Deal sealed to save Ont. tomato processing plant

Agreement includes co-pack deal for Canco to make Heinz goods

(HeinzItUp.com)

Farmers around Leamington, southwestern Ontario’s tomato-growing capital, will continue to supply tomatoes to the local 105-year-old processing plant under new management.

Michael Mullen, senior vice-president of corporate and government affairs for U.S. food processing giant H.J. Heinz, confirmed Tuesday the company has completed its deal to sell the Leamington plant to Highbury Canco, a consortium of Ontario investors including plant managers. [Related story]

Canco formally takes over “all aspects of the operation” at Leamington starting June 27, Mullen said in a statement.

The purchase agreement includes a supply deal under which Canco will make “some of Canada’s favourite products, including Heinz tomato juice, Heinz beans and Heinz canned pastas in the years to come,” he said.

Further terms of the deal, such as the plant purchase price or the length of the supply agreement, were not disclosed, though Ontario farm magazine Better Farming on Wednesday quoted a Canco official as saying the supply deal has a five-year term.

“Now that the deal has concluded, the Highbury Canco Corp. is fully focused on establishing a strong production base in Leamington for Heinz and further strengthening our own brand,” Canco director Pradeep Sood said in a separate statement Tuesday.

Media in the region have quoted Sood as saying Canco has contracts in place with 10 area tomato growers for 2014; that’s down from 43 who contracted to Heinz last year.

Heinz in November announced plans to shut the plant and lay off its 700-plus employees, close two of its U.S. plants, and consolidate their production at other facilities in the U.S. and Canada. [Related]

The company, whose remaining Canadian plants are at Toronto and St. Marys, Ont., had sourced tomatoes since 1909 from growers at Leamington, where it built what became the company’s second-biggest plant worldwide, producing mainly ketchup.

“Same prices and terms”

The Ontario Processing Vegetable Growers confirmed last month that Canco now has a processing license in hand from the Ontario Farm Products Marketing Commission.

“Given that there are still transition details to be worked out between Highbury Canco and Heinz, the (OPVG) board has received a letter of credit and undertaking from Heinz that will guarantee payment to growers for the 2014 crop year,” the association said April 24.

Canco, the association said, can now contract with growers, having signed a 2014 tomato agreement with “exactly the same prices and terms and conditions of sale” as those reached with all other tomato processors in the province.

The OPVG also confirmed in January it has reached an agreement with Heinz to compensate growers for closing the Leamington plant, worth $9 per ton based on 2013 contract tonnage.

The 43 growers who contracted just over 200,000 tons of tomatoes in total to Heinz in 2013 have approved that deal, the association said. Cheques were mailed to eligible growers in March. — AGCanada.com Network

 

 

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