quality and shelf life.
Jennifer DeEll, a tender fruit researcher with the Ontario Ministry of Agriculture, Food and Rural Affairs, said it is the single most significant technological breakthrough in about 30 years.
What it means to consumers is that, hopefully, for the first time consumers will be able to buy Ontario pears at least until Christmas.
The marketing board's Troup accepts the end of the canning industry in Canada. But the end of the tender fruit industry?
No way.
Troup said if Canadians support them, farmers will keep Niagara bearing its pristine fruit.
"We're good at what we do and we want to keep doing it."
lmarr@thespec.com
905-526-3992
ee the full story on CanGro's closure in videos, slide shows and maps at thespec.com.
CanGro's shock waves
Cathie Coward, the Hamilton Spectator
As Canada's last fruit canning plant closes, what happens to the farmers, the markets and the consumers?
June 28, 2008
June 28, 2008
Lisa Grace Marr
The Hamilton Spectator
Click here to read a special report.
ST. DAVIDS (Jun 28, 2008)
The doors of the country's last fruit canning plant closed yesterday with a soft thud that echoes beyond Niagara. It was a pragmatic decision on the part of CanGro, owned by American private equity firms Sun Capital and EG Capital Group.
Quite simply, the products can be made cheaper elsewhere.
Many union reps, growers, economists and even consumers reluctantly acknowledge the canned products put out by the plant, Del Monte fruit cocktails and the like, were approaching their best-before date. Consumption of canned goods is near stagnant (about 2 per cent growth a year), fruit production costs (particularly labour) are escalating, and the plant, while it made money, was not considered efficient in global terms.
The St. Davids canning plant operated for more than a century. But there's a lot more at stake here than one plant closing.
It marks a crossroads for Niagara's tender fruit industry that has flourished for more than a century. Acres of peach and pear trees have been pulled from their roots since CanGro made the closure announcement in January. Niagara fruitlands hold the designation of prime agricultural land -- a designation given to only 5 per cent of Canada's entire land mass.
It also calls into question our country's very ability to feed itself, let alone others.
It just seems crazy that locally grown peaches holding an international reputation for being the best in the world will no longer be found in cans on local grocery shelves.
"Last night, thousands of children on this planet went to bed hungry and we're pulling out trees. It's immoral," said Ray Bromley, a director of the United Food and Commercial Workers (UFCW), which represents about 150 full-time workers who lost their jobs at the St. Davids plant and the 130 who lost their jobs at the CanGro vegetable cannery in Exeter, which closed a few weeks ago.
"Del Monte is going to China. We're going to be feeding our children peaches from China. Sun Capital is just an investment firm, it's worried about profits to shareholders.
"(The union) is worried about the communities and the people, but we're also worried about food security."
The company has not returned phone calls to confirm this information.
Tompkins Associates, a consulting firm affiliated with Sun Capital, indicated in a press release the closure of the Canadian plants will exceed $1 million annually in savings.
"With the distribution activities successfully outsourced, we are now focusing on further reducing our supply chain costs and becoming our customers' 'best in category' supply chain partner," Geoff Scholes, vice-president of CanGro Foods, said in the statement.
Kate Stiefelmeyer, a research associate at the George Morris Centre, an independent think tank, conducted a comparative study of the U.S. and Canadian agri-food processing sector and found the Canadian sector needs an overhaul.
She said the Canadian tender fruit processing sector is suffering from regulatory, and to some extent, taxation issues. They're also just not keeping up in terms of capital investment and automation.
Negotiations between the government, the company, investors and fruit growers failed to save the plant, even with an extension to the March 31 deadline.
Then in May, Niagara businessman Rainer Hummel and two silent partners made a deal to snap it up.
Hummel owns a Niagara telecommunications company but now primarily focuses on his land development firm.
Hummel has not said what his plans are for the site, but he appears to be keeping an open mind, with the potential of a canning plant being a remote possibility.
The 20-hectare plant site is near the centre of the hamlet of St. Davids and comes with a heavy industrial zoning.
"This is a problem -- you have a gigantic plant in a hamlet with no major transportation to it," he said. "This is going to require some serious thinking, but in a short period of time because it's an investment.
"We are a for-profit company. We will balance that off of what our friends and neighbours in the community want."
As a child, Hummel delivered peaches to the plant and went to school with many of the affected growers.
He has met with local grower groups, including a committee struck by Donald Ziraldo, the flamboyant chairman of the Vineland Research and Innovation Centre and co-founder of Inniskillin Wines and VQA.
Ziraldo said the challenge before the fruit growers is much like that experienced by the grape growers in 1989, just after Ottawa signed the North American Free Trade Agreement (NAFTA).
"We were wiped out. We were told we were going to keep the beer industry and throw away the wine industry and give it to Ernst and Gallo. In 1990, we were given a grant to tear out old vineyards," he said. "There are now about 120 wineries."
He sees opportunities for the tender fruit industry in a jazzed up marketing program, branding Niagara and southern Ontario's fruit for what it is: Top-notch. The trick will be to get people to pay for it.
"It really depends on what you want to do with the industry," said Ziraldo. "It's a tipping point on local food, the whole world. Toronto, (chef) Jamie Kennedy, everyone wants local food. There have been some very strong initiatives."
Len Troup is banking on it. The chairman of the Ontario Tender Fruit Marketing Board said about 800 hectares of peaches and pears were affected by the plant closure.
By now, most peach farmers have already pulled out canning variety peach trees and replanted with fresh market peaches, nectarines, pears, plums or grapes.
The board and growers have also consulted with nurseries to prepare a strategy for future markets, aiming for the fresh products consumers want.
But changing direction in fruit production is a long, expensive process.
Trees can take years to come into production, and the return on investment can be even longer. [/]Many tender fruit growers were already grappling with plum pox -- a virus that has plagued the peninsula for about eight years --when the plant announced it would close.[/B]
"We were just crawling out of that and then this came," said John Thwaites, a Niagara-on-the-Lake grower. "We've gone through the expense of replanting and we have to live with the loss of that lost market. It won't be until four years from now when these trees start bearing fruit that we'll start recovering."
He's worried about what will happen to the market in four years. He's also worried about the effect on an industry he has seen gradually fade.
"The whole north end of St. Catharines was (once) peach orchards. It's all gone.
"You can't grow peaches like this anywhere else (in Canada)."
That's because Niagara's position between Lake Ontario and Lake Erie creates a microclimate that is one of the best tender fruit/grape growing regions in Canada, creating mild winter conditions and enough heat to ripen fruit. In addition, the region is blessed with a supply of fresh water and soil textures that are ideal for growing specialty crops.
Few pear growers affected by the plant closure have had to pull out trees because canning pears - Bartletts - are also great fresh market products.
But out of necessity comes invention.
/B]Just last week the use of a new agricultural product, Smart Fresh, was approved for use in Canada.[/B]
It's a critical development that will double the storage length of pears to prevent flooding the market with extra pears this fall and will also help the quality and shelf life.
Jennifer DeEll, a tender fruit researcher with the Ontario Ministry of Agriculture, Food and Rural Affairs, said it is the single most significant technological breakthrough in about 30 years.
What it means to consumers is that, hopefully, for the first time consumers will be able to buy Ontario pears at least until Christmas.
The marketing board's Troup accepts the end of the canning industry in Canada. But the end of the tender fruit industry?
No way.
Troup said if Canadians support them, farmers will keep Niagara bearing its pristine fruit.
"We're good at what we do and we want to keep doing it."
lmarr@thespec.com
905-526-3992
ee the full story on CanGro's closure in videos, slide shows and maps at thespec.com.