The Hon. the Speaker pro tempore: Honourable senators, when shall this bill be read the third time?

(On motion of Senator Housakos, bill referred to the Standing Senate Committee on Banking, Commerce and the Economy.)

On the Order:

Resuming debate on the motion of the Honourable Senator Moncion, seconded by the Honourable Senator Sorensen, for the third reading of Bill S-252, An Act respecting Jury Duty Appreciation Week.

Hon. Senators: Agreed.

(Motion agreed to.)

(At 5:19 p.m., the Senate was continued until Tuesday, May 21, 2024, at 2 p.m.)

The Hon. the Speaker pro tempore: Is it your pleasure, honourable senators, to adopt the motion?

Hon. Yuen Pau Woo: Will Senator Cotter take another question?

Hon. Paula Simons: I do. Senator Cotter, would you accept a question?

The Hon. the Speaker: Senator Simons, do you have a question?

Hon. Brent Cotter: Honourable senators, I rise to speak as the critic on Bill C-280, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust — perishable fruits and vegetables).

I realize I have as much as 45 minutes today. I want to tell you that my speech is 21 pages long. I could call out the pages as I go, if you like.

I want to start on page 0. When I came to the Senate, I confess that I was surprised that I had, almost by accident and by experience in my career, bumped into many of the issues that we are addressing here, and I used to sit over in that corner in the nosebleed seats. I was there with former senator Judith Keating. We would compare notes on, remarkably, the kinds of things that we knew and perhaps didn’t even know that we knew.

One of the things I learned from former Senator Keating during those conversations was why she had asked Senator Percy Mockler to be her sponsor. I am sorry that he is not here at the moment. Some of you who are new to the Senate may know that former Senator Keating unfortunately passed away after only serving here for a couple of years. The temerity of the question was on my part, to ask her why she had asked Senator Percy Mockler to be her sponsor. She told me the reason was that, although she may not have agreed with everything that Senator Mockler stood for, she wanted to be a senator just like Percy Mockler.

Some Hon. Senators: Hear, hear.

Hon. Senators: Hear, hear.

Hon. Robert Black: Honourable senators, I stand before you today to support the long-term viability of the Canadian produce industry and an issue that directly affects the heart of our nation — our farmers and producers.

I’m proud to rise and speak to Bill C-280, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust — perishable fruits and vegetables).

This critical piece of legislation holds one of the keys to supporting Canada’s agricultural sector as it works tirelessly to feed not only our nation but also the world.

As an “agvocate,” I’m happy to see such a bill come to us — one that addresses discrepancies that have long left important members of Canada’s agricultural sector financially disproportionate.

At the outset, I would like to state that this is a finance bill. It is about bankruptcy protection. I want to assure my colleagues that I am not an expert on the Bankruptcy and Insolvency Act. However, I rise to speak to the need for this protection for the agriculture industry and this sector.

At the core of this bill lies the protection of perishable fruits and vegetables, which includes fresh and time-sensitive produce that can spoil quickly.

The bill proposes the creation of a deemed trust that ensures farmers and producers are given priority over the proceeds from the perishable goods they supply to buyers or creditors in the supply chain when buyers become insolvent or bankrupt. This essential safeguard proposes to protect our farmers’ interests during times of financial instability.

As we all know, supply chains are the intricate web that connects farmers and producers to consumers. In a vast country like ours, these supply chains play a vital role in sustaining our economy and ensuring the seamless flow of goods from farms to markets and, eventually, to our tables.

Agriculture, being a cornerstone of this network, not only caters to our domestic needs but also upholds our international obligations in the global food market.

The importance of a robust agricultural sector to our nation’s food security cannot be overstated. In the context of an increasingly interconnected world, disruptions in the supply chain can have far-reaching consequences.

The collapse of a single link in this chain, caused by a buyer’s or a creditor’s financial troubles, can have severe repercussions. It can lead to financial distress for our farmers, destabilize the market, cause our farmers to bear the burden of others’ bankruptcies without protection and compromise food security, not just within our borders but also for those who rely on our agricultural exports around the world.

