HALIFAX, TUESDAY, MARCH 18, 2003
STANDING COMMITTEE ON ECONOMIC DEVELOPMENT
1:00 P.M.
CHAIRMAN
Mr. Brooke Taylor
MR. WILLIAM DOOKS (Chairman): Good afternoon. I would like to call the Standing Committee on Economic Development to order. My name is Bill Dooks. I'm the member for Eastern Shore, standing in for the Vice-Chairman, Russell MacKinnon, who is standing in for the Chairman, Brooke Taylor, this afternoon.
I would like to introduce a couple of gentlemen from the Nova Scotia Fruit Growers' Association: Leonard Sarsfield, President; and Larry Lutz, Director. We welcome you here this afternoon. Gentlemen, usually we go around the committee and we introduce the members so you can have a feel of who's who. The practice is to open up the first part of the committee by a presentation from you and then you can, I guess, go wherever you want with that. Then what we do is we open up for questions and then you can answer the members, if that's okay. So, once again, we can start with you, Frank, for introductions.
[The committee members introduced themselves.]
MR. CHAIRMAN: Once again, Russell and also Dave Wilson will be joining us later on this afternoon. David is now replacing Mr. Donald Downe who has resigned from the committee. The floor is yours, gentlemen.
MR. LEONARD SARSFIELD: Very good. I'm Leonard Sarsfield, serving a one-year term as President of the Nova Scotia Fruit Growers' Association. The Nova Scotia Fruit Growers' Association was established in 1863. It is the sole representative of the tree fruit industry in the province and assists its grower/packer/processor members in the ongoing development of a viable and sustainable industry.
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Over the past few years, the industry has been seriously challenged by world over-production of apples, the importation of large quantities of foreign apples and competing fruit, retailer consolidation, U.S. subsidies to their apple industry, cutbacks in Canadian federal and provincial government spending on agriculture and added to that, agriculture is now consumer-driven and consumers have very high expectations.
In order to meet these ever-increasing challenges, the Nova Scotia apple industry has come together to restore its economic viability through a comprehensive long-term program. This vitalization program has been designed to stimulate the industry and is made up of six stand-alone yet interactive supporting components, one being integrated fruit production, cultivar development and evaluation, bio-product development, market development, product commercialization and what we are going to speak to in more depth here is orchard renewal, the Orchard Renewal Program which Larry Lutz will give you some more detailed information on that program. Then later on, if you want to discuss any of the other parts of this vitalization program, we could, in the questions. Thank you. Larry.
MR. LARRY LUTZ: Well, as Leonard said, my name is Larry Lutz. I'm a Director of the Nova Scotia Fruit Growers' Association. I am also the Vice-President of Scotian Gold Cooperative which is the largest apple storage operator and packer in Nova Scotia. In my spare time, I have 40 acres of apple trees in the Berwick area that myself and my family take care of.
Being a nervous speaker, rather than fidgeting on the desk, I'll stand up and fidget, so they have equipped me with a portable microphone here. I'd like to give a brief overview of our apple industry for those of you who may not be as familiar with it as others. Then we will get into the crux of the program.
The apple industry in North America actually started in Nova Scotia back with the settlement of Annapolis Royal. We've had our ups and downs over the years. Our heyday was at the turn of the century. With the outbreak of the Second World War and the subsequent problems of shipping and whatnot, we lost a lot of our overseas markets. That was a really big factor in the decline of the industry in Nova Scotia. European production had increased and they were growing a lot more consumer-friendly apples in Europe at the time so we lost a lot of the markets. We were no longer a preferential supplier.
Currently in Nova Scotia, there are somewhere in the vicinity of 7,000 acres of orchard producing somewhere around 2.5 million bushels. For those of you not familiar with the measure, a bushel is about 42 pounds. We have low production per acre. They average somewhere between 375 and 400 bushels per acre. The rest of the world, they aim for about 1,000 bushels per acre and the overall average in an area such as Washington State, Chile, places such as that, is in the vicinity of 900 to 1,000 bushels per acre.
In the late 1970s and early 1980s, there was a lot of orchard replanted in Nova Scotia. The problem is, we encountered a problem known as replant disease. What that means is that orchard which is replanted on an old orchard site does not do as well as what it did. The original orchards that were planted in Nova Scotia were all planted on virgin ground, which means they had never had tree fruit on them. The trees took off, they grew well and they were very productive. That was one of the biggest problems. We still have a lot of those orchards in the grounds today that have never, what we call, filled their space which means grew into an acceptable, dense planting. That has hindered a lot of our growers in that they are still trying to make money off these apple orchards which have never entirely filled their space.
Things have changed a lot in the industry and what we really need in this area are large plantings of higher value varieties. The old standard varieties that our grandparents planted are no longer acceptable. You can't ship them. The market doesn't want them. Even the strains have improved. McIntosh is no longer a half green, half red apple. It's an entirely red apple, the same as Cortland. We have new varieties such as Honeycrisp and Jonagold, which I will talk about a bit later, which you are receiving twice as much money for and it's really what the consumer wants. The biggest problem with that is that the growers, a lot of them don't have any equity left to access capital for replanting. In order to get money from your bank, you have to have land as collateral and in most cases the land is tied up and that's leverage with the Farm Loan Board. Therefore you don't have anything else to access.
Some of our growers have been reluctant or unable to adopt new technology. By that I mean that some of our growers are older and thinking of getting out of the business and if they don't have anybody in the family who wants to take it over, they are not going to spend the money on the farm. The young people in the industry, and there is a significant amount of young people in the industry, which probably separates us a bit from a lot of industries, haven't been able to access the money to do what they need to do. Some of our growers inherited orchard from their parents, which was not very productive, and they are living with the results.
The other part here, which I mentioned before, we have a very unique climate. We can't grow Granny Smith. We can't grow Fuji. We can't grow Pink Lady. The season is too late. We don't have the heat units. These are the apples you hear about that the rest of the world has been making money off of for the last 10 years. An interesting thing has happened with plant breeding in the last five to seven years. There have been some exceptional varieties which have been bred and developed that only grow in cool climates. Honeycrisp, for example. We grow the best Honeycrisp in the world. Ask the people we market our fruit to in Minnesota. It was bred in a northern climate. They can't grow it in Washington State, they can't grow it in South Africa, they can't grow it in Chile. That puts us in a rather unique situation. We have been able to return somewhere in the vicinity of four times the value of McIntosh for Honeycrisp and that makes quite a difference in the bottom line of your operation.
Jonagold, a popular variety in Europe, also was bred under European conditions. Actually, it was bred in New York but it adapted well to European conditions and they can't grow that in Washington State, they can't grow it in the hotter areas of the world. That's a big advantage for us because now, all of a sudden, we're in the position of being able to grow varieties that they can't grow in the rest of the world. That's a very interesting position to be in, from where we were.
With all the problems we've had, and there's been a lot of negativity in the apple business for the last two decades, we decided to look at our own industry to see what we should be doing or could be doing to increase the optimism in the industry. We started what we called a production study group. It was made up of some of the main growers or primary progressive growers in the Annapolis Valley along with federal research scientists and provincial extension people. What we did was a detailed survey of the highest-producing apple orchards in Nova Scotia to determine if we could actually produce, consistently, the levels that the others were. In the end we found that we could. Our highest-producing orchards produced as much as they did anywhere else in the world. Our problems were that we weren't using the technology that the other areas were to do that.
In conjunction with that we've been very progressive as far as travelling to other areas. We've organized groups and I've taken groups of growers to South Africa, recently to South America, to Washington State several times, and British Columbia. What we saw with a lot of those areas is that they don't have any better soils or any better conditions than we do, but they were spending the time and using the expertise to establish the orchards to produce in the end. Basically their theory was that we don't mind spending the money as long as we're going to get it back. In our areas, a lot of times, we didn't spend the money up front. We were as cheap as we possibly could be. We used small calibre trees, and we didn't do a good job on land prep; if you had an open field, you scuffed over it with the harrows and planted an orchard and hoped that it grew. That's not what they do in other areas. We had to recognize that that's what we had to do if we wanted to be successful.
As a result of this, we set down a strategy and decided what we were going to do. We figured that our most limiting factor was the way that our orchards were being established, and that was primarily due to the way we were preparing the soil. While I was in South Africa, we actually met a gentleman by the name of Keith Fuller. He gave us a presentation on what they do with their soils to get them ready for planting trees. Actually, we brought him up for the orchard tour in the summer. While he was here, after I saw what he was capable of, we invited him back for a three-year contract. The Nova Scotia Fruit Growers' Association, the province, Scotian Gold - who I work for - and the federal government jointly funded this project for Keith to come.
We put on farm trials, out on actual growers' orchards. We spent the money to invest in a deep ripper, which is basically a shank behind a D6 bulldozer, which goes down four feet and breaks up the hardpan. We actually roll the topsoil down into the subsoil. We ridged, we
did all sorts of things. The other thing we did was Scotian Gold actually bought a fumigator that puts fumigant deep into the soil to take care of what we call the replant disease. It's not a simple organism, it's a complex of fungi, bacteria, nematode, a whole variety of things. Anyway, the fumigants have worked to solve that, but you need the specialized machinery to do it.
We did that and then, probably most importantly, we embarked on a program to educate our growers on what you could do if you put your mind to it and were willing to invest the money in it. We brought speakers in from the West Coast, from New York, from South Africa. We put trials on irrigation, fertigation, fumigation, you name it, out on these actual growers' farms, on different soil types in different areas of the Valley. With that, we also started buying trees off the west coast of the United States. You can say, well, perhaps, we should have been buying trees from home, but the trees from home were sub-quality. We spent the money, we're paying in the vicinity of $10 apiece for trees from the west coast when you could buy local ones for $5, but the growers found that they were gaining probably one to two years in terms of the length of time it took them to come into production.
What we did in all that, now we're growing orchards as well as they are anywhere else in the world. We proved that we can do it. They're successful, they're high-producing. With that, the growers who are doing that have a new sense of optimism. There is money to be made in the orchard business if you do it right, but that's the key, you have to do it right.
Before I talk about what we're proposing for a program, I would like to mention the Northern Spy apple tree planting program. This program ran from 1995 to 2000 - 2000 was supposed to be the end of it but actually we had some problems with trees one year so we carried it on into 2001. It was funded by the Department of Agriculture - back in those days, prior to being the Department of Agriculture and Fisheries - ACOA, the Nova Scotia Fruit Growers' Association and AFDA, the Agri-Food Development Agreement, which was federal funding, provincial funding and whatnot, and as well, of course, the growers obviously put a lot of money into it.
[1:15 p.m.]
