Ketchup added to tariff list

Ketchup is caught up in the trade war between Canada and the United States. Prime Minister Justin Trudeau spoke at Highbury Canco’s tomato processing plant in Leamington on Canada Day, the same day his government placed tariffs on a slate of American products including levying 10 per cent on ketchup. There was no direct mention of the trade war during the PM’s speech, although the visit itself spoke volumes. 

 

“We are there for each other in times of difficulty, in times of opportunity. We lean on each other, but we stand strong, and that’s what we do from coast to coast to coast,” Trudeau said. “Canadians stand up for each other.”

 

Some recent economic history explains why the visit was so symbolic. H.R. Heinz sold the processing plant to Highbury Canco in 2014, when it laid off more than 700 employees and relocated to the U.S. While Canadians were up in arms about losing local ketchup production, U.S.-based brand French's stepped in and continued to source tomatoes grown in Essex county.

 

As of 2018, 80 processing tomato growers are contracted to grow 471,624 tons of tomatoes for six processors: Highbury Canco, Sun Brite, ConAgra, Countryside Canners, Weils and Harvest Pac. Field tomatoes represented half of the $97 million in 2017 farmgate sales of Ontario’s processed vegetables, according to Cathy Lennon, executive director, Ontario Vegetable Processing Growers. 

 

The risk of losing the tomato processing industry has lessened with these recent developments. According to market research company, Euromonitor International, French's Canadian ketchup sales more than doubled to $11.1 million from 2016 to 2017, but Heinz's dropped to $126.4 million, down five per cent. Canada’s new tariffs will further erode the bottom line of companies such as Heinz. It’s unlikely the Canadian government will cancel ketchup off the list unless the U.S. initiates a stand-down. 

 

The political rationale for the PM’s visit to Essex county was well placed. For context, the county is the province’s biggest agricultural powerhouse, earning more than $1.2 billion in farmgate sales. Some of that is thanks to the greenhouse commodities of tomatoes, peppers and cucumbers of which 70 per cent is exported.

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Thursday, July 5, 2018
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