18 August 2009

Great Gambols with Public Money: Sprung Cukes 3 – ministerial statement version

Things got pretty bad when the Greenhouse was accused of dumping cukes on the Maritime market. The following is the ext of a statement by Premier Brian Peckford in the House of Assembly as part of an effort to address many of the criticisms and complaints which emerged by the spring of 1988.

Ministerial Statement by the Honorable A. Brian Peckford
Tuesday, May 24, 1988

Mr. Speaker, I believe it is urgently necessary to address this Honorable House on a matter of great importance. It has been suggested for several days now that this Government and Newfoundland Enviroponics Limited has been engaged i some sort of insidious plot to take over Maritime cucumber markets through a systematic dumping effort aimed at bankrupting the Maritime greenhouse industry.

Mr. Speaker, there is not now nor has there ever been any such plan. Such a plan would be totally inconsistent with the policy positions of this Government which have been to strengthen the free flow of goods and services between Provinces [sic] in a fair and open manner.
Newfoundland Enviroponics has absolutely no intention of unfairly competing in any market place. Indeed, the facts are just the opposite.

Newfoundland Enviroponics entered the Maritime marketplace on a fair and reasonable basis. It is probably the most cost-efficient producer in Canada today and we make no apologies for that. As well, it is producing product that is herbicide and pesticide free and is of the highest possible quality. We make no apologies for this either.

Newfoundland Enviroponics can and will compete on that basis. The fact, Mr. Speaker, is that Newfoundland Enviroponics has done nothing wrong. It is not a case of Government subsidy competing with private enterprise.

Newfoundland Enviroponics is financed on a business-like basis and will have to pay its own way. It is no more subsidized by Government then are greenhouse growers or for that matter any other agricultural producer in this country.

Again, Mr. Speaker, we must consider the facts. In an interview published in the May 21 edition of the Globe and Mail, the vice-president of Clover Produce in Halifax indicated that he would be making up the shortfall caused by cancelling orders with Newfoundland Enviroponics by purchasing from Ontario producers at lower prices.

Does this sound like a dumping situation or a situation in which local Maritime growers are being unfairly competed with?

The answer is clearly no.

Mr. Speaker, I feel it is important that the record be set straight on this issue. I would like to quote from Hansard of May 20 and the statement of the Honourable the Minister of Rural, Agricultural and Northern Development:
“Mr. Speaker, it is not the government's intention, or Newfoundland Enviroponic's intention to deliberately put anybody out of business. It is not our deliberate intention to dump so that we can up prices afterwards. It is our deliberate intention to be very, very aggressive in the marketplace and to make sure that we are there in a price competitive situation. We are not going to be competitive in a quality situation because nobody can compete with us on quality. There is nobody who produces a cucumber like we do, that is herbicide and pesticide free, packed fresh and gets to the market as quickly as ours can. On quality we have no concern at all because we are going to be the best by far in the marketplace. When it comes to price, we are going to compete in any marketplace we choose to be in and we are going to do very, very well in those marketplaces.''
Mr. Speaker, not withstanding what I have just said, if there has been any misunderstanding created through a misinterpretation of the Honorable Minister's comments, I feel compelled to apologize. My apologizes go to the local Maritime growers, to the Governments of our sister provinces, to the consuming public, and, perhaps most importantly, to the employees of Newfoundland Enviroponics. They are doing their best to create a successful enterprise. This Government will be making appropriate contacts over the next day or two with neighbouring governments and others to reassure them on these points and to hopefully repair some of the damage which has been done.

Mr. Speaker, there are a number of other related misconceptions about this project and the occurrences of the past few days which need to be cleared up.

First of all, Newfoundland Enviroponics has not, as I stated earlier, been dumping produce on the Nova Scotia market. Any suggestion to the contrary is totally without foundation.

Newfoundland Enviroponics has not sold produce outside of this Province at any time at a price lower that it was then offering to its local customers.

Second, there has been discussion about smaller cucumbers being produced by Newfoundland Enviroponics. For the record, Newfoundland Enviroponics is currently producing a variety of grades of cucumbers to cater to the preferences of its customers. These different grades are characterized by different sizes and are packaged and designated as such. The different sizes of product command different prices.

To put it simply, Newfoundland Enviroponics sells the smaller cucumbers for less than the larger ones and of course this is reflected to a degree in the ultimate retail price. It must be reiterated, however, that the retailer controls the final price and therefore, it is difficult to make generalizations about pricing issues.

Third, it has been suggested that Newfoundland Enviroponics is marketing its produce at prices significantly less than its costs. This appears to stem from information released some time ago which suggested that at output levels in the order of seven million pounds annually, Newfoundland Enviroponics would require average prices in the order of $1.08 per pound to be viable. The suggestion seems to be that if Newfoundland Enviroponics sell at prices lower than $1.08 per pound it is dumping.

Again this is simply not the case. To begin with, the $1.08 was clearly an average price. We are entering the season of the year when prices in produce markets will be at their lowest. Clearly Newfoundland Enviroponics has to compete in these produce markets and price is certainly a primary criteria. It also has to be remembered that Newfoundland Enviroponics has to break into new markets. It is an accepted business practice to offer some price incentives to establish new products.

Is this dumping? I think not. I would also add that the $1.08 figure was preliminary and premised on annual output of about seven million pounds. Newfoundland Enviroponics is currently producing at rates which are far in excess of our original projections. This allows Newfoundland Enviroponics as an extremely efficient, low-cost producer, to charge lower prices. The $1.08 figure has absolutely no relevance in this type of environment.

Mr. Speaker, I think all Honourable Members need to reflect on this situation. My administration believes that this venture can succeed but it has to be given a chance to succeed. It has to be given a chance to operate without its every business transaction being subjected to microscopic scrutiny by the media and in this Honourable House.

Newfoundland Enviroponics has to compete in the market place; it can and it will. However, we are subjecting this business to untenable pressures which severely hamper its ability to compete. Its suppliers, its customers and its potential customers are constantly being harassed. It makes it difficult to be a supplier or a customer of Newfoundland Enviroponics because of the attention one gets.

This is patently unfair.

Mr. Sprung himself has been called a crook, a liar and a cheat. I have found him to be an honourable, hard-working man, who has perfected a technology significantly ahead of anything else in the horticultural world today. Time will prove this to be correct.

My administration has taken a great deal of criticism over our decision to invest public funds in this project and over the so-called secrecy which surrounds it. During my nine years as Premier of this Province I can recall no other Government decision about which more information has been made available to the public.

Some, however, will not be satisfied until we totally destroy the ability of Newfoundland Enviroponics to compete in the market place.

Mr. Speaker, Government has therefore decided that we will make no further comment on day-to-day operational and marketing decisions of Newfoundland Enviroponics. A Board of Directors is in place and it has our confidence. We will of course continue to report to this Honourable House and to the people of the Province on a regular basis on factual occurrences such as production levels and financial performance, but we are going to give the management of Newfoundland Enviroponics the opportunity to run this business as any other and an opportunity to compete on a fair and even basis in the market place.

My administration takes full responsibility for the decision to invest public funds in this project, just as we have done in numerous other business enterprises in this Province. My administration will also answer criticism directed at this decision.

However, I implore this Honourable House and members of the media to focus their criticisms on the Government and to allow Newfoundland Enviroponics a fair chance to succeed. I would remind Honourable Members that there are 200 people employed in full time jobs at Newfoundland Enviroponics; people who would be unemployed were it not for this project; people who will be unemployed again if it fails.

Surely we owe them the opportunity to make this project a success.

They will take no political satisfaction from its failure.