The Nova Scotia Fruit Growers' Association managed the funds, which meant we took the applications, we approved them and we followed up on them to make sure the money was properly spent. I was actually the chairman of the committee which decided who got the money based on the applications they put in. There was a $7-per-tree assistance, which was paid to the grower, but there were very clearly defined criteria for that assistance, which means it had to be high density, it had to be supported, and by that I mean it had to be a minimum of 250 trees to the acre to a maximum of 600 trees to the acre, the trees had to be supported with a support system, the land had to be either fumigated or have had a replant test done. It was very closely monitored. Some growers didn't like that, they wanted to get $7 a tree to plant however they wanted to plant, and that is not what we had in mind. It was
not a giveaway program, it was not designed to be a handout, it was designed to plant an orchard that was going to be productive.
In the end, that single program - and I think Leonard can certainly attest to this - really changed the face of the apple industry in Nova Scotia. We established 500 acres of new orchard, 160,000 trees, basically, that were planted in the Annapolis Valley. Out of all those sites, I cannot think of a single failure that we actually paid for. The other thing with it, in addition, we were only planting Northern Spy, which the Sarsfield plant was short of at the time, and most of the Spys were produced on old trees, and we had to do something or they were going to have to bring in more fruit from outside the province, which we didn't want to do. Basically what that did is it solidified long-term Northern Spy for both Sarsfield Foods and as well, Leonard's new plant, Apple Valley Foods. Now there is sufficient Spy volume in the Valley to keep both those processors going.
The other thing is the growers, in spite of themselves, are now comfortable with this new high-density planting system. Most of them growled to start with, we don't want to do that, you can't get through with the same tractor I use to spread manure with, this and that, but actually, in spite of themselves, once they saw that the trees were actually a lot nicer to take care of, they were shorter, they were smaller, they were closer together, it was a better utilization of land, and they actually started to like it. I should say in spite of themselves, because many were deathly opposed to doing anything different from what their grandparents had done.
So, to speak about what we are actually proposing to do, we want to see the same thing happen with the fresh fruit industry as what happened with the processing industry for the Northern Spy. Our goal is to increase the success of our growers through the increased production of high-value varieties. What I mean by that is that this program is not designed to increase the overall production of apples in Nova Scotia. You will hear the detractors of the program say there is too many apples in Nova Scotia. There is not too many apples in Nova Scotia. Yes, globally, there is a lot of apples, but in Nova Scotia there is not too many good apples. There is too much trash that is grown on old trees and get to the market, which should never get there, but there is not too many good apples. There are too many low-value apples. What we need is more high-value apples, a higher production on the individual farms. That will make our growers successful.
The standard rate in the industry is there should be about 5 per cent annual renewal of the orchard, which means if you have 100 acres of orchard, you should be cutting down five acres of old orchard every year and planting 5 acres new. That allows you to come on with new varieties and keeps your orchard young. Realistically, we think we can renew 2.5 per cent or 175 acres per year. This is based on the uptake we had in the Spy planting program on what we think our progressive growers will do. The average cost of replanting orchard in a high-density, high-production fashion - and that includes your soil prep and
everything, like labour to plant the trees - is about $14.75 per tree. That varies, of course, with the number of trees per acre, but that is a good rule of thumb.
If we were to plant 175 acres of trees per year, then the total value of that planting would be around $1 million per year, $1,032,000. What we would like to see is an assistance of $7 per tree, the same as under the Spy planting program, because we know that it will work. The Nova Scotia Fruit Growers' Association will provide $45,000 per year for five years. This has been approved at our board level. The money is in place to do it. And what we're asking for is for the province or some other funding agency to put in $445,000 per year, and that will result in the planting that we're talking about. This represents approximately 45 per cent of the capital cost of putting this in. So the growers will have to put in the other 50 per cent, 55 per cent of the actual capital cost of it, by the time it gets into production I think the assistance we are providing - correct me if I'm wrong - between 12 per cent and 20 per cent of the total expenses the growers will have in it.
The criteria for assistance - and I think this is very critical because, again, I want to stress that we're not looking for handouts simply to keep growers going. What we want is an organized approach to renewing the infrastructure on the farms. Based on that, the growers are going to have to submit a plan.
There will be an orchard renewal committee, the same as when there was a Spy planting committee, it will be composed of the most forward growers, federal research scientists, and our provincial extension people who are part of the AgraPoint system now. The criteria will be that that system will have to be capable of producing 800 bushels per acre in a reasonable time. What we are saying is you just can't plant the trees you want to plant or the way your grandfather planted them, you have to plant them in a fashion that will make money.
There will have to be a marketing plan in place for all the fruit produced from this planting and what that means is, if you are your own marketer then you'll have to say how you plan on dealing with that fruit. If you are selling to Scotian Gold or to another packer, you have to have a letter from that packer saying yes, we are willing to take the fruit from this orchard. We do not want fruit being produced when there is no home for it because that is one of the worst things you can do to the industry.
The other thing we're going to look at is it's not only the industry plan, it's what variety do you plan on growing. You can't just grow whatever variety you want to grow because certain varieties are going out of favour with consumers, certain varieties have a much higher value than others. Take Gravensteins, for example, just because you don't have any Gravensteins and want to plant some, there may be an industry over-supply of Gravensteins and therefore we would never approve someone planting a bunch of Gravensteins that will end up competing with people already having difficulty marketing them.
All of the sites are going to be examined and approved by a qualified soil scientist, Keith Fuller in particular is our suggestion. The sites have to be capable of producing a decent orchard and before any money goes to the grower, there will be an inspector who will be employed by the Nova Scotia Fruit Growers' Association. She's already on staff in another capacity, managing the Spy Planting Program. She will actually go out, walk through those orchards, count the trees and make sure everything is done according to schedule, otherwise the grower will not receive any money for it.
That is basically the crux of our program. One thing which we may talk about in a bit, you all have the program summary, which is quite a lot more detailed, or the program overview. In the back exhibits, if you go to Page 18, Exhibit B, the heading says, Mature McIntosh, 50 per cent Fresh Fruit, 75 per cent Packup. I just wanted to explain this a little bit.
When you look up top, this is an old McIntosh orchard, it means you are picking about 50 per cent of the apples off the trees and the rest are going on the ground for juice. Of the fruit you pick off trees, when it goes across the packing line in our plant, 75 per cent of it actually ends up in a box being sold to the consumer. It says bushels per acre, 400 bushels, that's about where we are right now. When you look at the bottom line it shows that somebody growing an old McIntosh orchard, getting that kind of packout, is losing $492 per acre, that is before depreciation and before any return to the grower. Even with an old orchard, look what happens when you simply increase your production.
The thing with an orchard is that a lot of your expenses are tied to the acre, that means your cost of pesticides, your cost of fertilizer, your cost of maintenance. Other than harvest labour most of your costs are already fixed. When you look at simply increasing the volume of fruit you are producing on that acre, it puts you in a position where you are making $500 to $1,000 an acre and you're contributing back to return to grower and depreciation.
If you flip over, the next one is Exhibit C, it says Young McIntosh. Simply by renewing that old McIntosh block, planting a variety which will return $100 to $120 per bin back to the grower by the time all things are considered. Even at the lower levels of production, 400, which is your average for the province, you're still getting a couple of hundred dollars an acre back. When you start to get up into the higher production levels to where we should be as an industry, all of a sudden things look considerably better.
In the third one, Exhibit D, if you flip over, it shows what happens when you change to a higher value variety. Jonagold - which we were saying on average you are getting $150 to $160, not counting the juice production - even at the lowest levels you are up to $1,000 an acre and when you get up into the higher levels you're looking at over $3,000 an acre. I think it is a two-pronged thing: one, you have to get your production up; and two, pick varieties that consumers want.
In my estimation there is money in the apple business. If you do it right and you have young orchards with good varieties you can make money at the business. I'm very positive about it and I wouldn't be planting an orchard myself if I was planning on losing money on it.
MR. CHAIRMAN: Thank you, Larry. We've also been joined by Russell MacKinnon, MLA for Cape Breton West this afternoon. Russell, we've already introduced ourselves and the presentation has been made and I will now open up to the committee for questions. John.
MR. JOHN MACDONELL: Mr. Chairman, thank you very much for the presentation, it was quite educational. I planted 10 apple trees about five years ago and I think I got one apple about that big.
MR. RUSSELL MACKINNON: Is that why you got into politics? (Laughter)
MR. MACDONELL: Well, the success of that has yet to be determined. One of my first questions would be, what acreage at the high production level, and this would be type specific, in other words you may not have a market for all types of apples equally, but I'm thinking generally speaking, if you're looking at increasing production in the province there must be a point that you would have in mind where we couldn't really go beyond? If we had high production on most acres, do you have a level of production that you think that we can't really go beyond that, otherwise we're really going to be flooded? You said there were a lot of apples that are trash and some people are saying we are over-producing apples anyway but you say we're not over-producing good apples. So in terms of producing good apples, what kind of production can we achieve and stand?
MR. LUTZ: Currently, our production is sitting in around 2.5 million bushels. When you look back to the pre-war days, we were probably approaching 9 million bushels of fruit. Obviously, we're not going to go back to those days because we don't have those markets.
The thing that is going to happen with this is that even though our acreage is now decreasing year by year, it gets a little less, our production is actually on its way back up, because we've already established some of these high-producing orchards. I think it's difficult to put an actual figure on what level of production, like is it 3 million bushels, or 5 million bushels, I really don't know. I think the key relies on planting varieties for which there is perhaps not an unlimited demand but the faster we get into these new varieties, such as Honeycrisp, let me use that one for example. We can sell all the Honeycrisp we can grow for the foreseeable future, so really we're not limited in that one.
I think what we have to do is get into these new varieties on the upswing of the scale, like we did with Honeycrisp, like we did with Jonagold and keep doing that, instead of being on the downside of the curve. I'm sure that didn't answer your question specifically.
MR. SARSFIELD: And we're only 1 per cent of the North American production of apples. About 9 per cent of Canadian production.
MR. MACDONELL: So is it Mexico or the U.S.A. taking up the other? If we're 9 per cent of Canadian and 1 per cent of North American . . .
MR. SARSFIELD: The U.S.A are the heavy producers.
MR. LUTZ: Just for an example, Washington State produces around 120 million packed bushels of apples, just Washington State alone, whereas we produce around 2.5 total of that, only about 1 million packed. So Washington State alone is one hundred times the size of our industry or about 120 times.
MR. MACDONELL: Do you have any notion of what the agricultural bill of $19 billion or whatever, in subsidies, how that might impact the American apple industry?
MR. LUTZ: Well, it's certainly . . .
MR. MACDONELL: They're definitely putting money in agriculture that we're not.
[1:30 p.m.]
MR. SARSFIELD: Yes, there is no question, and it all has an effect on us.
MR. MACDONELL: I was a little surprised in your presentation because I was thinking you were going to kind of give an overview for strawberries because it was fruit growers.
MR. SARSFIELD: No, it's tree fruit.
MR. MACDONELL: But you never touched on plums or pears so I would just be curious if you have comments on the place of that part of the industry.
