The Grower March 2017

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MARCH 2017

CELEBRATING 138 YEARS AS CANADA’S PREMIER HORTICULTURAL PUBLICATION

THEGROWER.ORG

THE SHOCK OF HIGH ENERGY BILLS

Capital flees Ontario to expand greenhouses in the U.S.

John Ketler, farm general manager, NatureFresh Farms, inspects peppers at one of their greenhouses in Leamington, Ontario. NatureFresh is one of several major greenhouse growers expanding in the border state of Ohio where a more favourable business climate encourages growth. Energy prices and the recent instalment of cap and trade taxes are contributing factors for the flight of $220 million of capital from Ontario in the last five years. Photos by Glenn Lowson.

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KAREN DAVIDSON In the year that the Ontario Greenhouse Vegetable Growers (OGVG) is celebrating a 50th anniversary, several of the largest growers are expanding south of the border. Mastronardi Produce, Red Sun Farms and NatureFresh have all built state-of-the-art facilities in recent years, but now Mucci Farms is following. High energy prices in Ontario are causing capital flight estimated at $220 million over the last five years. When asked why his

company decided to break ground this year on 25 acres in Huron City, Ohio, Bert Mucci said, “It’s Ontario. Electricity prices, lack of infrastructure and now cap and trade are making it impossible to make money.” In the next three years, Mucci Farms will invest $115 million US in Ohio. He estimates building costs at $1.3 million US per acre. That price includes new lighting technology that allows them to grow year-round. This migration of capital is alarming for Ontario’s greenhouse vegetable industry,

which is nudging ever closer to $1 billion in sales. In recent years, it has been growing at a rate of about six per cent per year says Rick Seguin, general manager (OGVG). Current statistics peg acreage at 2880 acres under glass and plastic, which includes 180 acres which came on stream in 2016. These acres are almost evenly split between tomatoes (1060) bell peppers (1038) and cucumbers (782). This healthy industry is threatened with energy prices at historic highs, now that Ontario’s cap and trade

legislation kicked in January 1, 2017. When energy invoices arrived this past month, it was impossible to discern the exact impacts of cap and trade because the cost is buried in the line item on delivery. This lack of transparency is aggravating for business operators who can’t manage what they can’t measure. “More growth is planned for 2017, the result of decisions made two years ago,” says Seguin. “But this year, growers may decide not to expand as energy prices go higher. Continued on page 3


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