DELHI — Pepsico, the makers of Frito-Lay potato-chips, recently sparred with Loblaws over price. For one week there were no potato chips in Loblaws stores, then both sides reached an agreement. Vegetable farmer Bill Nightingale doesn’t have that bargaining clout.
Canada’s largest grocery chain of-fered to buy the first crop of the season — asparagus — at or below the cost of production, according to the owner of Nightingale Farms Ltd, a 1,300-acre or- ganic and conventional vegetable operation near Delhi.
“It’s going to be the most challenging season I’ve ever seen, and the main reason is that the chain stores want to pay less than they have in the past, while charging 200% to 300% on top of that (to the consumer),” said the owner and third-generation operator of the family business founded in 1950. Nightingale, who estimates that asparagus accounts for 20% of his farm revenue, was fired up by Loblaws’ recent final offer of $68 per standard 28 lb. carton of asparagus. That’s the same price as last year when the figure was already “barely break even” and below the price Loblaws paid in 2019, he said.
His own input costs, from fuel to fertilizer and labour, are all way up since last year. Nightingale offered to sell at $73 to Loblaws — which typically buys 30% to 40% of all vegetables produced at the farm — but the retailer insisted on the lower price, he said. “And this is after 30 years of doing business.”
Nightingale found another major retailer willing to pay $75 for his asparagus, though he’s still steamed over the Loblaws negotiations. “They’re telling you they’re not going to pay any more than what it costs you … after you have your costs in the ground to plant that crop,” Nightingale said.
A workforce of 80 temporary foreign workers plus 40 local hires assist in the asparagus harvest at the Nightingale operation each spring.
Retail Council of Canada vice-president grocery division Jason McLinton said he could not speak to the specific complaint but said that grocery retailers are mindful of the increased costs faced by their suppliers, as well as consumer demand for affordable groceries. “Our members recognize that this has been an exceptional time,” McLinton said, noting that retailers have also faced cost increases for transportation, energy, labour and COVID compliance.
The solution is for everyone to work together as the industry adjusts to a period of higher inflation, he said.
Loblaws reported a profit increase of 40% in the first quarter of 2022. The company did not respond to a request for an interview by press time.
Some farms will be driven out of business, Nightingale predicted, also suggesting that Ontario vegetable growers need to band together into a supply-management system.
He expressed concern for asparagus producers who are more reliant than he is on large grocery stores. Some pushback is starting to occur from those farmers on price, he said, but acknowledged it’s not easy to get competing producers working together.
Having vegetables treated even like regular commodity crops — where farmers can hedge their risks by selling in a variety of ways, well in advance of harvest — would be “a dream,” he said.