MR. LUTZ: We have a rather unique climate from the standpoint that we are normally fairly mild, but occasionally we will get spikes of low temperatures in the wintertime. Apple trees will stand that. Most of the popular varieties of plums, cherries and whatnot, won't. The varieties of plums, like the large black ones you see from Chile and whatnot, we can't grow here successfully and until they develop and cultivar that it will grow that size and that quality
in Nova Scotia, we somewhat shied away from it because the consumers simply aren't going to take it up. We have a small plum industry that we have locally but it's not significant.
With pears, we used to have a large processing industry here, Clapp and Bartlett were the two main varieties. That subsequently moved offshore due to the price of fruit being lower in South America, wherever it's cheaper to put a cannery in a place like that. The acreage of pears has really declined but now we are looking at some new fresh market pears. We haven't included them under this program but there will be some new plantings of that but it won't be significant in terms of the volume.
MR. MACDONELL: I will ask one more question because I know other members probably want to ask some as well. Then I hope to get a chance to come back. When you mentioned Scotian Gold Cooperative, something that I have a concern about and if producers don't, then I guess probably I don't. I have often wondered why there isn't some type of marketing board for selling apples or for producers to sell apples through. So I'm curious about Scotian Gold Cooperative, if that's a cooperative of producers.
MR. SARSFIELD: It is.
MR. MACDONELL: I'm curious as to how the price that they get is negotiated, or is it negotiated?
MR. SARSFIELD: No, it's the market but with a marketing board, and there have been probably two or three occasions in the last number of years, over probably the last 25 years, a couple of times where there has been an attempt to organize, so many of our apples are exported out of Atlantic Canada and the majority of our fruit, actually, is exported out of Nova Scotia. So it wouldn't really have a lot of effect. It would just be additional costs. In fact, Ontario, they had a marketing commission that was involved in helping set price and so on and they have disbanded it just fairly recently.
MR. MACDONELL: So are producers fairly pleased with price then?
MR. SARSFIELD: If you grow the right varieties, like Larry was saying, and a lot of it is production. You have to get production per acre so you can get your cost per bushel down and there is a dollar to be made. But it's very competitive. We are competing, when you talk about markets, there is a lot of imported fruit coming into Atlantic Canada, for instance, from all over, particularly the west coast of the U.S.
MR. MACDONELL: Okay, I won't ask another question.
MR. CHAIRMAN: Thank you, John. I will now turn it over to Jon Carey, the member for Kings West.
MR. JON CAREY: It always bothers me to see the number of farmers being reduced. Particularly in our area we see the Annapolis County and some of Kings West, it seems to be moving away from farming in many areas. By implementing this program, will there be new people, do you think, that will take on, or will it just retain the people who are there? What do you see as a future for this and what would you say would be the acreage for an individual to operate at a good level, a productive level? How many acres would he have to have?
MR. LUTZ: I see it as a two-phase process under this program. Number one, our main goal is to make the existing farmers more productive and more profitable. What we want to do is give the kids a reason to stay on the farm. I guess that's the crux of it. As I state,
there is money in growing orchard, but you have to convince people of that and they have to see that it is possible to do. The best way of doing that is getting high-quality, high-density, so-called modern orchard on their farms that they can see and see the financial gains as a result of that.
But yes, by the same token, it's also an incentive for people from outside or outside the industry to come in and invest in the industry, because there is a financial incentive to do so. I think that is also equally good. It brings new blood into the industry, people with new ideas and perhaps people from away. We're already seeing that, people coming in from areas where land values are so high that they couldn't afford to get in the business in either their home province or where they've moved to over the years.
To be a self-sustaining operation under the type of program that we're talking about instituting and under the type of orchard that we want planted, a self-sustaining unit would probably be somewhere in the vicinity of 30 acres to 50 acres. Currently a full-time job for one man, basically, we consider is about 75 acres to 80 acres of orchard. That means that you're the primary manager but you have seasonal help to help with the pruning and whatnot.
MR. CAREY: You're talking about seasonal help, one of the things that has disturbed me since being involved in politics and prior to that in the machinery business was that we couldn't get seasonal workers, and the government didn't appear to understand, really, the necessity. In our area, seasonal workers are as important to us as full-time jobs, from that aspect of getting our crops off. How can government help you? Is it through EI changes, or what other areas could it be? That's a major concern to me. I've seen too many strawberry growers, too many apple growers with their crops left on the ground.
MR. SARSFIELD: It's certainly one of the major challenges in the industry as we move forward, and it has been for probably the last few years, getting enough harvest help, particularly. I know on our own farm we're using a large percentage of Newfoundland pickers. Even then it's a challenge. It's easier to get people, particularly locally on these new plantings because they're not having to climb ladders on the old trees and so on. Definitely, that's another advantage of the kind of modern orchard. The EI thing and so on, it would also
be an incentive for people on pensions, housewives and so on if they could work part-time and not have it affect it.
MR. CAREY: Has your association presented any type of request or plan to both federal and provincial or one or the other to try to make circumstances better, conditions better so that seasonal workers could participate in getting the crops harvested?
MR. SARSFIELD: If you're using, for instance, Newfoundland pickers or out-of-province, you have to have adequate accommodations for them because they have to have a place to stay. If you have good accommodations, it's certainly an incentive and it makes it easier to get people. But then, of course, there's the expense involved in that and a lot of growers have difficulty getting enough capital to have adequate accommodations for pickers.
MR. LUTZ: Our association has acted largely through - not largely, but - Horticulture Nova Scotia, as well as the Nova Scotia Federation of Agriculture, as far as taking our concerns about employment to the appropriate sources. The other thing which we may mention is access to offshore labour - we're really the only growing area left, pretty much in North America I'm sure, or the world, which doesn't have our fruit picked by offshore labour. The American West, it's primarily Mexican labour which picks it; Michigan State, Central Canada is either Mexican or from the Caribbean. We've really tried to rely on local help, and I think it's a lifestyle for us, perhaps, that we would like to see our locals employed and we do. I think we've tried to emphasize that we want all the local people working who can be working. By the same token, we need access to offshore labour if we can't supply the needs of our growers from the local market.
Just capitalizing on what Leonard said about these new orchards, not only are they easier to pick but since we pick on what we call a piece-work basis, the people can make more money picking these young orchards. It's not uncommon for pickers to make in excess of $100 a day picking these orchards because you simply aren't climbing ladders and there's more fruit within easy reach. That's the main thing. As well, with what we see coming in terms of safety and labour standards and things like that, you're doing all your work from the ground, so there's less opportunity for somebody to become injured through falls or whatever.
MR. CAREY: If I could have one more, then I will pass. I have many questions I would like to ask. Is it the cheaper labour that means the west coast can send apples from the west, pay the freight and ship them over here? How can they do it at a competitive or cheaper rate than we can do it?
MR. LUTZ: Cheap labour is actually somewhat of a misnomer, the American west, your average price on labour is probably between $8 and $10 U.S. an hour, by the time they bring them in and house them and whatnot. The main factor is that in Washington State they have large expanses of orchard. They went in and planted the very best, most up-to-date high-
density orchards and they're getting 1,000 to 1,500 bushels per acre. So all their expenses are now spread over 1,500 bushels instead of our 375 bushels. It's partly economy of scale. Some of those orchards are 3,000, 4,000 acres in size, but it's largely due to the efficiencies of yield.
MR. CAREY: So the reality is, if we do it right, we can probably be in a better position than the west coast.
MR. LUTZ: Absolutely.
MR. CAREY: I will pass and give someone else an opportunity, and hopefully I will get another opportunity.
MR. CHAIRMAN: The member for Preston.
MR. DAVID HENDSBEE: I have lots of questions. First of all, I was reading some of the information here and you have some apples that have code numbers on them. Do they eventually get a name? Who determines the names of the apples? I noticed in the booklet there were a bunch.
MR. LUTZ: They are what we call numbered varieties. Maybe those are root stocks.
MR. HENDSBEE: For instance, S82650 or S434454 and S2306123.
MR. LUTZ: Those are varieties which came out of a breeding program. That actually refers to the location in the row, where the S number comes from. If they become a commercially acceptable variety, they will eventually be named at some point, usually through the breeding organization. Nova Spy, for example, which came from the breeding program at the Kentville Research Station was originally a numbered variety, and at some point when they thought it was going to be commercially acceptable they named it. So Nova Spy, Nova Mac, we've had quite a number from Kentville.
MR. SARSFIELD: One of its parents was a Spy in the breeding program, and it is an excellent peeler, as good as Northern Spy, probably even a little better.
MR. HENDSBEE: I was just kind of wondering if it was to be named, with the 400th Anniversary of the founding of Acadia coming up next year and stuff, I thought it might be an opportunity to name a special apple on the occasion of it, a promotional item for that particular aspect.
In regard to your concern about importation of apples, do you think we should have more of a buy Nova Scotia policy, where we should buy local products, and perhaps have our institutions, be it our schools and hospitals, buy Nova Scotia products instead of having the Granny Smith apples in the cafeterias?
MR. SARSFIELD: Yes, that's a good question. Actually, we've just started embarking on a new marketing program. ACOA, which was so impressed with our whole strategic plan and so on for the industry, is coming through with $500,000 in funding, along with close to another $200,000 from the industry to embark on a generic marketing program for Nova Scotia apples and the branding of Nova Scotia apples.
MR. HENDSBEE: You can look for the tartan tag or the tartan bag, whatever the case may be. I think it's a great opportunity.
MR. LUTZ: As part of that too, I think we want people to buy our apples because they're the highest quality and the best apples available. We want to displace imports by growing better apples than what the imports are.
MR. HENDSBEE: In regard to the new breeds and varieties, you hear about the new enzymes they were trying to find to keep the apples from browning off once they are cut open or bit into, are there are any concerns about the GMOs, the genetically modified organisms, that will the affect the apple industry?
MR. SARSFIELD: Not to my knowledge.
MR. LUTZ: All of the varieties we are growing now have been through the traditional breeding process, like taking the pollen from one and crossing to another. There is no GMO apple variety, and we have no intention of introducing any right at the moment.
[1:45 p.m.]
MR. HENDSBEE: What about the cross-pollination, though? You have a lot of bees and stuff in the area but you also have a problem of wild apple trees or the importation, of people bringing in from the local garden centre, different types of ornamental fruit trees and stuff. Does that cause any problems with the fruit growers?
MR. LUTZ: No, not really.
MR. SARSFIELD: The old trees but most of them we've had for apple maggot, anyway, pretty well controlled.
MR. LUTZ: Yes, from a disease and insect standpoint but are you still talking about GMOs here?
MR. HENDSBEE: No, just cross-pollination of the apple trees.
MR. LUTZ: There are none of the GMOs, there are no GMO species that would cross-pollinate with the apples so there is no chance of an apple that we are growing having any GMO genes in it because they can't cross-pollinate with anything that would have been a GMO.
MR. HENDSBEE: What about the new ornamental trees that people are bringing in from the garden centres, the old apple trees and the wild apple trees, does that cause any problem to the quality of the product?
