PEI Potato board welcomes decision Tribunal in potato contracts appeal

In a dispute around the process for the establishment of potato contracts between potato growers and processors, a decision has been reached by the Natural Products Appeals Tribunal. The decision provides a unique insight in the negotiation process on potato contracts in PEI and the considerations around it.

The Prince Edward Island Potato Board welcomed the decision of the Natural Products Appeals Tribunal regarding an < a href="/node/5427 "target="_blank" rel="noopener">appeal launched by Cavendish Farms Corporation in March 2010. The tribunal ruled in the Potato Boards favour on key issues raised during the appeal.

Following months of consultations with growers and processors, on December 4, 2009 the PEI Potao board put in place a Board Order which sets out a process for the establishment of the terms and conditions of the contract on which an individual processor can purchase potatoes for processing. A similar order was in place for seveal years, but a change was made to incorporate mediation and arbitration provisions that would be used if a contract cannot be settled during the negotiation period. The changes were made to ensure that a contract was reached prior to planting the main potato crop on the Island.

Cavendish Farms appealed, and asked that the Tribunal set aside or overturn the Board Order. The company's position was that the Board did not have the power to pass such an Order, and that it could not impose binding arbitration.

In its twenty one page decision, the tribunal concluded that the PEI Potato Board does have the power to make the Order and to require the parties to mediate and arbitrate the terms of the contract. It also determined that an adequate alternative to the mediation and arbitration process in teh Order was not provided, and thereby confirmed the mediation and arbitration provisions of teh Order. As well, it said that the current method of voting on processing contract offers is appropriate.

The Tribunal did vary the date by which processors can buy potatoes on the open market. It was moved back from Sptember 1st to August 15th of each year.

"We're pleased that the Tribunal clearly understood the Natural Products Marketing Act and the regulations, and that they thoroughly considered the issues pertaining to the appeal,"said Potato Board Chairman Boyd Rose. "Growers simply want to have the processing contracts settled before they put the crop in the ground, and our Board Order was the best solution to ensure this happens. Our objective is to try to match the supply of potatoes to the demand, and on the processing side, growers will have the knowledge to make this happen."

The cost of production for potatoes has risen dramatically in recent years, and the PEI Potato board estimates the costs to be in the $2,600 per acre range for 2010. A four hundred acre potato farm therefore invests over $1,000,000 each year in putting the potato crop in teh ground, and incurs additional costs in planting rotation crops to keep the farm environmentally sustainable.

"Our farmers take agreat deal of pride in producing potatoes to the high standards required by our processors for their clients around the world,"said Chairman Boyd Rose.

"Approximately 60% of our crop goes to processing, and knowing the contract specifications, the volume and pricing prior to planting will allow growers to make the necessary investments to meet processors' needs each year and into the future. We look forward to working with our processors s always to meet their needs so that they and our growers will be successful long term."

Read the full decision of the Natural Products Appeals Tribunal