Tree fruit growers in Kelowna are getting worried as the leaves begin to change colour and harvest encroaches, as there is no plan in place for the storage of millions of pounds of apples, and BC Tree Fruits facilities remain closed and empty.
On July 26, more than 300 fruit farms from around the Okanagan woke up to the news that the BC Tree Fruits Cooperative would no longer be accepting any produce and had filed for creditor protection. In Canada, the Companies' Creditors Arrangement Act states that corporations can apply to be granted a grace period to restructure its business and financial affairs, while remaining in operation, without having to repay loans. The Act is intended to prevent the consequences of bankruptcy from impacting the economy and society.
BC Tree Fruits has approximately $50 million worth of debt and was asked for repayment by the Canadian Imperial Bank of Commerce (CIBC) by August 26.
However, Amarjit Singh Lalli, a fruit farmer, former board member with BC Tree Fruits (2016-2022), and a member of the BC Fruit Growers Association said that the Fruit Coop has, or at least had, assets of approximately $109 million the last he, and the other growers had inquired.
When announcing the closure, BC Tree Fruits said in a statement that the decision was made after challenging growing conditions, low fruit estimates and "difficult market and financial conditions"
"The cooperative will not be able to effectively operate the business moving forward," read the statement.
The court accepted the cooperative's application on August 19, and granted a stay of proceedings, essentially preventing creditors from collecting debt while the BC Tree Fruit makes changes and loan-repayment plans.
At the 'come back hearing' – to be held in Vancouver on August 23 – all creditors and stakeholders will have an opportunity to challenge the initial order and to seek other relief from the court.
"We need answers and accountability for the actions of the board," said Lalli during an interview on his apple farm in Kelowna.
"A large portion of the Growers Membership wants BC Tree Fruits to re-open."
For nearly nine decades, fruit farmers across the Okanagan would harvest their produce and transport the yield to a co-op location. There, farmers were invited to watch as their fruit was sorted, processed, and stored before being sold. One of the reasons many farmers chose to work with the cooperative was the storage facilities and bargaining power it provided, particularly to small farms with slim financial margins, said Jennifer Deol of There and Back Again Farms in Kelowna.
At BC Tree Fruits, produce could be stored nearly indefinitely in a low-oxygen controlled atmosphere and cold storage facilities. The specialized and expensive fruit storage facilities afforded the cooperative the ability to sell to grocery stores and buyers around the world at any time of the year without worrying about the biological pressure of fast-decaying produce.
After being harvested, some types of fruit have to be stored, sold or consumed within days or it will spoil. Lalli said the lack of appropriate storage is the most pressing issue currently facing the farmers who relied on BCTF.
"We know that BC Tree Fruits is not going to be able to pack our fruit this year. But, we as owners want access to our controlled atmosphere rooms, we want access to our regular storage and we want access to our bins."
While there are private packers operating in the Okanagan, Lalli said the availability of controlled atmosphere and cold storage space is extremely limited.
"These private packers have fruit of their own."
Lalli said that without immediate access to proper storage facilities, the fruit will begin to rot within hours to days of being harvested.
To prevent rotten fruit, farmers may be tempted to enter into hasty agreements, selling their produce "fast as possible" to the first bidder, so that the apples are off the farm and generate some income.
However, dumping apples on buyers for a low price can "flood" the market, causing the price of apples to plummet.
Lalli said some farmers may choose to take a complete loss this year.
If storage facilities are full and market prices are low, some farmers will choose to abandon their apples and not pay to have the fruit harvested or transported to processing facilities.
"If there is nowhere to take the fruit, then most likely [farmers] will just let the fruit hang on the trees and rot."
Lalli also said that there is fear among the growers that the assets and facilities owned by BC Tree Fruits will be sold. He fears the loss of the co-op may also mark the loss of small-scale family-owned farms in the Okanagan as already many of his fellow growers have received buy-out offers from processing facilities that know the small farms are struggling.
