Blue Book Services Phone: 630-668-3500 Fax: 630-668-0303 E-Mail: [email protected] Web Site: www.producebluebook.com ONTARIO’S GOLDEN HORSESHOE A thriving market for produce buyers and sellers

By Karen Raugust

he city of Toronto gets its Horseshoe encompasses the densely name from the native populated areas of Hamilton, THuron word Toronton, Oshawa, Niagara Falls, and meaning “a meeting place.” facility in Canada and one of the Toronto. “Canadians consume a Nowhere is that connotation more top five markets in North America, lot of fresh fruits and vegetables, appropriate than at the Ontario situated in what is often called the and most of it comes through here,” Food Terminal, the largest such Golden Horseshoe. The Golden says I.B. (Bruce) Nicholas, general Reprinted from Blueprints, the Produce Professionals’ Quarterly Journal, published by Blue Book Services. Copyright 2015.

1 — Blueprints | Jul/Aug/Sep 2010 ONTARIO’S GOLDEN HORSESHOE manager of the Ontario Food laugh. It’s the personal aspect of the bitter melon are popular items. Terminal Board, a self-sustaining business.” “The Chinese are a huge market here,” operation created by the Ontario The Terminal, with its 230,000 square says Larry Davidson, vice president and co- Ministry of Agriculture, Food and feet of warehouse space, offers a number of owner of North American Produce Buyers, Rural Affairs. advantages to buyers and sellers. “For the Ltd., a fruit importer and wholesaler oper- size of the facility, the tonnage and quality ating in the Terminal since its inception in are both very high,” Nicholas reports. “We 1960. “Without them this market would ~By the Numbers~ also have very little waste.” Of the not work.” 965,000 tons of food coming in each year, “We continue to see increases…in only 12,000 tons (about 1 percent) ends Indian and Chinese produce, geared a little The Ontario Food Terminal brings up as waste. “It means we have sophisti- more to the mainstream,” says Anthony together 22 large wholesalers and 450 cated buyers,” he explains. “And that Formusa, president of National Produce farmer’s market tenants (mostly Ontario- means the sellers have to be sophisticated, Marketing, an importer and broker. based growers) with nearly 6,000 wholesale too.” Rubini agrees: “More Asian fruits and veg- buyers, who pay a fee to register. Technology is another factor: the facil- etables are being shipped every day.” There Customers include independent fruit and ity boasts state-of-the-art camera systems, are, however, particular challenges associ- vegetable stores, of which there are many automated entrances, and an 80,000- ated with some of these products: “Shelf in the Toronto area, as well as florists, con- square-foot central cold storage facility life is shorter than other items and timely venience stores, restaurants, garden centers, with computer-controlled temperature and deliveries are imperative,” Rubini says. chains looking to fill gaps in assortments, humidity. In May, the Terminal Lately, there have been more sellers and everything in between. The Ontario announced it would integrate a new air from Western Asia and the Middle East, Food Terminal Board estimates over one sanitation system developed by NASA, into including Afghanis and Iraqis, as well as million vehicles enter and exit the market the facility. The chemical-free system kills more Tibetans and South Americans. They each year and 42,000 people are directly or airborne mold, bacteria, viruses and fungi, offer produce popular in their own cultures indirectly employed on an annual basis. and removes volatile organic compounds to a growing number of specialty All told, more than 5.1 million pounds from the air. of local and imported produce goes out FACTS & into the community each day. The Terminal is located on the shores of Lake ~Diverse and FIGURES Ontario, offering easy access to ports and Ever-Changing~ major Canadian highways and providing a TERMINAL MARKET direct connection to regions throughout ANNUALLY the U.S. and Canada. The end consumers The Terminal is known for the diversity served by the Terminal, by way of its of its fruits and vegetables. Many com- Annual produce tonnage wholesale customers, hail not only from modities are available, from citrus, by year: the Toronto area but from all over Canada bananas, and off-season produce imported 2002 840,000 and the northern United States. About 180 from regions such as Chile, Florida, 2003 868,000 million people live within a day’s drive of Tunisia, and India, to carrots, potatoes, 2004 965,000 Toronto, including 125 million beans, peas, tomatoes, and hothouse veg- 2005 989,000 Americans. etables grown in Ontario. All told, about 2006 947,000 Having a presence in and around the 57,000 farmers grow produce in Ontario, 2007 949,020 Terminal helps importers, wholesalers, from the sand plains in the province’s 2008 949,555 growers, and transportation brokers differ- southwestern region to the Holland Marsh 2009 960,958 entiate themselves from their competition. about four hours north of Toronto. “Relationships are what set you apart,” says As the fifth-largest city in North Truck traffic by year: Joe Rubini, president and co-owner of America, Toronto has a vibrant and grow- 2002 27,700 Rally Logistics, a