Spuds dumped over dispute: producer Regulator says they were shipped to U.S.

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Larry McIntosh

A south-central Manitoba farmer claims he was forced to dump 2.3 million kilograms of specialty potatoes on the cattle-feed market in 2008 after his farm tried to supply its spuds to a chain of Quebec poutine parlours.

But provincial potato regulators say the specialty spuds were actually shipped to the United States after the regulators foiled an attempt to make an end-run around marketing boards.

Northern Potato Co., a family-owned corporate farm based in Bagot, Man., signed a $1-million deal with Montreal distributor Thomas Fruits et Legumes in 2007 to supply potatoes to La Belle Province, a fast-food chain famous for its hotdogs and poutine, farm-company president Henry Khul said.

All Manitoba-grown potatoes bound for processors must be sold through Keystone Potato Producers Association, while table potatoes must be sold through marketing board Peak of the Market.

Khul claims Keystone initially approved his Quebec sale but changed its mind after he began shipping red potatoes east in November 2007.

That led to an April 2008 ruling from the Farm Products Marketing Council -- a provincial body that hears appeals of marketing board decisions -- that required Northern Potato to sell through Peak of the Market. Rather than pay the fees, Khul claims he gave all but 82,000 kilograms of his spuds away to cattle farmers and filed a crop-insurance claim for $180,000.

"I was growing a very, very unique specialty potato, a large red processing potato, not a table potato," said Khul, a former Peak of the Market board member who has a long history of opposition to marketing boards. "La Belle Province can't get enough of this product. The French people love this. You go there and there are people lined up outside."

Keystone Potato Producers, however, claims it never granted Northern Potato permission to sell its product directly to Thomas Fruits in Montreal. Khul failed to demonstrate Thomas Fruits is a processor, as opposed to a distributor, said Keystone chairman Garry Sloik.

Following the marketing council decision, Peak of the Market then offered to sell Khul's product to Thomas Fruits on his behalf, said Larry McIntosh, Peak's president and CEO.

"He knew the regulations. We offered to sell it at his prices to make the deal legitimate," McIntosh said. "We offered to sell it so nothing would be spoiled or wasted."

Northern Potato never responded to Peak of the Market's offer, McIntosh said.

Khul claims the fees charged by Peak rendered the deal impossible. "We kept these potatoes until June. They were already deteriorating. Basically, we got nothing for them," he said.

But the regulators dispute this, too. "He didn't dump those bags. They were shipped to the United States," said McIntosh, claiming Northern Potato sent 1.1 million kilograms across the border.

Northern Potato is the second Manitoba spud company to complain about clashes with regulators this year. Earlier this summer, Otterburne's Schriemer Family Farms ran afoul of Peak of the Market after it was caught selling table potatoes to Sobeys supermarkets without going through the marketing board.

The dispute between growers and regulators comes at a time when fewer registered farmers appear to be responsible for Manitoba's regulated potato crop. Growers like Khul and Schriemer allege Peak is trying to swallow up market share.

Peak of the Market has fewer growers today than it did five years ago and they produce about the same total acreage, McIntosh agreed, but said that's because some farmers have retired.

Other observers say it isn't that simple.

"The number of producers is dropping dramatically. You're getting a very select group running the whole show," said Ken McLean, a former Peak of the Market general manager.

McLean said he was surprised Peak is concerned with smaller growers at all. "You're never going to get it all," he said of the Manitoba potato market. "It's just going to force it underground."

Peak of the Market, however, is preparing to exempt small Manitoba potato growers from having to go through the marketing board. McIntosh said his board is prepared to change regulations to allow non-Peak growers to sell potatoes at roadside stands and farmers' markets, but probably not at independent grocery stores.

bartley.kives@freepress.mb.ca

Republished from the Winnipeg Free Press print edition October 13, 2009 A5