Apple Packinghouse
UPDATE November 23, 2022
The BC Tree Fruits board of directors narrowly survived a non-confidence vote by its members, but critics say the close vote was a warning to directors to listen to its membership.
Parm Saini, a grower from West Kelowna, has been leading a grassroots rebellion over a recent decision to shutter a Lake Country packinghouse, and move all operations to Oliver.
Saini says a clear majority of growers voted to remove the board.
“When it comes to the vote to remove all of the board of directors all at once, we weren’t successful,” Saini told reporters outside the Special General Meeting venue in Peachland. “It was high. It was 59 per cent.”
While the board’s critics may have achieved a majority, they did not get enough votes to remove the board.
Under the bylaws of the BCTF Cooperative, a resolution to remove the board of directors requires a two-thirds majority of voting members. There are more than 200 members of the Cooperative, and an estimated three-quarters of the membership showed up to vote at the SGM.
Still, the board’s critics say the majority vote is a clear warning to the directors that members must be consulted before major decisions like the restructuring of the co-op’s packinghouse operations.
“The board (is) going to have to sit and talk and discuss and maybe possibly rethink the process that they’ve gone through,” said orchardist Surinder Gosal. “Clearly the growers are upset.”
Saini has made it clear that he and the many other growers he has helped represent in the battle over the packinghouse decision want to see more consultation from the board, and that members’ opinions should be taken into account.
“We want transparency, we have lost confidence in the CEO and the board of directors, said West Kelowna farmer Parm Saini. “We want them to show the growers the financials, we feel they have dropped the ball on where the membership is on this issue.”
But BCTF’s president Warren Sarafinchan struck a defiant note, saying that despite the opposition, he believes the management and board made the best decision possible for the membership, given the current financial situation.
In an earlier interview with Orchard & Vine, Sarafinchan said the plan to build a new plant in Kelowna had to be cancelled due to rising interest rates, high construction costs, and inflation.
At the SGM, Sarafinchan reiterated that position.
“This was a difficult decision but one that we do believe that is in the best interest of all of our members,” Sarafinchan adds. “We are committed to the Oliver facility. Our business is not at the point where we can continue to operate two packinghouses.”
While the board survived the non-confidence vote, the packinghouse issue is far from over.
Growers who oppose the board want to keep the Lake Country packinghouse open and spend a smaller amount of money to upgrade the equipment.
They will have another chance to express that opinion, and an opportunity to topple the Cooperative’s board of directors, at the upcoming Annual General Meeting on Dec. 12.
The decision to cancel construction of a new packinghouse in Kelowna has led to a bitter internal battle within the BC Tree Fruits Cooperative.
Dozens of growers have forced the BCTF to call a Special General Meeting (SGM) on Nov. 22, with the intent of removing the current Board of Directors.
“We want transparency, we have lost confidence in the CEO and the board of directors, said West Kelowna farmer Parm Saini. “We want them to show the growers the financials, we feel they have dropped the ball on where the membership is on this issue.”
Saini, who recently moved back to West Kelowna to help his mother with the family farm, has become a spokesman for what he says are more than 90 farmers who oppose moving packinghouse operations to Oliver.
As a result, the board and the CEO of BCTF, Warren Sarafinchan, will now be fighting to keep their jobs as they face growers during the SGM in the Peachland Community Hall.
In a letter to its members on Nov. 10, the BCTF board and management defended the decision to cancel construction of a planned packinghouse in Kelowna, and to consolidate its operations in an existing packinghouse in Oliver.
“The decisions to close Winfield packing and renovate Oliver rather than build new in Kelowna were made after detailed analysis of the Cooperative’s costs, volumes, and existing facilities,” the letter said. “The change to a renovation in Oliver instead of a new Kelowna build was due to a sharp rise in construction costs and interest rates which would have increased risk for the Cooperative. Both decisions were made to improve grower returns as quickly as possible while managing Cooperative debt levels.”
The board also pointed to what it called the “economic realities” of the current situation, saying Okanagan farmers face increased competition, high overheads, a rise in interest rates and labour costs, declining crop volumes, much higher construction costs, and aging facilities.