transportation broker ing immigrant community. More than 40 2003 28,920 2004 35,044 located near the Terminal that ships from percent of the 4.7 million residents in 2005 37,701 all ports and growing areas. Rally’s two Toronto and its surrounding areas are 2006 30,963 owners have a combined 20 years’ experi- foreign-born, representing more than 100 2007 25,032 ence on the market. different cultures. At the Terminal, 2008 24,712 “Working at the Terminal gives us a Chinese and Korean customers have long 2009 25,730 hands-on view and allows us to act quickly sought the produce needed for their native if there’s a problem,” Rubini continues. cooking—as have Indians, Lebanese, and Source: www.oftb.com “We have a much better relationship with others—and commodities such as bok our customers. You share a coffee, share a choi, daikon, gai lan, ginger, ginseng, and www.producebluebook.com Ju/Aug/Sep 2010 | Blueprints — 2 ONTARIO’S GOLDEN HORSESHOE restaurant and store owners. “It just keeps Commercialization venture, led by the broker of potatoes, carrots, and onions, changing and changing,” says Nicholas, Ontario Fruit and Vegetable Growers noticed the Buy Local trend taking off in noting there was a time when kiwis, sweet Association, is helping growers diversify potatoes about two years ago. His com- potatoes, and mangoes were new and South Central Ontario’s sand plains by pany began offering more local product unknown. matching grower capacity with new and purchased a local farm, and began the Indian and Pakistani growers supply opportunities. process of changing its corporate name to tangerines and mangoes, for example, Earth Fresh Farms. “It’s our intention to while ginger and garlic are increasingly grow a lot more Ontario product in the coming out of China. “We’re getting ~Buying “Local”~ future,” he says. calls from Pakistan and India looking The Ontario government has been sup- for avenues for distributing and importing porting the Buy Local trend, running a their produce here in Ontario,” Formusa The intensifying “Buy Local” trend, television campaign to support local grow- says. which grew out of the green movement, ers, according to Hughes. He also has seen Not all Asian commodities are imported has been gaining traction around the more retailers in the province running by the 22 big wholesalers, most of whom world. But at the Terminal, “buy local” television ads touting their selections of are members of the Toronto Wholesale has been a fact of life since the facility local produce. Produce Association. Many are sold by began operations in 1954. About 57,000 “People want to know where their food local growers; ginseng is grown in the growers operate in Ontario according to is coming from,” says OPMA’s southwestern sand plains, while several the Ontario Federation of Agriculture; the MacKenzie, explaining that the Ontario types of Chinese vegetables have been province rates agriculture as its largest eco- government requires country of origin to growing in Ontario for some time. These nomic driver and third largest employer. be clearly visible in all in-store displays. local items are available roughly from June A unique element of the Terminal is its Canada also requires country of origin through December. “They were picked last 10-acre outdoor wholesale farmer’s mar- labeling on consumer packaging and con- night and are as fresh as can be, and they ket, 40 percent of which is covered by the tainers, (but not bulk displays at the store can also be cheaper than the imports,” 500-plus car parking area above. Most of level) and over the last several years has Nicholas explains. the 450 tenants, operating across 550 been strictly enforcing the law and impos- “Ontario growers are starting to take available stalls, are Ontario-based growers ing fines. notice,” confirms Ian MacKenzie, execu- that sell local produce when in season and The definition of “local” produce can tive vice president of the Ontario Produce have the opportunity to reach the same be a bit ambiguous, however. “The pro- Marketing Association (OPMA), based at buyers that shop the big wholesale opera- duce we eat may come from Canada, but the Terminal. He and other experts say tions. Dealers are free to sell produce from it travels a heck of a long way to get here,” more and more growers are exploring these other sources at the farmer’s market, but MacKenzie says, noting that fields in New commodities, within the constraints of cli- must pay quadruple the usual growers’ fee. Jersey, Michigan, and New York are far mate and soil conditions. Farmers’ market tenants lease for six- closer to Toronto than those in British Tobacco growers, in particular, are month periods, January through June or Columbia. Apples and berries from the hoping to transition acreage to other July through December. About 60 percent west coast of Canada travel 2,000 to 3,000 crops. The Erie Innovation and lease year-round, though it is also possible miles to reach Ontario. to lease space on a daily basis. In addition to more local produce and Tom Hughes, president of Mackey more ethnic varieties, the Terminal has VIEW OF THE MARKET and Hughes, a grower, distributor, and been seeing increased volume in fruit,

Photographs courtesy of the Ontario Food Terminal.