MR. SARSFIELD: Just from a pest. The only thing would be the apple maggot fly which can be a host for the old apple trees or wild apple tree but most of them, at least where they are commercially grown, we keep those cleaned up.
MR. LUTZ: A McIntosh is going to be a McIntosh regardless of what it's pollinated with. The source of pollen doesn't have an impact on what the apple is going to end up being. Just the seed.
MR. HENDSBEE: Now with the value added to get the raw apples and stuff being shipped out, then you have the juice, sauce and pies and other desserts and stuff. You also have the honey that's in the fields. How is the market right now with the new apple cider that's being produced there in the Valley and is there a market possibly for apple wine and apple cider? How much is that right now in percentage of the apple producers?
MR. SARSFIELD: It would be a small percentage but it's growing. I know at Grand Pré Wines, Stutz Apple Cider and so on, it's an excellent product. I don't know if any of you have tried it but it's something, I think, that will grow over time but it won't probably use a large volume of fruit but still it all helps. It's an excellent product.
MR. HENDSBEE: I'll pass. I'll have other questions later.
MR. CHAIRMAN: Thank you, David. Now we are going to turn to Frank, MLA for Annapolis.
MR. FRANK CHIPMAN: Mr. Chairman, I'd like to thank you for the presentation today. When you look at the cost of production per pound of apple, who would you say bears the greater portion of the cost, the grower or the retailer?
MR. SARSFIELD: Of the cost? Definitely the grower.
MR. CHIPMAN: I'm talking about price per pound, so you feel the grower would because you have the risk, you have the weather and all the other issues to contend with. When you talked about marketing boards and how they didn't work in Ontario and I know B.C. and I believe Quebec has a marketing board - New Brunswick, I believe, still has one, don't they?
MR. SARSFIELD: Yeah, a marketing commission.
MR. LUTZ: I'm not sure how it works.
MR. SARSFIELD: Like they are an importer, they are not an exporter of apples. They are definitely a net importer of apples.
MR. CHIPMAN: Right but when I look at Exhibit D and I look at the price of Jonagold in the packout it's probably your highest returning apple but it's not uncommon to see apples in the store for $1.33 a pound and yet your gross return per pound is only 16 cents. So you are getting one-eighth of the value of the retail dollar and you are paying a greater part of the cost to production. So I guess my question is, do you think there is a fair distribution of the return on the cost of production of apples? Do you feel the grower is getting a reasonable return on the price? If he's getting one-eighth, it would appear - and I'm talking from experience, too - that you're not.
MR. SARSFIELD: Well, we're not but the difficulty, I guess, is there always seems to be someone else willing to sell it for that price, whether it's coming from outside. I know what you're saying.
MR. CHIPMAN: I'm talking about local apples. When I go to Sobeys or I go to the Superstore, it's not uncommon to see local apples there - Cortlands and McIntosh - $1.33 per pound or $1.66 per pound.
MR. SARSFIELD: And we are getting, like you say, 14 cents, 15 cents or 16 cents.
MR. CHIPMAN: Right, and that's gross and then there's the retail. How can you get a greater portion of that? I know there are some people out there who are opposed to marketing boards.
MR. SARSFIELD: We have only got two major players or retailers in the country with a few regional. With this consolidation, it certainly hasn't helped.
MR. CHIPMAN: And I suppose if you demand a certain price, they just go outside the area because they consider 24 hours away local produce.
MR. SARSFIELD: Yes.
MR. CHIPMAN: Just a couple of other questions now. You talk about fumigation, Larry. Do you have any problems with environmental issues using fumigants here? I know in some of the states, I think in California there have been concerns of that.
MR. LUTZ: The problem when we talk fumigation, California and those areas were using a product called methyl bromide. It's a gas that they actually inject into the soil with specialized equipment and it's hard on the ozone layer. It's a chlorinated hydrocarbon. Anyway, we don't use the same product. We use a liquid product which is entirely different chemistry. It doesn't have anything in common with methyl bromide. It's a different product altogether that we use. Sure, we would rather not use it. Virgin land cleared out of the woods is by far the best for growing orchard but its really what we have to do. We also have experiments ongoing at the research station with Keith Fuller, looking for organic methods through compost or whatever, which may overcome this replant problem. So we are looking at incorporation of organic matter and a variety of other things as well. So hopefully we will come up with something where we don't have to use the fumigants.
MR. CHIPMAN: What's the lifespan of a modern, high-density orchard today?
MR. LUTZ: The lifespan of the orchard is really only limited by the variety. Our plan is, when we plant these orchards, they will be there as long as the variety is returning an acceptable amount of money to keep the thing in the ground. The tree does not, just because it is 20 years old, become out of date. Assuming no natural disaster, such as a deep freeze or a hurricane or something, the lifespan of a tree could be 50, 60 or 100 years. It all depends on the variety you have on top.
MR. CHIPMAN: Those are all the questions I have now. I may ask one later, Mr. Chairman.
MR. CHAIRMAN: Thank you, Frank. I'd like to turn now to Russell, MLA for Cape Breton West.
MR. RUSSELL MACKINNON: Mr. Chairman, my first question would be, do we have more apple farmers today than we did 10 years ago or less?
MR. SARSFIELD: Less, I would say.
MR. LUTZ: For sure.
MR. MACKINNON: Can you quantify that?
MR. LUTZ: Really not off the top of our head because the membership in the Fruit Growers' Association . . .
MR. SARSFIELD: Our membership hasn't declined as much, really significantly maybe 10 per cent.
MR. LUTZ: We probably have more smaller part-time growers but we do have less full-time growers who made the majority of their income off the farm.
MR. MACKINNON: I was a little surprised when you indicated that the most significant marketing strategy was the one that was put together between yourselves and ACOA at the price of approximately $500,000, I think was the figure you used.
MR. SARSFIELD: It's a total program of about $700,000.
MR. MACKINNON: Is that the only one that your association has had in the last four or five years or so?
MR. SARSFIELD: We have had a number of smaller programs but we have limited capital, of course.
MR. MACKINNON: This isn't one of any significance that you can identify.
MR. SARSFIELD: We also tie in with some of the national programs.
MR. MACKINNON: I was just a little surprised because my colleague, the member for Preston, indicated his concern about not buying Nova Scotia apples and I agree with him, yet that was an election promise in the Tory blue book in the last election, "Buy Nova Scotia first policy with regard to the fruit growers of Nova Scotia." Yet, we have an admission here today that they haven't done that. I guess my specific question would be, what specific action is the provincial government taking to expand the industry, to promote it, to market it? I've listened to your presentation, what you folks are doing, I think it's quite admirable, given the conditions and all the restraints but what specific action, because there have been specific changes within the Department of Agriculture and Fisheries over the last two years. Could you outline what specific actions?
MR. SARSFIELD: I don't know if I could. We would probably need Dela to give us the specifics. She's not here, our executive director.
MR. MACKINNON: Okay, I can take it on notice. Obviously there is nothing that stands out in your mind that the provincial government has done to promote the industry per se.
MR. SARSFIELD: As far as promote . . .
MR. MACKINNON: Or expand it.
MR. SARSFIELD: We have eight packers in the Valley. This program that we are embarking on, this $700,000 program, it takes significant money to actually brand a product and have the effect that you need. The province and the extension people, and so on, have helped us. . .
MR. MACKINNON: Okay, well, let's be a little more focused then. It might help you. Yes, that is exactly the question I was going to (Interruption). Yes, but no guarantee that it was going to be Nova Scotia apples. I think that is the point I was going to make. Has your association received any communiqué from the provincial Department of Education, Agriculture or anybody within government, that they would use Nova Scotia apples in this newly-promoted marketing strategy for schools, healthier living? Do you have any documentation, any communiqué, anything?
MR. SARSFIELD: I don't know if you have this at Scotian Gold or. . .
MR. LUTZ: I'm not aware.
MR. SARSFIELD: I'm not aware.
MR. LUTZ: I don't have anything to do with . . .
MR. MACKINNON: Would you perhaps be interested enough to write a letter to the Department of Education and to the Minister of Agriculture, requesting that Nova Scotia apples be supplied for the children in the schools, rather than those from outside of Nova Scotia?
MR. LUTZ: I'm sure they will but we'll get on that.
MR. MACKINNON: I'm sure they will if there is enough pressure but it didn't seem like that was the case.
MR. LUTZ: If I could make a comment, if I may, I was just sitting here mulling over what your question was about what the provincial government has done for us. With the demise of some of the extension programs out of the Department of Agriculture, Bill Craig, our provincial tree fruit specialist, under the old program - he is now working for AgraPoint - has been very closely involved with all aspects of this. He has worked closely with us. He was on the renewal committee. He comes to all our growing meetings that we hold as a co-operative, and as well, puts on grower education, organizes grower education workshops and what not; has been a very big component of that.
The other thing that the province did is they also helped us get the soil scientist from South Africa through funding arrangements and what not. You know, we had a lot of support from our local politicians to carry that out. So, yes, we have received a lot of support in that sense.
MR. MACKINNON: Probably one or two more, Mr. Chairman. You mentioned about AgraPoint. It would be interesting to note that 45 per cent of this year's annual budget goes towards propping up the financial securities, pension benefits and salary benefits of those who work at AgraPoint. That was a point that was made at a presentation before this committee several weeks back. You may want to, perhaps, encourage them to use more of those resources, close to $1 million that was used for internal purposes, rather than promoting and helping the industry.
The other question I have is with regard to the labour costs. I think my colleague, the member for Kings West, made a very important point about the labour costs. What is the average cost in terms of workers' compensation to your membership, per employee?
MR. SARSFIELD: For growers?
MR. MACKINNON: Yes. Do a large number of your employees pay workers' compensation premiums?
MR. SARSFIELD: No.
MR. MACKINNON: Well, as an employer but. . .
MR. SARSFIELD: Some of the larger growers would have workers'. . .
MR. MACKINNON: Is it on a contract basis? It's more on a contract basis?
MR. SARSFIELD: They don't have to have workers' comp. Some would have a private plan and a number would have workers' comp but it is not a requirement for the smaller growers. They can have it. It is available if they want it.
MR. MACKINNON: The reason why I raise that is because that would be an integral component to the issue of the unemployment insurance, changing that regime because you can't have one without the other. That is a point of law because you can't employ people in Nova Scotia without having that coverage.
MR. SARSFIELD: You can if you're in farming.
MR. MACKINNON: Well, if you're paying Canada Pension and you are paying unemployment insurance and you have more than one employee, you have to pay workers' compensation.
MR. SARSFIELD: Not if you're a farmer. No, farming doesn't. . .
MR. MACKINNON: The farming community is exempt, even though they pay the other benefits?
MR. SARSFIELD: Yes.
MR. MACKINNON: You learn something new every day.
MR. SARSFIELD: That's why we're here.
MR. MACKINNON: Well, that's true. It's very important. I assumed that because of the occupational health and safety issues. I know there was a tremendous lobby from the farming community for exemptions with the roll-over bars and things like that which were legitimate concerns because of the cost.
