Financial protection for produce sellers

Because fresh produce spoils quickly, sellers cannot recover product from incomplete sales.

Because fresh produce spoils quickly, sellers cannot recover product from incomplete sales.

Growing, harvesting, packing, and marketing fruits and vegetables is risky: costs are high, capital is tied up in farm land, buildings and machinery, and returns are delayed until the product is sold and payment is collected up the supply chain. In the U.S., if a produce buyer goes bankrupt, a grower or seller can rely on the Perishable Agricultural Commodities Act (PACA) Deemed Trust to help them get paid for their sale. However, because there is no such insolvency tool for U.S. growers and sellers to rely on when doing business in Canada, the U.S. has denied growers and sellers in Canada from having preferential access to their PACA dispute resolution programs. This lack of financial protection has serious implications for the viability of Canada's horticultural sector, as it impacts sustainability and the ability to fund innovation in the sector.

CHC's position

Canada's horticultural sector requires the establishment of a limited statutory deemed trust that protects produce growers and sellers during bankruptcy in Canada. Implementation of a trust will significantly reduce supply chain disruptions and the vulnerability of small businesses and of rural communities. It will also improve trade relations with our largest and most important trading partner.

  • The Canadian government should adopt the draft Fresh Fruit and Vegetable Products Protection Act, written by Dr. R.C.C. Cuming, an expert in Canada’s bankruptcy laws.
  • Upon introduction of the legislation, Canada should request restitution of Canadian preferential access to PACA by the U.S. Department of Agriculture.

Current advocacy activities

  • CHC is actively lobbying the Ministers of Agriculture and Agri-Food and Innovation, Science and Economic Development respectively to take immediate action on longstanding industry requests and the proposal presented to, and supported by, the standing Committee on Agriculture and Agri-Food to implement a payment protection program for produce growers in case of buyer bankruptcy.
  • CHC is lobbying the government to negotiate with the U.S. to restore Canada’s privileged access under PACA.

Previous advocacy activities

  • In July 2017, CHC successfully worked with Members of Parliament to raise the issue during Question Period.
  • In June 2017, CHC presented the issue as a non-tariff trade barrier at the Standing Committee on Agriculture & Agri-Food. The Committee subsequently wrote a letter to the Minister of Agriculture and unanimously asked him to look into the file.
  • In November 2016, CHC and the Canadian Produce Marketing Association lobbied the Minister of Agriculture and other notable MPs on financial protection during the two organizations’ annual Fall Harvest event.

For more information, please contact Jennifer Babcock, Policy Research and Development Manager at jbabcock@hortcouncil.ca.

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