Producers, Peak of the Market favour proposed changes they feel would grow the root-vegetable industry

Manitoba’s archaic quota system for table potatoes and other root vegetables could finally be buried by the time this year’s crop is in the ground.

Provincial legislation was introduced this week that will end the quota system and allow Peak of the Market to transition from a regulated marketing agency to an independent corporation.

As has been the case for several decades, producers who grow more than five acres of table potatoes, carrots, onions or parsnips can only produce as much as their quota allows.

Whereas in the 1960s and ‘70s there were more than 50 farmers growing fresh root vegetables – as opposed to potatoes grown for the processing industry — consolidation has whittled that number down to eight, with another three producers growing carrots, onions and parsnips..

All of their production must be marketed by Peak of the Market.

Pamela Kolochuk, the CEO of Peak of the Market, said the organization and its growers – who are unanimously in support of the change – have been working on fine tuning the proposed changes for two years.

“This is a very important piece of legislation for our industry,” Kolochuk said

As well as freeing up farmers to be able to decide what to grow and how much, it will also allow Peak of the Market to expand into new markets, acquire distribution facilities and be better able to compete with other national produce companies.

Peter Loewen, chairman of Peak of the Market who grows about 500 acres of potato on a farm in between Morden and Winkler – he is the smallest of the tiny cohort of eight Manitoba table potato producers – said he thinks this is the right step for the industry to be going.

“We are trying to make it easier than the current system allows,” he said. “We are trying to keep up with the times and the needs of the consumer.”

As it stands now, Peak of the Market’s annual gross revenue is around $120 million.

Kolochuk said the hope is that the total will increase substantially over the course of the next few years.

Among other things Peak is constrained in markets outside Manitoba by its inability to actually own any assets outside the province. For competitive reasons Kolochuk would not disclose any of its new marketing plans but with the new legislation it will be able to properly compete with a broader compliment of offerings and be able to partner with retailers and distributors elsewhere in Canada and the U.S.

Loewen said that internally there is no opposition to the changes.

Dan Sawatzky, the general manager of Keystone Potato Producers Association, the group that manages contract production for the potato processing industry, was not available for comment on Friday.

But Loewen said Sawatzky is fully briefed on the proposed changes and is supportive.

While there are only about 10,000 acres of table potatoes grown in Manitoba, process potatoes grown under contract to French fry and potato chip manufacturers, are in excess of 60,000 acres.

Manitoba’s Agriculture Minister Derek Johnson, said, “For years Manitoba potato farmers have not had the freedom to grow and sell their table potatoes and root crops in the province and at the same time, regulations have prevented Peak of the Market from modernizing its business model to promote, sell and distribute Manitoba’s table potatoes and root crops to the world.”

The proposed legislation would allow those producers to sell to any buyer. Currently their entire crop has to be marketed by Peak of the Market.

But Kolochuk is not concerned that Peak will lose volume.

“We’re hoping the change will entice more growers into the market and hopefully they will want Peak to sell on their behalf,” she said. “And we are putting things in place such that growers who we partner with now will continue to want to work with us.”

The thinking is that production acreage will not change overnight. For one thing, Kolochuk said, seed is hard to come by in the springtime.

“It will take a few years for the industry to grow,” she said. “It will also take time for growers to wrap their heads around the possibilities that will come out of this.”

The future structure of Peak of the Market will likely undergo some sort of transition, but Kolochuk is either not sure or not prepared to say what it will look like just yet.

She said there are on-going discussions with banks about altering the capital structure of the organization.

In the short term, she said it will continue to operate as a not-for-profit corporation.

The organization owns its 65,000 square foot warehouse and distribution centre on King Edward St. It also leases a 10,000 square foot warehouse in Calgary.

Martin Cash

Martin Cash

Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.

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