[2:00 p.m.]
MR. SARSFIELD: Right.
MR. MACKINNON: Given the fact that - what - 95 per cent of that system is now funded by the workers' compensation or the employers who pay in to the workers' compensation. That is why I kind of married that in to the . . .
MR. SARSFIELD: One of the real difficulties with workers' compensation on a farm is because of the tremendous - well, the high-percentage of seasonal help for six or seven weeks of the year and it goes by number of employees even though they are part-time. It is very expensive.
MR. MACKINNON: There is a high accident rate too, is it not?
MR. SARSFIELD: Well, not so much in our industry but agriculture is . . .
MR. MACKINNON: Okay, that is all I have for now, Mr. Chairman.
MR. CHAIRMAN: Thank you, Russell. I would like to turn now to Howard Epstein, the member for Halifax-Chebucto.
MR. HOWARD EPSTEIN: I wonder if you could help me understand some of the basics of your business. Could we start with the size of the acreage that is actually in production in Nova Scotia? I see a couple of different figures here and maybe you could just help me. The most common figure I heard you use was about 7,000 acres. I think you referred to that a couple of times.
MR. SARSFIELD: Yes.
MR. EPSTEIN: I see in your January 17th document about the industry vitalization program, that you refer to a figure of almost 10,000 acres from the 1996 census. Are you essentially telling me that it is now down? It said, 1996 census orchard mapping project calculated that there were 9,704 acres of tree fruit in the valley.
MR. SARSFIELD: Yes.
MR. EPSTEIN: So you're telling me now it must be down if it is 7,000?
MR. LUTZ: Yes, 7,000 to 7,500. A lot of that is my estimate too. With that, there is some orchard which has been abandoned or non-productive. It may show up on a map but the apples are not being picked. The 7,000 to 7,500 is actually probably my number and the best industry guess that we have right now.
MR. EPSTEIN: Is that province-wide or is that the Valley only?
MR. LUTZ: Almost all the orchard is in the Valley. But that is a provincial number, yes.
MR. EPSTEIN: Okay. Then the other number I see you use, you seem to refer to your own membership, where you talk about a year or two ago, you had a membership of 112 commercial apple growers acknowledging 3,674 acres of established orchard. If the figure is 7,000 to 7,500, does that mean that you represent about half the acreage?
MR. SARSFIELD: No, not really.
MR. EPSTEIN: Could you help me understand what the different figures are?
MR. SARSFIELD: Yes. As an association, we feel that that number is much higher. It is derived - and, in fact, we just had a meeting yesterday, our management team, just on this issue - that number is derived from the fee structure. The fee structure maxes out at a certain acreage. Any of the larger growers wouldn't be reporting - because it goes up to a maximum on the fee structure so that is not an accurate number. That was a concern that, here, we are having an inconsistency on acreage where there is actually more acres than what fruit growers are reporting as their growers' acreage.
MR. EPSTEIN: So what you think it is, is that it is about 7,000 to 7,500 acres?
MR. SARSFIELD: I think it is probably kind of the 80-20 rule. We probably represent at least 80 per cent or so of the acreage.
MR. EPSTEIN: That was the other thing I wondered, was just what percentage of the growers, in terms of acreage or numbers, you represent.
MR. LUTZ: The other factor to take into account, that refers to bearing orchard. Like, that is what you pay your fees on. About 77 per cent, roughly, of the orchard is what we call full production. People probably don't report the other 20 . . .
MR. SARSFIELD: New plantings, for the first three or four years.
MR. LUTZ: You don't pay fees on that.
MR. EPSTEIN: Okay. All right, I think I got a little more information than what I started with on that part of it. Now, can you help me on the question of what areas in the world are really the producing areas? I heard you refer, of course, to parts of the United States, you referred to Africa and you referred to Chile in South America, and of course, Canada.
MR. LUTZ: New Zealand would be another and Europe. China is the single biggest producer of apples in the world right now.
MR. EPSTEIN: Is that primarily then for domestic consumption in China or are they now emerging on to the world scene as an exporter?
MR. LUTZ: Primarily, like, we're starting to see some spill into the Pacific Rim countries now.
MR. EPSTEIN: See, I think this is really what I was getting at. I was really wondering what the countries were that were actually producing apples. It seems to me that the soil and climate conditions must be fairly widespread and would lend themselves to apple production. It seems to me there must be many nations in Europe that are apple producers, for example.
MR. LUTZ: France and Italy are the two largest ones, yes.
MR. EPSTEIN: So the picture would be that in fact, it's probably worldwide. What about Russia, what's the picture in Russia now? They must share some climate and soil conditions with us.
MR. SARSFIELD: There are probably some areas.
MR. LUTZ: But again, China is very similar to Russia in that it's mostly for local consumption. Even in South America in places like Brazil, I was there a few weeks ago, they are a large producer of apples but so much of it is used domestically due to the size of their population that they don't become a player on the export market which is converse to places like Chile or New Zealand, which have a lot more production than population.
MR. EPSTEIN: So if our position in Nova Scotia is that we're producing, I think you said, 9 per cent of the Canadian amount that comes forward, clearly, we're producing a lot more than we can consume domestically in Nova Scotia?
MR. SARSFIELD: That's total production too and we have a fairly strong processing industry compared to some other regions. We're the pie capital of Canada, for instance.
MR. LUTZ: I think that's a good point, in that when Leonard and I talk about fresh apple production, we're also probably including what we call the high value processing sector, which is what we consider Northern Spys because Northern Spys are returning almost as much back as what the fresh fruit industry is. Our growers spend as much time and worry on producing Northern Spys as they do fresh fruit, whereas in other countries, when we talk processing, it's just a salvage market, like $20 a ton in Washington State for apples.
MR. SARSFIELD: Juice apples.
MR. LUTZ: They don't even consider it as part of their production whereas we're fortunate to have the pie plants. The Spys that are planted under this program are almost as valuable as fresh fruit.
MR. EPSTEIN: Believe me, I think that's great. I was just wondering where the product was exported to, is really where I'm going to, and what competitors were in that market. Can you tell me a bit about that?
MR. LUTZ: Most of our fresh fruit would be exported to New England, Ontario and Quebec and a bit to the west and the British Isles, there's a bit still going to the U.K.
MR. EPSTEIN: The British Isles import some of our apples?
MR. LUTZ: Yes.
MR. EPSTEIN: And why is that?
MR. LUTZ: The McIntosh, they like our "mac". We grow the best "mac" in the world because of our cold nights and temperatures and so on, so we get very good colour and flavour.
MR. EPSTEIN: What I was really wondering was what kind of picture we should have in our heads about the future prospects for your business, because you emphasized so much that there's competition with a lot of other producing nations, particularly the Americans and elsewhere in Canada. If their target market includes our target market, that is the Northeastern United States and perhaps parts of Canada and the East, Ontario and Quebec, then I wondered whether you were painting for us a picture of an industry that was in decline? I don't mean declined to zero but I mean an industry that perhaps is either going to stabilize and not grow or maybe even contract a bit.
MR. SARSFIELD: With these new varieties a lot of it would be import replacement. We would hopefully with, say, Honeycrisp, Jonagold, those varieties, would replace imports that are coming in from Washington State. We can be as competitive, I mean they have got freight and so on from Washington and we can compete both in price and quality. As far as the Honeycrisp, as Larry said in his presentation, we can grow the best Honeycrisp in the world, actually, and Washington can't grow them. If it was a variety that they could grow, it would be difficult to compete because they can just put in such acreage and they have the capital to do so.
MR. EPSTEIN: Make no mistake, I'm very fond of apples, I consume a lot of them and I try to consume local product, as well. I'm very fond of the Gravensteins that you were perhaps a little skeptical about earlier about expansion but I think they are a wonderful apple and I eat them a lot.
MR. SARSFIELD: One of the difficulties with the Gravs is they have such a short season and they don't store well.
MR. EPSTEIN: Yes, we've got to use them right away. I also, of course, admire the cider and the juice and the sauce that we produce here as well. I was looking at your bio-product development paragraph and I was wondering if you could help me understand a little bit in there. It wasn't clear to me exactly what the current state of play was there in terms of what you were hoping to develop and also, there was a word there that I didn't understand.
You talk here about what would normally be regarded as waste-stream material and you talked about pumice, cores and peels. What's the pumice?
MR. SARSFIELD: Pumice is the peels and cores after you have - or the apple, actually, after the juice has been extracted. So it's the drier material, after the . . .
MR. MACDONELL: It's what you would eat if you were eating an apple. (Interruptions)
MR. SARSFIELD: Yes, it's the fibre, minus the juice.
MR. EPSTEIN: What happens to that product now?
MR. SARSFIELD: It goes either for compost, cattle feed or . . .
MR. EPSTEIN: Is it composted? That's really what I was looking for. Okay, so it's not thrown away. So can you tell me then, though, what it is that you are actually hoping to produce here in the bio-product development research?
MR. SARSFIELD: Well, actually, we have just narrowed it down to two candidates for a bio-research chair at the Nova Scotia Agricultural College. This individual will be doing research, as well as teaching at AC on tree fruits, but also looking at bio-product, extracting from this waste material, say, the skin, where the skin actually has most of the flavonoids, the polyphenols or whatever are in the skin of the apple, particularly red apples. Ida Reds and so on are very high in flavonoids. We would be looking at extracting that from our waste material from the peels and . . .
MR. EPSTEIN: So the hope is, this would go beyond information for marketing purposes that would educate consumers as to the health benefits.
MR. SARSFIELD: Yes.
MR. EPSTEIN: You are actually hoping for a product . . .
MR. SARSFIELD: For a product that could be sold as - well, like a lot of us - Echinacea and that kind of thing. There are a lot of health . . .
MR. EPSTEIN: Health supplement, a health product.
MR. SARSFIELD: . . . supplements that could be added back, maybe, into an apple pie and add some value with a material that is now just being wasted, actually. We have to pay to have it all the way, right?
MR. EPSTEIN: And this is not research that has been done anywhere before?
MR. SARSFIELD: No.
MR. EPSTEIN: Isn't that interesting. Okay.
MR. LUTZ: Not to add to the confusion, perhaps, but it could be as simple as a better applesauce, a better apple juice, a new, improved apple pie. It doesn't necessarily have to be some obscure chemical that we are going to find.
MR. EPSTEIN: Yes. It doesn't have to be a separate product, it could be part of your traditional . . .
MR. SARSFIELD: Or process that reduces the oxidation, or whatever, of apple slices so they stay white, or whatever.
MR. EPSTEIN: Good point. Thank you.
MR. CHAIRMAN: Howard, if I may, you have had a lot of time. You can come back, be put on the list. We are doing a 10-minute round and then go back for seconds, maybe, five minutes.
John Chataway, Chester-St. Margaret's, for 10 minutes or less.
