Nacewicz v Ontario Flue-Cured Tobacco Growers’ Marketing Board, 2005 ONAFRAAT 32

Agriculture, Food and Rural Affairs Appeal Tribunal

1Stone Road West

Tribunal d’appel de l’agriculture,

de l’alimentation et des affaires rurales

1 Stone Road West

Guelph, (Ontario) N1G 4Y2

Tel: (519) 826-3433, Fax: (519) 826-4232

Email:appeals.tribunal@omaf.gov.on.ca

Guelph (Ontario) N1G 4Y2

Tél.: (519) 826-3433, Téléc.: (519) 826-4232

Email: appeals.tribunal@omaf.gov.on.ca

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL:

Nacewicz v Ontario Flue-Cured Tobacco Growers’ Marketing Board

Nacewicz v Ontario Flue-Cured Tobacco Growers’ Marketing Board

2005 ONAFRAAT 32

STATUTE:

Ministry of Agriculture, Food and Rural Affairs Act

HEARING:

December 15, 2005

DATE OF DECISION:

December 23, 2005

2005-32

NEUTRAL CITATION:

2005 ONAFRAAT 32

IN THE MATTER OF THE FARM PRODUCTS MARKETING ACT AND SECTION 16 OF THE MINISTRY OF AGRICULTURE, FOOD AND RURAL AFFAIRS ACT:

AND IN THE MATTER OF:

An Appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by Alexander Nacewicz, Rodney, Ontario from a decision of the Ontario Flue-Cured Tobacco Growers’ Marketing Board to deny his request for an exemption from its regulations so that he could rent out 100% of his 2005 marketing quota.

Before: Rod Stork, Chair; Ron Gelderland, Member; Graeme Hedley, Member

Appearances:

Alexander Nacewicz, appellant

Barry Bresner, counsel to the respondent, the Ontario Flue-Cured Tobacco Growers’ Marketing Board

Jason Lietaer, General Manager, OFCTGMB, witness for the respondent

DECISION OF THE TRIBUNAL

This appeal was heard in Guelph, Ontario on Thursday, December 15, 2005. Mr. Alexander Nacewicz appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal (Tribunal) from a decision of the Ontario Flue-Cured Tobacco Growers’ Marketing Board (OFCTGMB). Mr. Nacewicz sought an exemption from OFCTGMB regulations regarding the rental of marketing quota; the OFCTGMB turned down his request that he be allowed to rent out 100% of his 2005 marketing quota (MQ).

Statutory Context

This appeal comes to the Tribunal by way of Section 16 of the Ministry of Agriculture, Food and Rural Affairs Act. Subsection 16(2) reads as follows:

Idem

16. (2) Subject to subsections (4) and (5), if a person is aggrieved by an order, direction, policy, decision or regulation made under the Farm Products Marketing Act by a local board or under the Milk Act by a marketing board, that person may appeal to the Tribunal by filing with the Tribunal and sending to the local board or marketing board written notice of the appeal. R.S.O. 1990, c. M.16, s. 16 (2).

Subsection 4 outlines conditions under which the Tribunal may refuse to hear an appeal. Subsection 5 requires that appellants first apply to the local board for a hearing, unless both parties waive their right to a hearing.

The OFCTGMB is a local board empowered to make regulations under the Farm Products Marketing Act. The 2005-06 OFCTGMB general regulations provide that:

11. (2) All rentals of marketing quota are prohibited, except for:

(a) such spring and fall rentals as are permitted under Sections 19 and 20 hereof; (b) such rentals between members of an immediate family as are permitted under Section 12 hereof; (c) such rentals between a partnership and a partner thereof as are permitted under Section 13 hereof, provided that the partnership was an allottee of basic production quota and was in existence on or before March 17, 2004; and (d) such rentals between a corporation and a shareholder thereof as are permitted under Section 13 hereof, provided that the corporation was an allottee of basic production quota and that the shareholder was a shareholder of that corporation on or before March 17, 2004.

Section 20 of the regulations allow for tobacco producers who are marketing a crop in 2005-06 to rent out MQ after SE 06 05. Section 19 of the regulations allow for tobacco producers who were eligible to rent out MQ in Fall 2004, to rent out MQ in Spring 2005.

