Greenhouse expansion in Essex County is stalled by a lack of water and rapidly rising energy costs, prompting investors to consider the United States instead.
Essex County’s water supply is at capacity and natural gas costs have undergone steep increases.
After seven years of growth, Ontario greenhouse space dedicated to peppers, cucumbers and tomatoes has stalled to a net-zero gain in the past 18 months.
Meanwhile they are being courted by the United States where they are offered perks and where there have been investments in infrastructure.
“The investment into agriculture is going to happen, whether or not we have the infrastructure here,” said Richard Lee, executive director of the Ontario Greenhouse Vegetable Growers in an interview with the Globe and Mail. “If we don’t, it will go south of the border.”
In 2019, Heritage Farm’s parent company, One Floral, expanded a 10-acre greenhouse into 16 hectares in North Carolina. Now, One Floral is looking to grow its Heritage Farm operation – and while it has bought an extra 73 hectares in Essex County, the company is thinking of investing in the U.S. instead.
“This is where the market should be,” said Jamie Lefaive, general manager at Heritage Farms. “But at the same time, if you can’t make profits to continue to support your business and grow, you have to find alternatives.”
The area is also a hub for highly specialized industries that focus on the fertilizer and biologicals (pest-controlling bugs) that greenhouses need to function.
With six to seven per cent growth since 2016, greenhouse growers of peppers, cucumbers and tomatoes have a farmgate value of more than $1.3-billion, producing 503 million kilograms of produce annually, or the equivalent of 300 truckloads daily.
A study done for the Ontario Greenhouse Growers Marketing board said there is a potential for growth at five per cent per year for the next 10 years.
But it won’t be happening if there’s a lack of water and energy costs remain high.
Natural gas prices have doubled in price since 2016. In Ontario, electricity prices have been steadily rising since 2006. The future of power in the province is also uncertain. Increasing demand on the system could strain the entire grid as early as 2026 and even trigger chronic shortages by 2030, according to an analysis of the entire energy system published by RBC.
“But it’s just one piece of the puzzle,” Mr. Lee said. “You still need water to make sure you can feed the plants.”
There’s also some jealousy that the federal and provincial governments have matched subsidy offers in the United States to land investments in electrical vehicle manufacturing.
Leamington Mayor Hilda MacDonald said it will take years to plan and build an increase in water supply and will be costly for a community of 30,000.
And there are some mixed feelings about the industry that brings in about 10,000 foreign workers and lights up the night skies. Installing curtains is an extra cost.
Some investors are attracted to the U.S. Department Agriculture’s farm loan program, which gives operating loans to farmers who cannot obtain commercial credit from a bank or other lender. The money can be used to purchase land, equipment or supplies and to construct buildings or make improvements.
U.S. municipalities will also help businesses with the costs of building roads and putting in natural gas lines. In Ontario, producers are mandated to build and pave the roads that lead to their property, without financial assistance, Lemaire said.
“Agriculture seems to be the last area of focus in many budgets, provincial or federal, especially in the fruit and vegetable side,” he said.
“We are probably one of the most vital industries in the country relative to ensuring we put healthy foods on the market, yet we’re often seen as an afterthought.”