MR. JOHN CHATAWAY: Thank you very much, I very much appreciate your talk. Certainly, being from the South Shore, we don't have as many farmers as you do in the Valley but it's very interesting. It's fascinating. I would suspect, yes, the numbers of farmers per se are going down but the product is going up. The farms that are staying are producing better, with science taking a hand and stuff like that.
What percentage of our crops are exported? I mean, as we can only eat so many apples in a day and things like that, we only have 1 million people, what percentage of our apple crop is shipped to various places?
MR. SARSFIELD: Presently, about half of our crop goes for fresh and about half for processing, either slices, like Avon Foods in Berwick. They are into canned slices or applesauce. Then there are two plants that are pies. Nearly all of the production of the processing industry would be exported out of, at least, Nova Scotia, or even most of it out of Atlantic Canada, a fairly large percentage of it anyway; on the fresh side, say 50 per cent of the fresh.
MR. LUTZ: Yes, roughly 50 per cent would go outside of Atlantic Canada.
MR. SARSFIELD: Yes. Most of the juice would be consumed in Atlantic Canada, the bulk of it anyway. Probably 75 per cent, 85 per cent of the juice, maybe. I haven't done the math on that.
MR. CHATAWAY: What are the challenges when you have to ship out? Obviously, there must be some challenges. What are the biggest challenges of exporting our product?
MR. SARSFIELD: Freight costs, because of where we are situated.
MR. CHATAWAY: What sort of delay - I mean, on the South Shore, lobster for example, they have tried to have lobster, when they ship it down to the States, they don't have to wait at the border for about 48 hours because that doesn't help the lobsters out very
well. I'm sure apples are not quite the same thing but, I mean, there are delays and things like that. Maybe just tell me a bit more about what the challenges are when you . . .
[2:15 p.m.]
MR. SARSFIELD: Well, we haven't experienced the delays, at least in the pie business, to date. We are quite concerned about what we read in the press and so on. Like, with fresh products, I guess, lobster and so on, there is this 48-hour notice thing which isn't the case with, say, a frozen product which is what we're selling.
When you hear of the fact that if there is another terrorist attack, or whatever, that they could close the border, I know our customers wouldn't tolerate running out of product and they would then, of course, be looking at an American supplier. In some cases, I have heard that in some of the American industries, our customers are already looking for, maybe, domestic suppliers so that they aren't confronted with this. I guess the times are very, kind of, uncertain.
MR. CHATAWAY: I guess labour shortage, of course - they pick the product - is a problem in Nova Scotia. I assume the other provinces have the same problem, or are we unique to having that problem?
MR. SARSFIELD: Ontario is using mostly offshore - at least, the tree fruit industry in Ontario has been for, probably, the last 20 years, or so, using Jamaicans, Asians and so on.
MR. CHATAWAY: Do we have many Caribbean people . . .
MR. SARSFIELD: We have three or four growers in the cold crops, broccoli, cauliflower, lettuce, that type of thing, that are using Asians, I think, presently, or mostly Asian. It is a program that is working very well. If they didn't have that supply of labour, the industry would really, probably, be non-existent. It is a fair-sized industry now. I know next door to us is the largest broccoli grower east of Ontario and he is using mostly offshore labour. Without that, he wouldn't be able to do what he is doing.
MR. LUTZ: There is also a shortage of qualified technical labour - perhaps, just in Leonard's case, for example, with the large size of their operation. To find local people who are qualified to be foremen, supervisors or farm managers, it's pretty near impossible. Anybody that graduated out of college that is looking for a job in industry or perhaps going back to the farm, we aren't generating a lot of people who want to be supervisors, foremen, farm managers, for example. That is a real problem because our people are leaving the province to do that.
MR. CHATAWAY: That, again, is not unique to this province or in Atlantic Canada, wanting people to learn the advanced way of doing farming . . .
MR. SARSFIELD: One of the positive things, I think - we were just talking about it on the way down - is that in our industry, the majority of our progressive growers now and some of our better and larger growers are in their 30s and 40s.
MR. CHATAWAY: I very much appreciate that, thank you.
MR. CHAIRMAN: Now we're going to go for our second time around and I would ask the members to keep their questions short, no longer than five minutes. If you go longer than five minutes, I will bring it to your attention. I would like everyone to have a second round of questions.
John MacDonell, the member for Hants East.
MR. MACDONELL: I'm curious whether it has ever been explored - and of course everybody needs them at once - but I'm talking about a crew that could go farm to farm, you know, with support for busing. Have people ever looked at some kind of co-operative way to have a crew that could do the work as far as picking and so on on a farm?
MR. SARSFIELD: It's such a short window and everybody needs them at the same time, pretty well.
MR. MACDONELL: So you would need a big crew for a short time.
MR. SARSFIELD: Variety makes a bit - I know on our own farm we grow a lot of Spys so sometimes at the tail end, Spys are the last variety to be harvested, so sometimes after other growers have finished up, we do get some of their pickers that help up on the tail end. Other than that through kind of the real busy times, say early October to the third week of October, it's every man for himself.
MR. LUTZ: That's why we can't grow all of one variety because you have to spread your variety out with the picking dates so that you have enough varieties spread over that two month time period to keep a crew busy.
MR. SARSFIELD: And an incentive that you can actually get pickers. They want to get six to eight weeks of steady work.
MR. MACDONELL: I'm curious about your comment about a consumer-friendly apple. I'm assuming that means the right colour, the right shape, the right flavour?
MR. LUTZ: The right texture, yes.
MR. MACDONELL: Cortland is my favourite, I think. The notion of - I think it was attached to your Orchard Renewal Program - what you were saying about you didn't want to plant varieties that couldn't be sold and you would like to have a letter from a packer to a grower, saying that they would purchase them. That letter, that doesn't have to be a contract. I'm just wondering if there is anything in that that people have a formula for negotiating price? Does the farmer just get a letter saying, we'll buy them, but they may not necessarily give you anything for them?
MR. LUTZ: You asked about Scotian Gold here a while ago and perhaps just to clarify how things go, we're owned by growers. When all the fruit is sold - say, McIntosh, for example - you take the total price of what you get out of those apples, you take off the cost of packing material, cost of the labour and the cost to run the packing line. The money from that fruit is divided up on a bin basis, of everybody who put McIntosh fruit into our co-op, but it is based on the quality.
If Leonard's fruit packed out 90 per cent fancy, he gets a set price. If mine packed out 40 per cent fancy, I'm only going to get less than half of what he got. That's how we do it with the money and that's individual with each variety. You are paid on your quality and you are paid by the variety. What that does is keeps people from growing low-value varieties because if Leonard grows something that we don't want and the consumer doesn't want, he gets back $20 a bin and therefore he's not going to plant any more of them. We think that that's a crucial part, that the growers have to have a home for their fruit and not get out on the open market and then say what are we going to do with it.
MR. MACDONELL: If I understood you right, this program you want to proceed with, you require $45,000 per year for five years from the provincial government, is that what you're saying?
MR. LUTZ: No, from the Nova Scotia Fruit Growers' Association; $445,000 from the province.
MR. MACDONELL: I'm assuming you've brushed this by the Department of Agriculture?
MR. LUTZ: We have had numerous meetings over the last three to four years, as far as what we would do for funding or how we could encompass it.
MR. MACDONELL: What's the reaction you've gotten?
MR. LUTZ: There has been a variety of things suggested, anything from perhaps programs to the Farm Loan Board whereby you could defer the payments, it's commonly known as a plant now, pay later program; those have been in place but they have had minimal
uptake. There were some suggestions of interest-free money for a set period of time, these are just things we have discussed.
A lot of what it comes back to is number one, most of our growers have their land leveraged to the Farm Loan Board or somewhere and the bank is not going to give them money to plant orchard if they don't have collateral in the form of land to put it up. The other thing is a lot of our growers, especially the young ones, are planting their orchard they are doing now out of their operating capital. Most don't want to take any more debt load on or any higher level of debt load, especially not short-term debt, to plant orchard.
It was actually interesting, Leonard and I were talking and one of the things we discussed back a few years ago with the province was the concept of interest-free money. What it turned out was - if I remember the numbers off the top of my head - to give a grower $7 a tree, on the scope of this program, would have cost $445,000 to the province. If they were to give that grower interest free for say five years or whatever it was, it would have cost $420,000 and that's without any administration fees. It was almost as cheap or would have been cheaper in the long run to give the $7 a tree as it would be to try to manage some program of interest-free money, the end result was the same cost.
MR. CHAIRMAN: The member for Kings West.
MR. CAREY: Leonard, your old and new plant, if I understood it correctly, there's about 500 acres of the Northern Spy that has been planted recently?
MR. SARSFIELD: Yes, and some Novas too.
MR. CAREY: Do you take most of those Spys for your plant? Would you be using close to all the volume off those . . .
MR. SARSFIELD: The two plants?
MR. CAREY: Yes.
MR. SARSFIELD: Yes.
MR. CAREY: So actually there is still a shortage of Spys for processing?
MR. SARSFIELD: There are other varieties we use as well, Ida Reds and a few others.
MR. CAREY: So if my math is approximately correct, 500 acres is about 7 per cent of the total acreage?
MR. SARSFIELD: The new plantings, there are still a lot of the older . . .
MR. CAREY: We were talking about 7,000 acres, 500 acres. So in dollar value what percentage would these 500 acres be getting, compared to the 7,000 acres? I guess what I'm looking at is, this is a progressive thing that you people are trying to put forward and your plants are taking good quality and paying good money, so of 7 per cent of the crop, what percentage of money would actually be of the total?
MR. SARSFIELD: That would be going to the two plants?
MR. CAREY: Yes. I'm not trying to find out your business but I'm just trying to - here are 500 acres that you use a lot of the material from and what percentage of the actual total volume in dollars would that account for in the apple industry?
MR. SARSFIELD: Probably a third, 30 per cent.
MR. LUTZ: Probably, it's difficult to think right off the top of my head without looking at the numbers, but it's a very substantial amount.
MR. CAREY: I'm trying to get back to what my colleague, Mr. MacKinnon, was trying to say that the government is not doing much in helping market but isn't it the truth of the matter if you have the proper product, there is no problem marketing it?
MR. SARSFIELD: That's right.
MR. CAREY: You can't sell a poor-quality product . . .
MR. LUTZ: Or a product that nobody wants.
MR. CAREY: . . . and government wouldn't be wise to invest in trying to market trash. (Interruption) Well, they're marketing these apples and if 7 per cent can generate 30 per cent of the revenue, that would be pretty significant and it shows that doing it right would be profitable.
MR. SARSFIELD: That 7 per cent, there is more than that volume would have been of existing (Interruption)
MR. CAREY: Yes, the old Spys that were out there. Before I run out of time, I just wanted to touch on the Honeycrisp. I think you said there was approximately 42 pounds in a bushel?
MR. LUTZ: Yes.
MR. CAREY: Honeycrisp are normally large apples and if you go to buy them in the store, if you can get them, they want $1.50 or so an apple.
MR. SARSFIELD: A couple dollars.