3 — Blueprints | Jul/Aug/Sep 2010 ONTARIO’S GOLDEN HORSESHOE particularly strawberries, blueberries, rasp- commoditized business. Potatoes have berries, and the like. Davidson of North been pretty cheap.” While carrots and FAST FACTS American Produce Buyers, which transi- onions held their own in pricing due to tioned from selling vegetables to mostly solid demand and conservative supplies, FARMERS MARKET fruit over the last decade, explains that potato prices tend to be tied to corn and vegetables are have become strongly com- grain supplies rather than pure supply and Hours: moditized, leading to low prices and low demand. Last year, corn contracts were Monday – Friday, year-round margins. In addition, customers tend to cheap, so growers switched from corn to Saturdays – May thru October buy direct and squeeze out the middle- potatoes, leading to an oversupply and man. At the same time, the local popula- lowered prices. Tenants: tion supports quality fruit, including the 450 largest ethnic groups such as Chinese and Korean consumers. ~Weather and On the other hand, the market for fruit Consequenes~ is becoming ultra-competitive. “There are the summer vegetables sooner,” he says. so many countries growing these fruits,” “People are putting in plants on May 1 says Max Rusque, president of Frusol Ontario has had an early and warm that they never would have put in before International, an importer of citrus, spring, following a winter with less snow May 21.” Whether or not the seasons will apples, pears, and berries, as well as, new and higher temperatures than normal. be longer or just earlier remains to be seen, this year, kiwis, stone fruit, and grapes The Florida freeze and earthquake in but “basically, everything seems to be from Latin America and Europe. “It used Chile caused disruptions in the availability blowing through faster.” to be Chile, but now you have grapes from of commodities from those regions. “The Even as the companies at the Terminal Peru, Argentina, South Africa, New freeze in Florida delayed crops up to a keep an ever-vigilant eye on the weather, Zealand, Brazil—all at the same time. You month,” Rubini says. “Coupled with what they’re also watching the economy. One would wait for Christmas for clementines, seems to be an early Ontario crop, there key factor in the past year has been the but now you have them year-round. could be some overlap.” exchange rate between Canada and the Cherries were in the summer, from Some Ontario retailers posted in-store U.S., with the Canadian and U.S. dollar California or Oregon, and you waited signs to tell customers commodities such value nearly on par. Exports have been dif- until the end of December before seeing as strawberries, beans, tomatoes, and egg- ficult, and more sales of field-grown and them from Chile, but now they’re year- plant were unavailable, reports hothouse produce from Ontario occurring round, too.” MacKenzie. “Produce wholesalers are very within Canada as a result. Another area of interest for some grow- resourceful in finding sources from other ers is organic. Rubini of Rally Logistics has parts of the world,” he says. “But there seen volume rise on organic products, were some shortages.” ~Financial Factors~ especially as conventional and organic The Chilean earthquake affected both pricing are getting closer together. “People availability and quality for a time. “Some who are more health-conscious are switch- of the ports were damaged, and fruit was For local customers looking for imported ing to organic fruits and vegetables a lot left behind for quite a while, which produce, prices have dropped dramatically more,” he says. affected quality,” Rusque says. He adds because of the Canadian dollar’s fluctuations Proprietary varieties are another growth that Chilean supply lines are pretty much and exchange rate. “It’s 10 percent to 15 per- area for some commodities, such as pota- back to normal. An exception is some of cent less,” says Vic Carnevale, president of toes. Hughes explains that proprietary the late-season apples and plums grown in Veg-Pak, a full-line importer that works with varieties give food service and retailers the southern Chile. The timing of the quake distributors around the world to supply pro- chance to differentiate themselves and was such that fruits fell to the ground dur- duce under the Pop-I, Harvest Fresh, and charge premium prices, while offering ing the shaking, leading to big losses. other brands. growers a price advantage, too, since sup- Closer to home, a late frost in Ontario Another issue is transportation. “If the dol- plies are limited. Mackey and Hughes’ affected the potato crop and a June storm lar gets stronger, it will make trucking next to proprietary varieties include Red Yukon, that swept from Lake Erie to Leamington impossible,” Davidson says. “We’re seeing the Pure Gold, Sierra Gold, and Klondike caused significant damage to greenhouses effects in freight already. To get trucks out of Rose. The last has a red skin and yellow and vegetable crops in the area. The long- California will mean crazy rates people aren’t flesh, and has seen great success lately, term impact of these weather events prepared for.” according to Hughes, with distribution remains to be seen. Freight costs are already rising, even with- across the U.S. and now Canada. Nicholas notes that the seasons are out exchange rate issues. To get a 40-foot “It’s a win-win for the industry,” starting earlier at the Terminal, as the cli- container from China to Toronto costs Hughes says of the proprietary varieties. mate seems to be getting warmer. “The around $6,500, up from $4,000 not long “Last year showed us this is still a very bedding plants come in earlier each year, ago, while a container from California to www.producebluebook.com Ju/Aug/Sep 2010 | Blueprints — 4 ONTARIO’S GOLDEN HORSESHOE

