Energy, Infrastructure Costs Drive Ontario Greenhouse Producers to the U.S.

By: 
Matt Dodge

While Ontario’s greenhouse vegetable market continues to grow, the promise of lower energy rates and better infrastructure and are driving a few of the province’s producers to invest in opportunities south of the border.

Ontario currently houses two-thirds of Canada’s professional greenhouse production space and the province is not on the ropes by any means, but word of Canadian producers setting up shop in the United States points to some larger issues within the domestic market.

Greenhouse vegetable producers from the province have been lured as far as Ohio, Michigan and Virginia by energy costs that are half what they’re paying in Canada, and sometimes significantly less. While rates in Ontario might run as high as 14.5 cents per kilowatt-hour, states like Ohio can offer electricity at one-tenth of the cost according to industry groups like Ontario Greenhouse Vegetable Growers (OGVG).

The Ontario Federation of Agriculture (OFA), an organization representing 37,000 farms across Ontario, says that the government has got to take action on expanding the province’s natural gas footprint, and soon. “We’ve got to get moving. One summer of construction has passed us by and we cannot afford to lose another summer of action,” says Don McCabe, OFA president. 

It’s not just the cost of energy that is driving growers to find new projects outside the province; there are also worries over energy infrastructure as electrical substations and natural gas lines approach capacity.

Ontario’s greenhouse vegetable industry boasts 2,700 acres of space, two decades of growth and a 6% cumulative annual growth rate, but industry experts say that such growth won’t be sustainable unless infrastructure and energy needs can keep pace. 

There have been efforts to that effect, with one program considered by lawmakers that would have mandated that electricity rates stay comparable to neighboring regions, but it did not make the cut when the provincial budget was passed last spring. OFA came out against the decision, saying that it failed to address rising energy costs for farmers across the province and the need for expanded natural gas lines to rural Ontario. 

There have been some government efforts to address the high cost of electricity for Ontario farmers. The Independent Electricity System Operator (IESO), which controls the provinces power grid, offers a program supporting the use of gas-fired electricity generating facilities that use combined heat and power technology.

In June, 2015, 13 agriculture and energy operators were chosen to participate in the combined heat and power standard offer program (CHPSOP), including Cervini Farms and Brunato Farms. Of the 39 applicants to the CHPSOP program, 28 were from the agricultural sector.

Detractors say that the CHPSOP does not hold the same potential for all users, and while discussion is underway on how to make it more inclusive, some feel that it is not as effective for greenhouse vegetables producers as it might be for other types of users. 

Despite falling oil prices and their dramatic effect on world energy markets, Canadian greenhouse vegetable producers still rely on natural gas for a majority of their heating needs. These lines take time to build and can leave rural customers waiting for years. In the meantime, some are turning to alternative energy solutions such as biomass, methane-capture, wind, solar and even diffuse glass that allows natural sunlight to be more evenly distributed throughout a greenhouse.