Stability of new tobacco contract system questioned

By Barbara Simpson, Sarnia Observer

Tobacco farmers who signed with a Tillsonburg buyer are still exploring their avenues for compensation.

Directors of the Ontario Flue-Cured Tobacco Growers Marketing Board held another special meeting to update True Blend growers in Delhi yesterday. Consent forms were passed around to grant permission for the marketing board and the two-year-old Tillsonburg buyer to share information, farmers say.

Discussion centred around whether to cash True Blend's $2 million bond put up against default or to launch a class action lawsuit, growers reported after the meeting.

"They're just trying to see what the members favour," said Luke Sioen, a Norwich tobacco farmer after the meeting.

Sixty True Blend growers have been in a state of limbo since the contractor suffered financial and technical hardships last fall. Some farmers claim they stopped shipping their loads once they received late or no payment at all this fall.

"I still haven't received any payment," said a grower, who asked his name not be used. "I had no income last year because of this in 2010. They've taken a load of tobacco and never paid for it."

True Blend growers are now facing millions of pounds of unshipped tobacco rotting away in their barns. They must rid themselves of any of last year's tobacco because contractors won't sign farmers with leftover crop.

"I guess there are two companies interested in what's left in the barns but at a much lower cost," Sioen said.

True Blend was contracted to purchase 20% of last year's 50 million pounds of tobacco.

Last year's crop is doubled in size compared to the 22 million pounds grown in 2009. However, this resurgence under the new contract system could be tempered with changes in the tobacco processing landscape.

"It's a bigger picture than just True Blend, even with Simcoe Leaf - what use to be the pride of Norfolk - no longer there," said Chris Van Paassen, a member of the Norfolk Agricultural Advisory Board.

Last month, Simcoe Leaf Tobacco Company announced it would be closing its doors at the end of June. The facility has been buying and processing tobacco for over 50 years. As volume of tobacco has declined in recent years, the once three-shift facility dwindled down to a single shift.

A hope of the new contract system was to create steadiness in the marketplace, Van Paassen added. However, the current situation with True Blend casts some doubt on that.

"Things like this make you question the stability of the system," he said.

While "it's a shame in agriculture when this happens," Van Paassen said he has heard optimism from both board members and growers that a solution can be reached.

Representatives of True Blend weren't present at the meeting and didn't return calls yesterday. Fred Neukamm, chair of the Ontario Flue-Cured Tobacco Growers Marketing Board, also didn't return calls yesterday.

Barbara Simpson

519-426-3528, ext. 112