Toronto costs about the same. “From are eroding bottom lines. To sustain any California it’s high, but it’s not sky-high ~Food Safety~ kind of increase in volume we have had to yet,” says John Wang, president of become more competitive to our cus- Canadian Garlic, Inc., the largest supplier of tomers and our truckers. We seem to be garlic, ginger, and snow peas in Canada. There are also increasing concerns working for much lower margins to keep Rusque of Frusol International points about food safety. “Everyone’s racing to be customers’ rates low and truckers’ rates out that when oil went up two to three third-party audited,” says Johnni Sbrocchi, high, so we’re doing more for less.” years ago, transportation rates doubled, but director of operations at C.O.D. Fresh, Both the Canadian and Ontario when the price of oil later dropped, the which offers commodity trading and Produce Marketing Associations are work- rates stayed high. This caused prices for logistics, and handles produce ranging ing to raise demand for produce over the fruit and other produce to go up, even as from tropical fruits to broccoli, with a spe- long term, although “it all comes down to growers were charging less due to the cialty in watermelons. C.O.D. is the first dollars and cents,” says MacKenzie. The increased competition. “Whatever we’re produce company in North America to be OPMA is about to meet with a school sys- saving from the grower, the freight wipes it ISO certified in food cold storage. “It adds tem in Southwest Ontario to see about out,” Rusque says. “The bottom line is, to your costs, horrendously,” he says, but getting the Canadian Produce Marketing consumers pay for it.” thousands of food companies are going Association’s (CPMA’s) Freggie Fridays Regulatory burdens also contribute to through the certification process as a program up and running. Freggie Fridays rising costs. Environmental rules for means of giving consumers confidence in is an extension of the CPMA’s Freggie growers are stricter, says Bette Jean Crews, their products. Tales online children’s initiative. president of the Ontario Federation of The global economy in general has Started by a teacher in Ottawa, Freggie Agriculture. “Farmers have always provided been tough over the last couple of years, of Fridays has been piloted in over 20 wildlife habitat,” she says, referring to course. “Buyers are only buying what they Ottawa schools, encompassing 320 teach- stricter environmental regulations. need, rather than speculating on some ers and 6,200 students. Students who “But now there’s more paperwork, every- commodities,” Rubini says. “It seems more bring a fruit or vegetable in on Fridays thing is checked and double-checked.” The and more that there are sales against any- instead of chips or other snacks, receive a costs involved are ultimately passed on to thing being loaded. No one wants to leave ballot eligible for prizes. Teachers also consumers. anything to shrink, as shrinking margins incorporate fruit and vegetables into the wider curriculum. Anecdotal results from FAST FACTS the pilot so far have been positive, says Melanie Richer, CPMA’s senior manager of marketing and communications. TERMINAL MARKET

~The Future~ Opened: Site: Registered Buyers: 1954 165 The Queensway 5,000 – 6,000 Toronto, ON M8Y As for the Terminal itself, the board is looking into possible expansion to accommo- Size: 1H8 date demand from both new sellers who want 40 acres between Park Lawn Rd. Deliveries accepted: in and existing tenants who desire more and Stephen Drive in 24 hours per day, space. While there’s certainly demand, Cold Storage: South Etobicoke 7 days per week Nicholas posits: “The question is, who will 80,000 square feet pay for it?” Parking: on two levels Expansion or not, the Terminal’s role as a 4-acre deck, Hours: meeting place for produce buyers and sellers Phone: 575 car slots 6:00 am – 2:00 pm, is as strong as ever. “Everybody likes to com- (416) 259-5479 Monday – Friday pare price and quality and pick the best Office space: load,” says Carnevale. “It’s the place to be.” BP Fax: 37,934 square feet (416) 259-4303 above warehouse area 7:00 am – 10:00 am, Sunday Karen Raugust is a freelance writer who Web: Warehouse tenants: covers business topics ranging from retail- www.oftb.co 23 ing to the entertainment industry. She has written for more than 50 publications, including Publishers Weekly, Supermarket News, and Animation Magazine.

5 — Blueprints | Jul/Aug/Sep 2010