Ontario Regulation 435 under the Farm Products Marketing Act, as amended to Ontario Regulation 115/05, provides that the OFCTGMB may make regulations with respect to tobacco. Section 4, paragraph (h) allows it to exempt producers from its regulations.

4. The Commission delegates to the local board its powers to make regulations with respect to tobacco, … (h) providing for the exemption from any or all of the regulations, orders or directions under the plan of any class, variety or grade of tobacco, or any person or class of persons engaged in the producing or marketing of tobacco or any class, variety or grade of tobacco;

The Evidence

Documentary evidence was filed in advance by both parties. The OFCTGMB also filed its 2005-2006 General Regulations which include a description of its quota system. Tobacco growers hold fixed amounts of basic production quota (BPQ) and are allocated variable amounts of marketing quota (MQ) each year. BPQ may not be rented; up to 30% of a grower’s MQ may be rented each spring, and 20% each fall, with OFCTGMB approval.

Alexander Nacewicz

Mr. Alexander Nacewicz told the Tribunal he had applied to the OFCTGMB on October 6, 2005 for a regulatory exemption so that he could rent out 100% of his 2005 MQ. He said he was initially told he had no MQ and therefore could not have a hearing before the OFCTGMB but that a hearing was held on October 17, 2005, after he had contacted the Tribunal. He said that he requested in writing that one OFCTGMB director not be present at his hearing, due to a past conflict. He did not know if that director participated in his hearing. Mr. Nacewicz said his request was turned down by the OFCTGMB and he received its reasons, dated November 18, 2005, on November 21, 2005. Mr. Nacewicz said the OFCTGMB had not accepted his medical evidence and had indicated he should have contracted with a sharegrower to grow his 2005 crop.

Mr. Nacewicz said he had experienced difficulties with his eyes since he was 11 years old when he was treated for a detached retina. He said he had twice suffered from a detached retina and that it had almost detached on several other occasions. Mr. Nacewicz told the Tribunal he started seeing black spots in late September 2004 but that he continued harvesting his crop until October 2, 2004 when his eyes became much worse. He said he went to the Emergency Department at St. Joseph’s Hospital that evening and saw two doctors the following morning. He explained that he was told surgery was needed and that he underwent surgery on December 7, 2004. Mr. Nacewicz said his doctor told him he had been legally blind in one eye before surgery. He said his eyesight was improved as a result of surgery but that he now required glasses for driving and reading. He said he obtained glasses on May 3, 2005.

Mr. Nacewicz told the Tribunal that growing tobacco was labour intensive and time consuming. He said he normally did most of the work himself and said he had worked up the land in the spring of 2005. He said he did not fumigate the soil as that was not his normal practice as he did not find it to be cost effective although he did use fumigant 5 or 6 years before. He said that he did not want to use fumigant and then subsequently found out that he was not able to rent quota out. However, he felt that he would be able to rent out his 2005 MQ due to his eyesight problems. Mr. Nacewicz explained he did not grow plants in a greenhouse, preferring to purchase trays of seedlings from other growers after they have completed their planting.

Mr. Nacewicz said that his eyesight started to deteriorate again in May 2005 and he was concerned that he would risk further injury if he planted a tobacco crop; and that even if he had planted it, he did not know if he would be able to harvest the crop. He stated he did not see a doctor at that time as he had a follow-up appointment scheduled for June 27, 2005 and he did see his doctor that day. He said he believed he would need more eye surgery and that his next follow-up appointment was scheduled for January 6, 2006. Mr. Nacewicz included an edited letter from his doctor in his written documentation. He explained that he did not want to divulge confidential medical information as it was no one else’s business what precise medical procedure he had undergone. He said he did not want to call any medical professionals as witnesses as he did not want to jeopardize his relationship with his doctor and as the medical community had a general aversion to tobacco.

Mr. Nacewicz said his operation was not suitable for a sharegrower because his kilns and combine were a different type than most others used in the area, his tractor was in disrepair and unsafe and he only had four kilns which were eligible for a quality assurance bonus. He said he grew his crop on his mother’s land and she would be upset by having a sharegrower coming on and off the property. His mother suffered from migraines. He was also concerned about break-ins.

Mr. Nacewicz explained he could not afford to fix his equipment or upgrade his remaining kilns. Mr. Nacewicz said he had never used a sharegrower in thirty years of growing tobacco, but that he had used a sharegrower for soybeans once and was not satisfied with that arrangement.

