Independents react to prospect of Ontario Food Terminal sale

News that the Ontario government is considering selling the Ontario Food Terminal (OFT) shook the province’s independent grocery and producer sector last week.

Changes for the OFT were hinted at in the budget April 11: “he Province is exploring options to ensure the long‐term success of the Ontario Food Terminal for farmers, businesses, and taxpayers the full.” But the implications were only spelled out in an April 23 article by the Toronto Star’s Josh Rubin in which provincial agriculture minister Ernie Hardeman was questioned about the government’s plans.

“sked specifically about whether he’d rule out the terminal being sold to a private operator who might raise rents, or the land being sold to a developer, Hardeman was noncommittal,” wrote Rubin.

“’We are just beginning consultations on how we can ensure the long-term success of the Food Terminal,” Hardeman told the Star.

Ontario’s Conservative government has been clear of its intentions to review its real estate holdings as part of its agenda to cut costs and improve the provincial balance sheet. Selling the OFT’s 40 acres of prime Toronto real estate (which Rubin reports could go for as much as $200 million) would align with that mandate.

However the OFT is at the very core of the grocery sector in Ontario beyond the largest retailer chains; more than 5.5 million pounds of produce flow through the OFT every day, from wholesalers and farmers to independent retailers.

Mike Longo, vice-president of merchandising for Longo’s, said 70% of Longo’s fresh produce comes through the OFT. “It really is important in our eyes,” he told Canadian Grocer. “The terminal enables not just Longo’s, but other independents to better compete by having access to better quality products… Without access there would probably be fewer independents and that would lead to higher prices for an inferior product.”

There’s been talk about moving the OFT for 20 years, said Longo, though he believes this government is taking a more serious look at it now. “Not sure where is going, but obviously it is a concern for us,” he said. If the OFT is moved it could lead to higher transportation costs for many independent grocers. “Right now it is conveniently located. And higher transportation costs lead to higher prices for the consumer.”

In a letter to its members, the Canadian Federation of Independent Grocers called the OFT, “one of the most critical components in helping independent grocers in Ontario compete on an already uneven retail landscape.”

Losing the OFT would present real challenges to independent grocers in the province, for whom access to a wide supply of local produce is an essential part of their business models, Gary Sands, senior vice-president, public policy and advocacy told Canadian Grocer.

“An independent grocer will not be able to compete and survive by going head to head with Walmart on price,” he said. “To stay on that field they have to differentiate… They differentiate by doing as much of the local stuff as they can, providing more of the local produce that you may not see in the chains. That is a key part of their business model.”

The Food Terminal has helped Toronto become a "globally recognized hub of food retailing and restaurants,” said Brad McMullen, owner of Summerhill Market in Toronto. “Cities that have similar food terminals have the best food cultures. It’s what has spurred countless successful food business and our business simply would never have existed without it.”

While he does not want the government to shut down the OFT,  he said reviewing the location is understandable.

“A relocation to a similarly convenient, accessible and modernized location could be beneficial but the idea of shutting it down would be catastrophic on so many levels,” he said. “It would be one more card in the hands of Walmart and Amazon which already has a stacked deck.”

At a meeting with Hardeman earlier this month, the CFIG asked to have an independent grocer added to the advisory group exploring future options for the OFT, a request eventually granted by Hardeman.

“We are pleased that the Minister has agreed to add an independent grocer to the advisory group,” said Sands. “The meeting was constructive, but there is much more information that needs to be conveyed to the government about how invaluable the terminal is grocers and others like farmers and producers.”

The CFIG is also providing letter template for members to share with their MPP. “Your provincial representative needs to understand what the Terminal is, how important it is to our agri-food industry and the impact changes could have on their local grocers, restaurants, farmers, processors but ultimately on the products available and the prices paid by their constituents,” said the CFIG in its letter to members.