Ontario greenhouse growers seeing high quality, high costs

Greenhouse growers based in Ontario continue to invest in their businesses even as their expenses climb.

Some companies are increasing their strawberry acreage, others are expanding their organic production, and some are building or using facilities in other markets.

All expect quality to be high, whether for tomatoes or cucumbers or peppers or other vegetables.

The use of artificial light continues to increase, something that is opening the door for more widespread year-round production.

“We think the landscape of the Ontario greenhouse industry needs to be a 12-month supply situation on all items because we’re such a big part of the global industry,” said Joe Spano, vice president of sales and marketing for Kingsville, Ontario-based Mucci Farms, which has invested heavily in lighting.

“It’s difficult for us to be in and out. Our customers want us to be in, so we need to figure out ways to be in all the time,” Spano said. “So we might not have all the same type of volume all the time every month, but there’ll be some Ontario production 12 months out of the year.”

Demand for local and regional produce has been a driver for the Ontario greenhouse industry, and customers seem to be interested in more organic as well.

Greenhouse growing methods could be another motivator for purchase if companies communicate them, said Joe Sbrocchi, general manager for Leamington-based Ontario Greenhouse Vegetable Growers.

“Most people buy organics to avoid what I call ‘the cides’ — herbicides, pesticides, fungicides, cides, cides, cides, cides, cides,” Sbrocchi said. “In greenhouse we use very little of that, if any. Only in the cases where a crop is threatened will a grower take those actions.

“Otherwise there’s very little reason for it,” Sbrocchi said. “You’re in a protected environment. You get to control all the inputs.”

Acreage in Ontario increased about 8% in 2017, but some projects have been put on hold in a climate of rising costs, most notably labor and freight, Sbrocchi said.

Companies are reporting strong demand for their products, but increasing costs are expected to result in higher prices at retail.

“What was normal before is not normal,” Sbrocchi said. “You’re not going to get the same type of pricing that you did in the past. I call it the new normal.”

Spano added that costs in 2019 could be even higher because of the possibility of another minimum wage increase.

“It’s taken us up over 20% overnight, and another hike supposedly scheduled for next year, so the industry’s looking at a 30%-plus increase in labor, the whole province is, so we’re very concerned about how we’re going to capture extra revenue to cover this,” Spano said. “We’re abiding by all the rules and giving the proper increases and kind of discussing it with all of our customers, and they’re understanding our situation because they’re in it, too.

“Unfortunately, that probably translates into higher food costs, but other than automation and laying people off — we don’t like to do that, the laying people off — so it will probably translate to higher food costs,” Spano said. “So that’s one main factor that we’re all kind of watching very closely.”

Companies continue to invest in automation in hopes of offsetting some of the increasing labor costs.

Jeremy Stockwell, director of procurement and grower relations for Kingsville-based Double Diamond Farms, noted that the electronic logging mandate — with the resulting cost increases and truck shortages — has caused issues for Ontario greenhouse growers just as it has for produce companies throughout the U.S.

“E-logs is a nightmare for us,” Stockwell said. “It’s very, very difficult ... Ultimately it’s going to drive the cost up.

“So far we’ve been absorbing that, but there’s only so long we can absorb it for before it’s going to get passed on,” Stillwell said.

Despite some substantial challenges at hand, growers still had positive expectations for this season and coming ones.

“I really think this industry has got tons of upside and all kinds of unrealized potential yet,” said Sbrocchi, who joined the organization in September. “We will see that over the next 5-10 years, and (I’m) really happy to be a part of it.”