Mr. Nacewicz said that he rented out part of his MQ in 2003 and 2004 but that he did not grow tobacco in 2002. He feels the OFCTGMB did not treat him fairly regarding QAP funding to convert his kilns to indirect heat. He has 10 kilns and 6 have been retrofitted with heat exchangers. He said 4 kilns qualify for QAP funding but 2 did not get any grant money because an appeal to the OFCTGMB and the Tribunal did not extend the deadline date. He still owes money on the 2 kilns which were denied QAP funding. He said that he has incurred losses since 2002 because the 4 kilns can not be used.

Mr. Nacewiccz stated that the reason he did not want the OFCTGMB director to attend his appeal related to past history over a sale of family owned land by the bank. This had occurred at about the same time as the 2002 issue with the OFCTGMB over QAP funding for the kiln conversions.

Mr. Nacewicz said he understood the need for the OFCTGMB no rental policy and that he supports it but that the OFCTGMB needs to be flexible and allow for exemptions from the policy for medical reasons and weather related situations.

The OFCTGMB had no questions of Mr. Nacewicz.

In response to questions from the Tribunal, Mr. Nacewicz indicated:

• His medical evidence was a letter from his doctor, two eyeglass prescription forms and a hospital admission form. He prepared a memo summarizing the history of his eye illness.
• He held 47,546 lbs of MQ in 2005, which was a combination of his own MQ and MQ held by his mother and his father’s estate.
• He kept a diary on a computer and updated it daily. Times noted on excerpts from his diary were estimates but the dates were correct.
• He had difficulty obtaining a hearing before the OFCTGMB in 2002 as well.
• No crop was grown in 2002 but he grew a tobacco crop in 2003 and 2004 using his own and family MQ.
• He held a driver’s licence but needed glasses to drive; he drove himself to his hearing before the Tribunal.
• He normally planted in late May or early June. He intended to plant in 2005 but decided it was not worth the risk to his health.
• He met the deadline date of June 17, 2005 for a within family transfer of MQ. The OCCTGMB wrote him in August saying his MQ had been cancelled because the inspections carried out in July confirmed that he did not grow a crop. He believed that the MQ was still there as it would not be allocated to other producers until January.
• Fall was the normal time to rent MQ but some growers did rent in the spring.
• The eye he had surgery on was the same eye that twice had a detached retina; the most recent detached retina problem was approximately 10 years earlier. He had medical problems with both eyes.
• He was pretty sure he would need another medical procedure in 2006.

Mr. Nacewicz clarified that his issue with a director of the OFCTGMB related to his attendance at a property sale initiated by the Bank of Montreal as a result of its dispute with Mr. Nacewicz’s parents.

Jason Lietaer

Mr. Jason Lietaer testified that he was the General Manager of the OFCTGMB and had held that position for approximately three years. He said he grew up on a tobacco farm, earned a degree in Management Economics from the University of Guelph and worked in government for five years prior to taking his current position.

Mr. Lietaer said the OFCTGMB had implemented its no rental policy in 1987 in order to discourage speculation in quota, keep quota in the hands of active growers and to keep artificial production costs down. He said the policy had stood the test of time and met its objectives.

Mr. Lietaer said he attends meetings and hearings of the OFCTGMB. He said there were four applications from growers seeking to rent out 100% MQ in 2005. He explained that while the OFCTGMB has accepted these applications in extraordinary circumstances, on principle it discourages quota rental. He said applications are considered on a case by case basis but that the OFCTGMB looked at whether there was a sudden change - such as crop failure caused by hail; and was there intent to grow a crop – greenhouse seeded, soil fumigated and sharegrower contracted. He said the OFCTGMB looked at terms and conditions of sharegrower agreements when assessing the rental policy criteria. With respect to Mr. Nacewicz’s case, Mr. Lietaer said it was unusual for growers not to fumigate land before planting but that it did happen.

Mr. Lietaer said the OFCTGMB had granted one request for 100% MQ rental in 2005, for a tobacco grower who required sudden triple bypass surgery in the planting season. He said he could recall other times where an exemption from the no rental policy had been granted due to a sudden medical condition arising. He said he was not aware of an exemption being granted to someone in a situation similar to that of Mr. Nacewicz.