MR. CAREY: Yes, for an apple.
MR. SARSFIELD: A pound.
MR. CAREY: So I guess my question is, is there a big move for people to grow Honeycrisp?
MR. SARSFIELD: There would be if they could access the capital. I mean, there are some going in the ground, but the majority of the growers just don't have the capital to . . .
[2:30 p.m.]
MR. CAREY: Frank spoke of this as well and you alluded to only two real outlets here locally; if an apple is selling for $2 in somebody's retail store, what would a farmer get for that?
MR. LUTZ: The return back to the growers this year will be in excess of $400 per bin, a bin is 16 bushels to 18 bushels, whatever that would be.
MR. CAREY: A significant difference, but yet still not the percentage that would seem more attractive to . . .
MR. SARSFIELD: The growers are very happy with that kind of a return and can make good money, but we don't have any other variety that has come close to that.
MR. CAREY: Well, anybody who has eaten them would never say that a Cortland was their favourite apple. (Laughter)
MR. LUTZ: But even with Jonagold you're getting up close to $200 a bin, back to the grower, and that's a very acceptable return when you look at the numbers, especially if you're getting the production up. The crux is that if growers want to get paid more for the same thing they're doing now without doing anything to improve their lot, then there's really nothing we can do about that. That's not the intent of this program. We want them to do a better job and do something to increase their lot.
MR. CAREY: I have one more question. I know we're in a global market. I think you said that growers, in the plan that you have, would be investing from 12 per cent to 20 per cent of their own money in this. Do I understand that correctly?
MR. SARSFIELD: No, it's more like 80 per cent.
MR. CAREY: So even with the help of government and your plan and paying $7 . . .
MR. SARSFIELD: It's a little over 50 per cent of the capital cost, but then there's all the maintenance and training and so on before that tree is producing fruit.
MR. CAREY: Their actual investment would be about 80 per cent. The numbers I had it looked like they were looking for more than would be reasonable.
MR. LUTZ: No, no. The grower will invest 80 per cent to 90 per cent by the time that tree gets in full production.
MR. CAREY: How would this compare with our global economy, where it's subsidized in the U.S. and other areas? If this were done, would we be on some kind of a level playing field?
MR. LUTZ: British Columbia actually has a very expansive tree fruit replant program which they just had renewed the other day, and they've been getting in the vicinity of - I don't want to say the wrong thing, but - $6,000 to $7,000 per acre for replanting for their orchard. They've had that in existence for probably five to seven years, at least. It's changed their industry a lot. You look out there, compared to 10 years ago, and it's really changed the face of their industry.
MR. CHIPMAN: Mr. Chairman, I wasn't aware that we had 10 minutes in the first round until I heard Howard ask his questions. (Interruptions) I hear all this talk about offshore labour, and of course the perception on the street is there are a lot of people out there who are able to work at harvest time, whether that's the case or not. I know we all have our own views on that. There are people who are working, and who are getting paid not to work. I don't think you can force people who are on social assistance, because of the agreements under the federal health social transfer program.
Hasn't there been a move to work on a contract basis outside of EI, so you can hire somebody to harvest your apples, say I take a contract out to harvest 50 bins and avoid the red tape and the regulations with EI? That's been done in the past, hasn't it, in the Valley? Some people are doing that.
MR. LUTZ: Not on a large scale with the growers that we deal with anyway. I'm not aware that it is.
MR. CHIPMAN: I know of a couple. It was just a question I had. The export, the Chinese, the main competition there is apple concentrate, it's not fresh fruit. They're not growing varieties that are going to compete.
MR. SARSFIELD: They just haven't the infrastructure, I don't think, in place. It's coming, the way China is coming along. They haven't had the CA storages and so on, but I think they're probably building them now. They do have, I think, some varieties that would be acceptable.
MR. LUTZ: Like our Fuji and Golden Delicious and things. I've talked to some people who have actually seen some of their fruit in the market in the Pacific Rim countries, and there's nothing wrong with some of the fruit they're producing.
MR. CHIPMAN: Just a point I would like to make, and I think the Nova Scotia Fruit Growers' Association had a significant part to play in it, you haven't mentioned anything about the integrated pest management program where you have been able to reduce the percentage of pesticides used. Maybe you should make a comment about that.
MR. LUTZ: Basically our province started it all back in the 1940s right at the Kentville Research Station, Dr. A.D. Pickett and a number of other ones. We laid the foundation for a lot of the integrated pest management work done in North America and, in fact, the world. We now have a number of researchers who keep fine tuning it, and we use the absolute minimum of pesticides available, basically through predatory insects, state-of-the-art monitoring of weather conditions. We use the absolute minimum that we can, and that's one of the beauties of our area. We have a lot of expertise in the federal government and through the province, and we've made a lot of use of it.
MR. CHIPMAN: If there was one part that the provincial government could play in your industry - and I don't necessarily mean financial and I certainly don't mean interfering in your programs, I think that's happened in the past and you've made some good points here with the orchard replant program. That wasn't a criteria before, but it is this time because there were lots of trees on sites that were replanted they had problems with - if you could pinpoint one thing other than a monetary factor, one thing that the government could support you in any type of infrastructure, what would it be? Money is the easy one, we all need money to operate. Any type of support program?
MR. SARSFIELD: Actually $7 a tree would be (Laughter)
MR. LUTZ: It's fine to say all the different things we could have in terms of industry support and expertise and whatnot, but what it really comes down to is we're having trouble convincing growers that they can afford to plant orchards. That's really the simple crux of it. If we had the money to plant trees, our industry would be in a lot better shape.
MR. CHIPMAN: I guess what I was referring to was, I look back at the Christmas tree industry here a few years back and there was a lot of support going in for shearing and planting. The same thing may be happening to the apple industry. When governments get
involved, sometimes there's overproduction and the industry ends up suffering because of excess volume material or product.
MR. LUTZ: The growers will have to invest so much of their own money that they aren't going to do it wantonly, and we aren't going to increase production to the point where it becomes unmanageable because the growers have to put in so much of their own. You're either serious or you're not. If you're not serious, you won't be investing in this program, you will be planting trees, 100 trees to an acre, the same way your grandfather did.
MR. CHIPMAN: Mr. Chairman, I think maybe somebody should make a motion at the end of the meeting . . .
MR. CHAIRMAN: Well, that will be up to the committee. Mr. MacKinnon.
MR. MACKINNON: I have some short snappers, probably yes or no would be great. You mentioned about the shortage of technical labour, technical expertise leaving the province. What specific action has the provincial government taken to ensure that these individuals stop leaving the province? You don't know?
MR. LUTZ: I'm not sure that it's the province - what we need is more optimism and a more viable tree fruit industry to keep the people at home. I think we achieve that through things such as we're suggesting, making these farms profitable enough that we can hire our kids to keep them at home.
MR. MACKINNON: Would you say the provincial government is providing adequate training and support in that regard?
MR. LUTZ: I think we have a state-of-the-art facility at the Agricultural College. Perhaps there is room to have some more expertise in tree fruit, but hopefully we've done that through the creation of the tree fruit research chair, where there will be actual teaching in the tree fruit process.
MR. MACKINNON: You mentioned about the chemical that you pump into the ground, this liquid chemical that's very adverse to the ozone layer.
MR. SARSFIELD: No, that was the gas that was being used in some other areas.
MR. LUTZ: You're speaking of methyl bromide which is used in the U.S. We don't use that product.
MR. MACKINNON: We don't use it at all?
MR. LUTZ: No, in the tree fruit industry methyl bromide is not used.
MR. MACKINNON: So the Kyoto factor would not adversely affect the agricultural industry at all in that regard? (Interruptions) How do you see the Kyoto Protocol affecting the agricultural industry as it relates to yourselves, your association?
MR. LUTZ: I think we're doing positive things. Our carbon sinks, we're using up a lot of the CO2, we're using up a lot more than we're generating. I think what we do is good for the environment.
MR. MACKINNON: That wasn't my question. My question is, as you folks function, with the implementation of Kyoto as you know it, this is not having an adverse effect on the fruit growers, in particular the apple industry?
MR. SARSFIELD: Not that I'm aware of.
MR. MACKINNON: There's nothing that you're aware of that Kyoto would do to adversely affect - okay. Mr. Chairman, I ask that because the Reform Party actually sent a flyer around to all the Nova Scotian households, saying that Kyoto is the worst international agreement that was ever signed and had an extremely negative impact on the agricultural industry in this country. I just couldn't understand the rationale to that logic. What you are saying is what I thought, that it really wasn't that adverse.
MR. LUTZ: At least in tree fruits, I don't think it is.
MR. MACKINNON: My colleague, the member for Annapolis, keeps hinting that Nova Scotia should have a marketing board for the apple industry. What is your position on that?
MR. SARSFIELD: No, we don't feel that there is a need . . .
MR. MACKINNON: So you're more content with the forces of supply and demand . . .
MR. SARSFIELD: . . . or that there would be any positive benefit. There are a number of reasons but, I mean, we have such a small local market and the fresh fruit is the only thing where it would work anyway. The fresh fruit product is exported, or a large percentage of it. I mean, it's no good to have a marketing board, it would just be very cumbersome.
MR. LUTZ: The thing is, if you are going to impose a quota system - whereby we are talking acreage, is really the only thing you can restrict - an acre of Honeycrisp is worth far more than a block of 100-year-old McIntosh, but if you're allowed to produce 20 acres and the quota is assigned to somebody that is not going anywhere - I mean, it's a block of old trash that is never going to produce anything, by the same token, you are keeping young
people or progressive people out of the business who may plant an orchard of stuff that is of higher economic value.
MR. SARSFIELD: I think, also, there are marketing boards with the free trade and so on and so forth. I think it would be . . .
MR. MACKINNON: Adverse.
MR. SARSFIELD: Yes, it would have an adverse effect.
MR. MACKINNON: One final question, Mr. Chairman. With regard to non-Nova Scotia workers and concern about supply and demand, wages and so on - and I have never been of the adage that Nova Scotia businesses, and particularly self-employed industry people like yourself, wouldn't pay a fair wage - what specific action has the provincial government taken, from your perspective, to encourage to employ more Nova Scotia workers, either through these wage subsidy programs, marketing strategies, training programs, or whatever? What specific initiatives can you point to that the provincial government has carried out to say, we are doing action a, b and c to ensure that we will have x number of less non-Nova Scotia pickers and employees next year?
MR. SARSFIELD: Well, I don't personally know of any and I . . .
MR. MACKINNON: Okay, that's fine.
MR. SARSFIELD: I mean, other than what we have already discussed.
MR. CHAIRMAN: Next is David Hendsbee, the member for Preston, for five minutes.
MR. HENDSBEE: In regard to the climatic conditions we have in the Valley, is most of the apple production concentrated in one particular area or is it all the way from Annapolis-Digby through to Kentville-Wolfville, or is it just concentrated in a particular zone within the Valley?
