—story by by Kate Prengaman
—photos by by TJ Mullinax
Editor’s note: In the weeks since this article was written, the dissolution of the BC Tree Fruits Cooperative moved ahead. The cooperative filed for creditor protection in early August, and court filings show that it owed $65 million to various creditors, including $50 million to the Canadian Imperial Bank of Commerce and tens of thousands, each, to many of its 200 or so growers. The cooperative’s warehouse assets, including packing lines, box fillers and bagging stations, were auctioned off in early September.
The provincial government announced several programs to aid growers impacted by the cooperative’s sudden closure. Those include a $4 million bridge financing program to help co-op growers who are owed returns from last year’s harvest continue operating while the court process continues. This will be facilitated by the Investment Agriculture Foundation of BC, which will assume the growers’ position as a creditor while the court process moves forward and eventually recoup the funds owed to growers, according to a news release.
The province also gave the BC Fruit Growers’ Association $100,000 to support emergency development of food safety certifications for growers, and it expanded the AgriStability crop insurance program with extended enrollment deadlines, higher compensation rates and a raised payment limit.
The Ministry of Agriculture and Food also reported in mid-September that 120 of the cooperatives’ 179 apple-growing members had been connected to other packing houses, and 73,000 bins of apples have shipped to warehouses.
Weeks before apple harvest began, British Columbia’s largest packer announced a sudden shutdown, sending growers scrambling.
“There’s 200-plus farm families still belonging to the co-op that now have to find new homes for their fruit,” Melissa Tesche, general manager of the BC Fruit Growers’ Association, which advocates for the industry, said in early August. “Panic is a fair word for what I am hearing on the phone.”
In a letter sent to growers in late July, BC Tree Fruits Cooperative announced its immediate closure, shuttering its cherry line while the last of the crop still hung on the trees and telling its apple growers it wanted “to provide you with as much time as possible to find a home for your crop.”
The abrupt end for the cooperative was either the inevitable result of years of struggles with low returns and dissension among the grower community looking for the best path forward, or an unethical breach of cooperative governance, depending on whom you ask.
“It’s a train wreck that I could see coming 10 years ago,” said Steve Brown, a grower and former board member. “Returns to 75 percent of the membership are way below the cost of production.”
Economic desperation and distrust drove many board and management turnovers, including a restructuring of the co-op’s governance in 2020, but it all came to a head this summer when it was time for growers to submit their crop estimates to the cooperative. While the co-op’s volume has been steadily declining — as some growers looked to private packers for better returns or got out of the business entirely — this year there was an unexpected loss of about half the crop.
Some of the cooperative’s growers withheld their estimates, believing that to be a negotiating tactic to force a conversation on restructuring, said Amarjit Lalli, another grower and former board member.
“The ruling body lost the confidence of the membership and didn’t do anything to recapture it,” he said.
But instead of opening the door to change, the short estimate forced a decision to shut the doors, permanently. That includes a new and hotly debated $50 million apple line that was just finished in time to be shuttered.
“Now there is massive debt looming over the co-op, and the tonnage is declining, and it became clear really fast this is the end of it,” Brown said.
Sam DiMaria, another grower and former board member, also weighed in for Good Fruit Grower.
“There was no hope in hell to generate enough money to pay off the co-op overhead and operating expenses and have anything left for the growers,” he said. “The growers who decided not to submit their estimates, I can only assume they had other ideas for who would take their fruit, but I’m worried for the other 50 percent of growers that were loyal to the co-op and got left in the lurch.”
BC Tree Fruits packed most of the province’s apples, which cover some 2,925 acres as of 2023, down from 3,500 acres five years ago. Nine other private packers operate in the region, according to a web page the government posted to connect cooperative growers with other packers.
But it’s not as simple as just finding another packer, said Tesche of the growers’ association. The cooperative held a collective food safety certification for its growers and owns all of the infrastructure needed to manage harvest.
“Growers don’t have bins or ways to move bins or places to store them,” she said.
Brown and DiMaria said they had found homes for their fruit as of Good Fruit Grower’s press deadline, and Lalli was still in negotiations.
“The private packers can cherry-pick now,” Brown said. “There may be a home somewhere for 50 percent of the crop, but the lower-quality fruit and unwanted varieties will be out of luck and there will be growers that go bankrupt, unfortunately.”
The fact that the co-op had continued to accept so much fruit that didn’t command decent returns was part of the problem, Lalli said.
“We’ve been losing millions a year. Why are we holding on to varieties you can’t sell?” he said. “Had there been a plan by BC Tree Fruits to right-size the operation, we could have made it work so everyone got a decent return.”
In fact, Lalli still feels there’s hope to resurrect and right-size the co-op.
“The importance of the co-op was that it was a stabilizing force in the market. It’s important it rise out of the ashes,” he said. “We’ve got legal working on it.”
In hindsight, DiMaria said, the cooperative structure made it difficult to make the hard decisions necessary to survive tough economic conditions.
“The co-op was incapable of changing fast enough to come up with a business model that was sustainable in our day and age,” he said. “It’s devastating, but the economics of growing apples here in the Okanagan Valley have not made sense in a long time, and it burst.”
Brown agreed, saying that one more management change likely could not have righted the ship, when there had been so much leadership change over the past 10 years — to no avail.
“Firing the CEO, letting go of many in management, and changing the board has been tried at least five times, but it’s interesting how the packing house was still not saved,” he said. “The definition of insanity is to continue to do the same things again and again, while expecting different results.”
The process of winding down the co-op is expected to take considerable time, Tesche said. Meanwhile, the growers’ association is working to see if insurance programs will cover losses due to market collapse for growers who can’t find a new home for their fruit.
“It’s not a standard covered peril. The cooperative has been there for 88 years,” she said.
Growers will also face cashflow issues, as their assets are tied up in the cooperative.
“We’re advocating for a stay of default on agriculture cashflow loans to let this play out,” she said. “It will reshape the industry, and yes, the industry needs to evolve, but how do we ease that pain of transition and help those growers who are ready to exit the industry do that with dignity and prevent personal bankruptcies?” •
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