Regarding the hearing before the OFCTGMB, Mr. Lietaer said the director to whom Mr. Nacewicz had an objection did attend the hearing. He said the OFCTGMB was made aware of the request by Mr. Nacewicz that the director in question not attend the hearing, that the Board considered the request and ruled that the director could sit in on the appeal hearing.

Under cross-examination, Mr. Lietaer stated:

• It took over four months to plant, grow and harvest a crop of tobacco.
• Most of the crop is harvested by October 1^st each year, but in most years a portion of the crop is harvested in October.
• He did not recall if the grower with the heart problem had planted any of his crop in 2005.
• The OFCTGMB did not find Mr. Nacewicz’s situation to be unforeseen and did not think he intended to grow a crop.

In response to questions from the Tribunal Mr. Lietaer indicated:

• There is usually one hail storm per year and that will trigger a request for an exemption to the no rental rule.
• To discourage speculation in quota, the OFCTGMB required growers to grow 70% of their crop on their own land. Exceptions could be made for growers like Mr. Nacewicz who grow on land owned by a family member.
• Tobacco growers were permitted to rent in and rent out quota in the same year.
• The OFCTGMB conducted farm inspections at least once per year; in 2005 it conducted two inspections, including one for carryover tobacco.
• When a grower does not plant a crop, only enough MQ is allocated to allow him to market carryover tobacco.
• He understood there was some confusion when Mr. Nacewicz initially applied for a hearing before the OFCTGMB, but a hearing was held on October 17, 2005.
• There was a quorum for Mr. Nacewicz’s hearing. Board directors are elected – ten from growers in ten districts and one at large.
• There were approximately 700 tobacco growers in Ontario in 2005.

Mr. Lietaer clarified that Mr. Nacewicz had been allocated MQ in 2005 and that the 2005 allocation had been taken away on August 4, 2005 after a farm inspection indicated that no tobacco had been planted. He said that Mr Nacewicz was advised in a letter sent in early August of this decision. He said inspections were authorized under the OFCTGMB regulations. He explained that quota reductions were calculated by staff and taken to the directors of the OFCTGMB who formalized the transactions.

Mr. Lietaer confirmed that the OFCTGMB had not yet allocated any supplemental MQ to growers. He said it could do so after December 8, 2005 but also confirmed that for the last few years supplemental MQ has not been issued until January. He said growers should look for a sharegrower before planting time.

Summations

Mr. Nacewicz told the Tribunal that in his circumstances in 2005, he did not want to, for health reasons, grow a tobacco crop and asked that he be allowed to rent out 47,546 lbs of MQ. He said that he did not want to take a chance on going blind as a result of the labour intensive work involved in planting and growing a crop and noted he had scheduled appointments with his doctor. He said he was prepared to grow a crop and had obtained crop insurance forms, although he did not submit them as he did not plant a crop. He submitted that a sharegrower was not an option for him due to his equipment issues and his mother’s health.

Mr. Nacewicz told the Tribunal that he had never asked for an exemption due to health reasons in the past. He said he did ask for exemptions from the no rental policy in 1994, 1998 and 2002, due to problems with crop insurance and the Bank of Montreal. He said if those requests had been granted he might not be in his current financial situation and might be able to attract a sharegrower. He submitted that it was unfair that he not be allowed to rent out MQ in 2005 when he had a legitimate health concern.

Mr. Bresner submitted that a producer seeking an exemption that is only handed out in extraordinary circumstances bears a burden to prove that his circumstances are extraordinary. He said the OFCTGMB did not dispute that Mr. Nacewicz had longstanding eye problems and underwent surgery on December 7, 2004. He pointed out that the doctor’s letter indicated Mr. Nacewicz did well post-operatively, was seen again on June 27, 2005 and was scheduled to be seen on January 6, 2006. Mr. Bresner acknowledged that Mr. Nacewicz had said he was concerned that field work would aggravate his eye condition, but argued that there was no medical evidence to support this concern and no evidence that he risked going blind if he grew a tobacco crop.

Mr. Bresner told the Tribunal that by the time Mr. Nacewicz submitted his family rental form on June 17, the deadline for making application, and indicated he was going to grow a crop, he should have had his tobacco planted. He said Mr. Nacewicz testified that he waited until his scheduled appointment on June 27, 2005 when he began having difficulties with his sight, so the deterioration in May and June could not have been that bad.