MR. LUTZ: The majority of the apple production is within about a 15-mile radius of the Kentville area. There is good soil in that area but, also, you have to look at infrastructure. The farther you get down in Annapolis County, the farther you're hauling apples to the packers. Now, years ago, there was a packing house at every railroad siding but now there isn't anymore. That is part of the limitations, the farther you get away from the central area of the Valley.
MR. HENDSBEE: Now the finite resources of land and stuff, and also with the urban sprawl, the communities in those areas, how much farmland or production land is being lost to the non-farming uses, i.e., residential purposes or commercial development?
MR. LUTZ: Small. Yes, there is a certain amount in the immediate areas surrounding Kentville and New Minas but the farther you get away from that area, there is still a lot of good land available for apple production.
MR. HENDSBEE: So there is still a lot of virgin forest land around that could be cut down or transposed into orchard production?
MR. LUTZ: There are still some virgin sites.
MR. SARSFIELD: Yes, there would be some but it is not . . .
MR. LUTZ: A lot of the reason that land is still forest is that the old guys knew better than we did. A lot of times when we try to clear something, there is a reason the old fellows didn't clear it in the first place and a lot of us have found that out much to our chagrin. (Laughter) The other thing is, there is a lot of good orchard land that is tied up by supply-managed commodities such as dairy farms. Like, they're growing alfalfa on areas which would be excellent orchard land.
MR. HENDSBEE: Now, in regard to infrastructure and stuff, when you talk about CA, controlled atmosphere, environments and so on, what kind of facilities in the past have we had in this province and what limitations do you have when it comes to the export market of sending it out? I assume that all your thing is done, probably, by truck because the bulk of your stuff is trucked out by refrigerated units. For instance, the U.K. market, is that sent over by plane or ship in refrigerated units? Out West, does it go by train or is the majority all by truck?
[2:45 p.m.]
MR. SARSFIELD: Containers out of Halifax for the U.K. market, refrigerated containers. The West, it is pretty well all going by truck, maybe a bit piggy-back, possibly, but most of it would be truck, and the same with going to the U.S.
MR. HENDSBEE: Now what is the shelf life expectancy of a good apple? You see the potato producers will over-store their product for a year or so. How long can an apple be stored?
MR. SARSFIELD: It depends on the variety. Like, Northern Spy, we are peeling pretty well year-round. We will be peeling this last fall's crop right up until pretty nearly a new crop. That is one of the real advantages of that variety, as well as being a very good high
apple. It also stores very well and Ida Red stores pretty good as well but not quite as long. Some of these other varieties, what, into July, in CA storage, June and July.
MR. HENDSBEE: For the previous year?
MR. SARSFIELD: Yes.
MR. HENDSBEE: So a six- to eight-month holding time?
MR. SARSFIELD: Easily, yes.
MR. HENDSBEE: In regard to the quality of the product when it comes to the off-season time or when it comes to exporting it out, do you find there is a price demand for particular times of the year, like at Christmas time, you have a flood of the apples in the harvest season but come the spring and early summer, there is no product around. Is there a higher price demand for the product at that time and do you get a better return on the investment at that time?
MR. SARSFIELD: You would know better, Larry, from working in the marketing of fresh fruit.
MR. LUTZ: Yes, there is more to be gained in the springtime as far as returns. The other thing is, you have to have product available to your suppliers anyway, so it is one of those costs which are spread over the entire pool of apples that you store.
What you may be interested in - I'm not sure if you're aware of it but a lot of CA storage technology was actually developed right here in Nova Scotia and we have state-of-the-art CA facilities, and we have as high a ratio right now, CA to cold, as most areas do. But that is changing and we are constantly investing money into renewing our facilities.
MR. HENDSBEE: The last question with regard to the technology and the production, you know, we see the old apple bins, the old baskets, bushels and stuff, to the new plastic bags. How do you find the handling of the product, trying to cut down on the bruising? How much of that is still mechanical versus labour-intensive?
MR. LUTZ: Most of the bruising still happens from the time the picker touches that apple with his fingers until it gets to the bottom of the basket. We have invested a lot of money in packing lines over the years, everything is water-flumed, as gentle as it could be. We actually have an instrument, a ball that has an impact sensor that we run over our packing line to check any points where the apple could get bruised and that is plugged into a computer.We have state-of-the-art packing facilities, as good as anywhere in the world, to cut down on the bruising.
MR. CHAIRMAN: Thank you, David.
MR. HENDSBEE: Thank you.
MR. CHAIRMAN: The member for Halifax Chebucto.
MR. EPSTEIN: I wonder if you can tell me if there is anyone in Nova Scotia, either a government agency or any of your members, who are holding on to examples of the stock of old varieties. I'm wondering if there is anyone who has a dozen Ben Davis trees, a dozen Baldwin trees, or any of the other dozens of varieties that were the older varieties that were popular 100 years ago. I guess I am just looking at the possibility of diversification because what we see in the stores, of course, is a fairly limited number of varieties right now.
MR. LUTZ: Certainly, there were people, particularly from the farm markets - some people advertised they have 40 or 50 varieties and they will keep 5 or 10 trees, or whatever, of the old type varieties. There is a lot of that germ plasm at the Kentville Research Station, actually, that has been maintained over the years, just to keep our diversity, partly, for the breeding program. There are a lot of small varieties, as you say, that are spread around the Valley region.
MR. EPSTEIN: Yes. I'm glad there is, at least, a little bit of that . . .
MR. SARSFIELD: The supermarkets only want a handful of varieties that they are going to get volume, turnover, shelf space and so on.
MR. EPSTEIN: I guess this is kind of where I am going. My friend from Annapolis raised this issue of integrated pest management and if he hadn't, I certainly would have, because I wanted to compliment your industry on taking the initiative in this. I am very much aware of it. I think it is a very good idea and the more that you can do, the better.
But where both of these points lead, I think, is where - as a representative of a community that is a consuming community, exactly your target - mainly the market - I can tell you there are a lot of us who live here who are middle-class people, who have disposable dollars, who want to buy a product that is a local product, that indeed is beyond the range of just the half dozen varieties that we frequently see and that has a minimum negative impact in its production. So, I would urge you to think seriously about that target market because I think it's there.
I know that to a certain extent, of course, it's an interactive process and you have got to respond to what you think the consumer is telling you that they want. I'm trying to suggest that there is something else out there that is a latent demand that I think is going to grow and that I think if you offer a wider range of product you could probably induce the demand a bit
and encourage it to come along. Thank you for all of your information today, it's very useful and I just add that little suggestion.
MR. CHAIRMAN: Thank you, Howard. John, did you want to give a quick snapper here because we are running out of time and I want the gentlemen to have time for closing statements.
MR. MACDONELL: I did want to say that the little bit I had investigated marketing boards is that it is possible to have them under WTO or NAFTA. You can't set up supply management, only those systems that are present are grandfathered but you can't equate supply to that equation. The dairy industry probably is the best one that has a domestic concern, basically, supply managed but it has so many silos about export and so on that still allow it to take care of the investing market.
I was wondering how much difference there is in what we ship out and what comes in from other places. Is it equal? Is there an equal amount coming in as going out or more coming in than is going out?
MR. SARSFIELD: I'm not sure but my gut would say there is probably more coming in than going out. I mean there is a good part of the year where we wouldn't have local supply so of course, the bulk of our fresh fruit is gone by early summer, so there is a number of months where it is all supplied from pretty well outside.
MR. LUTZ: The other thing that is coming in is the Fuji, it's the Granny Smith, it's the huge Red Delicious from Washington State, it's the Gala, the Pink Lady, largely varieties that we can't grow. So when you look at a lot of the imports, it's largely things we can't grow and what we want to do is expand, especially the varieties that we grow, and displace those, like the high-end consumer apples are the ones we want to target.
MR. MACDONELL: Thank you.
MR. CHAIRMAN: Thank you, gentlemen. Would you like the opportunity to make a closing statement? You don't have to if you don't wish.
MR. SARSFIELD: Thank you very much for the opportunity to be here and to tell you about our industry and where we are at. I think we have a very good plan to go forward for a viable and sustainable industry.
MR. CHAIRMAN: Russell MacKinnon.
MR. MACKINNON: Mr. Chairman, I wasn't sure if I made the point before when I asked if you would write a letter to the provincial government departments asking that it be Nova Scotia apples. If you could send a copy off to the chairman of the committee here for distribution.
MR. LUTZ: We will do that.
MR. CHAIRMAN: The member for Annapolis.
MR. CHIPMAN: I just wanted to make a quick statement. I paid $35 a bushel for Honeycrisp last year, it's the best apple I have ever eaten. My point is I know the purpose is to export them to get the big dollar but if you put them on the local markets then the local people will have a chance to get a taste of them and the growth here will grow too. Why aren't they on the local market?
MR. LUTZ: We do, actually, we sold Honeycrisp on the local market last year and this year but the problem is with the demand for them and our primary concern is to increase the economic benefit to our growers. We're trying to develop a local market because at some point there will be enough produced in the northeast that it will fill those markets and they won't want ours in as quick a fashion. Our idea is to develop a local market for when that point comes.
MR. CHAIRMAN: That's it, Frank, for you?
MR. CHIPMAN: Mr. Chairman, I was going to suggest that we make a motion with the proper authorities, shall we say, maybe the Minister of Agriculture, that this committee supports the presentation here of the Orchard Renewal Program.
MR. CHAIRMAN: It is, of course, the power of the committee to make a motion, if you would like to make the motion we'll certainly entertain it, have someone second it and we'll send a letter off to the minister stating that we appreciate and understand the progression of the Nova Scotia Fruit Growers' Association.
MR. CHIPMAN: You took the words right out of my mouth.
MR. MACKINNON: Are we supporting the proposal that has been before the department or are we just sending a letter of moral support?
MR. CHIPMAN: Supporting the Orchard Renewal Program on the presentation they have made today.
MR. MACKINNON: This proposal that you are looking for funding of $7 per tree?
MR. CHAIRMAN: A motion is always entertained by the committee. We just want to make sure that we put proper language in that motion so the minister understands our intent here. So the gentlemen have presented us with a proposal today, this is the intent of your visit, and we would then say the motion is in support of the presentation and would ask the minister for his due consideration. That is a gentle way of putting it.
MR. EPSTEIN: I will second that motion.
MR. CHAIRMAN: So moved. Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
Gentlemen, we thank you very much for coming in today, you've been very informative and we are always interested in hearing what is going on in the Province of Nova Scotia. Good health to you and good luck to you and I hope you make a whole bunch of money.
I'm just going to announce the next meeting date, as soon as the NDP take their seats. Order. The committee has not adjourned yet, gentlemen. The next meeting date is April 15th with Irving Shipbuilding here from 9:00 a.m. to 11:00 a.m.
Is there a motion to adjourn?
MR. MACKINNON: I move to adjourn.
MR. CHAIRMAN: The meeting is adjourned.
[The committee adjourned at 2:58 p.m.]