The BCTF had originally planned to build a new packinghouse in Kelowna, but CEO Warren Sarafinchan told Orchard and Vine that the plan was cancelled primarily due to the issue with rising interest rates and increased construction costs.
“The situation changed, so the plan had to change,” Sarafinchan summed up. “Construction costs are increasing by, in some cases, 20 and 30 per cent in the last couple of years. When you factor in increases in construction costs, increases in interest rates, and then there’s also a level of urgency to get our returns to a more sustainable level for our growers.
Parm Saini
Parm Saini has been calling on the board to keep the Lake Country packinghouse open.
“The difference is, we could have this project completed in Oliver for the 2024 crop, and in fact, the first phase will take place for the 2023 crop. So, we can start to increase grower returns and see benefits from this project as early as next year.”
But Saini says the group of growers he represents tried and failed to get detailed financial analysis of the project, and they simply don’t believe the board made the right decision for growers.
Saini has been calling on the board to keep the Lake Country packinghouse open, and to spend a smaller amount of money updating the equipment in both the Lake Country and Oliver packinghouses.
“I’ve been in the industry for a long time,” said Saini. Experts will tell you it’s not the building that saves you money; it’s the equipment, it’s the tools, it’s the manpower.
“So, we’re not asking them to build a new building, because we believe we can use the Lake Country facility as is. If you put a bit of money into it, if you can optimize the current equipment, we can run the facility and we (growers) can continue shipping our apples there.”
The BCTF, however, says the current building is too old and requires high operational overhead costs, so it has proposed putting funds into a major renovation of the Oliver packinghouse.
That has enraged apple growers like Saini, who says the vast majority of apples are grown in the Central and North Okanagan.
“The soft fruits, like the peaches and nectarines, are primarily grown down south, while cherries are grown all over the Okanagan, but with apples, it’s more than 90 per cent that are grown in the north and central Okanagan,” Saini said.
“So, why would you want to haul apples, which have a tendency to bruise with each additional touch, all the way down to Oliver? It doesn’t make sense.”
While Sarafinchan has said BCTF has shipped apples to Oliver many times without any damage, Saini and others insist the longer transit increases risk from bruising or freezing, and also makes it difficult for growers to travel to the packinghouse to see their fruit is graded and packed correctly.
But perhaps the most contentious issue between the BCTF critics and the board is the feeling by some members that the cooperative has not been transparent with the financial modelling behind its decisions.
“I’m just saying that, in our opinion, the transparency is not there,” said Saini. “We’re being told, we’re spending $85 million of your money and with no promises, and we don’t believe that the proper due diligence was done. We can’t believe the numbers or the information that’s been given to us so far. It’s been very vague and very high level.
“We can’t trust any of that because we’ve done our own due diligence and we’ve asked the questions, but in a very lengthy three hour information session, Warren could not answer one of the questions to our satisfaction. And when he did answer the questions, it’s like he seemed to contradict everything that’s now in writing.”
Saini also says he and other growers tried to get the full financial analysis that led to the board’s decision.
“In the (Cooperative Association Act) there’s a section about the examination of records, so we’re allowed to go in and look at the records,” he said. “But what happened was, when we went in there some of these records had been removed. Not all of them, but it just seemed (the records) were not complete.”
Sarafinchan has said in the past that some aspects of the decision-making process were in fact kept private for some time, such as anything that would impact on the privacy rights of BCTF employees.
Typically, boards can sometimes hold meetings privately - known as in camera meetings - when delivering matters associated to labour issues, legal issues, or land purchases.
And while some members clearly want a change at the board and management level, Sarafinchan argued this week that the cooperative risks losing all the progress it has made in recent years.
“I think it’s important for members to recognize that changing the path that we’re on will slow down the progress that the cooperative has made and that’s going to slow the improvement in returns that they need,” he said. “Over the past two years, the cooperative has changed the momentum of the business and we’re now moving in the right direction. It’s important for members to recognize the increases in returns that have been delivered, the fact the debt has moved down to something that is very manageable.
Editor's Note: This article will be updated once the Special General Meeting and vote takes place.