Mr. Bresner said the OFCTGMB does not force growers to take on a sharegrower or a farm manager but that it does expect them to grow a crop. He said if a grower chooses not to use a sharegrower that is his choice but that if he knows he cannot grow a crop and does not take actions to have it grown, he cannot then expect the OFCTGMB to allow him to rent out MQ instead. He submitted that Mr. Nacewicz knew about his eye problems as early as December 2004, when he had surgery. He said Mr. Nacewicz could have planned his affairs differently.

Mr. Bresner referred the Tribunal to a case involving a different tobacco grower who had appeared before the Tribunal and been allowed to rent out MQ in 2004, but not entitled to rent it out in 2005 where the state of his health was foreseeable and he opted not to use a sharegrower. He asked that the appeal be dismissed.

Mr. Nacewicz said his situation was likely different from that grower’s situation. He said he did intend to plant a crop in 2005 but was concerned that he would not be able to pick it four months later due to deterioration in his eyesight. He said that his normal practice was to purchase plants from other growers but that he must wait until plants become available which is usually in early June. He reiterated that he did not have the sort of equipment that would attract a sharegrower and said few growers would take on additional acreage in 2005. He said he was not prepared to risk his eyesight, not just in planting but in the harvesting months that followed it. He told the Tribunal that his testimony was the medical evidence and pointed out he had suffered with eye problems since he was a child.

The Findings

The issue before the Tribunal is:

Should Mr. Nacewicz be granted an exemption from Section 11 of the OFCGTMB general regulations such that he is allowed to rent out 100% of his 2005 MQ, on the basis of a medical problem?

Mr. Nacewicz testified that he had experienced eye problems since the age of 11 years, which included two detached retinas and that he had undergone various medical procedures to address his eye conditions. He testified that his situation worsened in the Fall of 2004 to the point he was legally blind in one eye and he had surgery in December 2004 to correct the problem. Mr. Nacewicz provided a letter dated October 2, 2005, from his doctor which for purposes of confidentiality Mr. Nacewicz had edited. Mr. Nacewicz indicated his eyesight improved immediately after the surgery but by May 2005 his eyesight had begun to deteriorate again. Mr. Nacewicz did not seek immediate attention to his eye problems in May. After his surgery in December, 2004, follow up appointments were scheduled for June 27, 2005 and January 6, 2006.

The Tribunal finds that Mr. Nacewicz was aware of his failing eyesight and had options to deal with it to have his crop grown. He had six months in which to make arrangements and this timeframe is critical. The Tribunal gave weight to Mr. Nacewicz’s testimony of a long history of eye problems. The Tribunal finds there was not a sudden unexpected deterioration in Mr. Nacewicz’s health which prevented him from growing or arranging to grow tobacco in 2005. For this reason, the Tribunal is not granting his request for a regulatory exemption which would allow him to rent out 100% of his 2005 MQ.

Mr. Nacewicz made it very clear that he was not aware that a sharegrower was an option, had no history of using a sharegrower for tobacco, did not have appropriate equipment for a sharegrower and in any event would not take on a sharegrower for his tobacco crop. The Tribunal does not find it credible that Mr. Nacewicz would not know sharegrowing was an option after 30 years in the tobacco industry.

While the Tribunal did hear testimony from Mr. Nacewicz that his reasons for asking for an exemption related in part to some long term issues and injustices, the Tribunal finds this is not relevant. The MQ in question is issued for the 2005 growing year; the exemption sought was due to a medical situation in the 2005 year and the Tribunal did not put any weight on evidence of past difficulties between Mr. Nacewicz and the OFCTGMB.

The Tribunal does note that hearings before it are hearings de novo, which means that it looks at this issue without regard to the previous hearing held by the OFCTGMB in this matter. Any errors or unfairness in process at that hearing are corrected by this Tribunal looking at the matter with fresh eyes.

Decision and Reasons

After careful consideration of the evidence filed and the submissions made the Tribunal orders:

1. The appeal by Alexander Nacewicz for an exemption from OFCTGMB regulations to allow him to rent out 100% of his 2005 MQ is denied.

The reason for this decision is:

Mr. Nacewicz failed to provide solid evidence that his eyesight problems were of an extraordinary nature or sufficiently unforeseen that he could not have grown or arranged to grow tobacco to meet his 2005 marketing quota.