Bill C-280 serves as a lifeline for farmers facing financial constraints, which are only amplified by the unpredictable nature of their profession. Our dedicated farmers contend with unpredictable weather patterns, rising production costs and stiff international competition. Amidst these challenges, the COVID-19 pandemic brought forth additional hurdles, like reduced demand, supply chain disruptions and labour shortages.

Supporting this bill is a recognition of their resilience and an affirmation of our commitment to easing their burden during difficult times.

As my honourable colleague sponsoring the bill in the other place noted, the worsening recession, inflationary pressures, increased prices, tax amendments and the lingering impacts of the COVID-19 pandemic have only increased the vulnerability of the produce sector.

This is underlined by the lack of critical financial protections available to Canadian produce growers for the losses they suffer as a result of an insolvent buyer.

While the existing mechanisms within the Bankruptcy and Insolvency Act may be suitable for the wider agriculture industry and other sectors, they do not provide a workable mechanism for when a fresh produce buyer becomes insolvent.

I was delighted to see, after years of requesting this protection, the bipartisan support this bill has garnered in the other place. In a political landscape often marked by division, it is a testament to the understanding that the welfare of our farmers and the security of our food supply transcend politics.

This underscores our collective responsibility as lawmakers to address critical issues that impact the livelihoods of those who put food on our tables three times a day, each and every day.

It is important to emphasize that the passage of Bill C-280 comes at no cost to the Canadian people. Supporting our farmers through this bill is an investment in the sustainability and resilience of our agricultural sector.

Ensuring that perishable goods are protected by a deemed trust is not an impediment to creditors or buyers; instead, it is an assurance that our farmers’ hard work and dedication will not go to waste — pun intended.

Might I add, colleagues, that the sponsor in the other place also noted that:

The financial protection established by Bill C-280 would reduce losses in the sector and lead to increased economic activity in Canada of $200 million to $235 million per year, increased value added in the Canadian economy of $104 million to $122 million per year, increased employment by more than 1,200 full-time jobs, and increased wages for Canadian workers by $59 million to $69 million per year.

What I take from this economic analysis, colleagues, is that Canadians have nothing to lose from this bill and much to gain.

In fact, the sponsor further noted that this bill would in fact save Canadian families and consumers anywhere between 5% and 15%, which could possibly save Canadian families between $300 million and $900 million on their annual fresh fruit and vegetable purchases.

This is good news during this time of rising food costs for all Canadians.

Agriculture is not just an industry; it is a way of life deeply ingrained in the fabric of our nation. The legacy of our farming families spans generations, with the passing down of knowledge and expertise from one era to the next.

By supporting this bill, we are protecting and nurturing this heritage, ensuring that future generations are inspired to carry forward the torch of farming excellence and not the possibility of losses due to others’ insolvency issues.

In conclusion, let us take this moment to demonstrate our unwavering support for Canada’s farmers and producers. The quick passing of Bill C-280 represents an opportunity to show the world that we stand united in our commitment to those who feed our nation and contribute to global food security.

Protecting perishable fruits and vegetables through a deemed trust not only is a practical measure to secure our supply chains and food security but also shows appreciation and support for our farmers’ invaluable contributions.

Supporting Bill C-280 will send a resounding message that here, in this chamber of sober second thought, and in Canada, we again recognize the critical importance of supporting our farmers, our producers and our processors. Their hard work, dedication and sacrifices deserve nothing less. By doing so, we strengthen the foundation of our agricultural sector and sow the seeds of prosperity for Canada’s future.

Thank you, colleagues, for your attention. I urge you to join me in supporting Bill C-280 for the greater good of our farmers, our food security and for Canada!

Thank you. Meegwetch.

(On motion of Senator Clement, debate adjourned.)

On the Order:

Resuming debate on the motion of the Honourable Senator Gerba, seconded by the Honourable Senator Klyne, for the second reading of Bill C-282, An Act to amend the Department of Foreign Affairs, Trade and Development Act (supply management).

Hon. Yuen Pau Woo: Would the Honourable Senator MacDonald take a question?

Senator MacDonald: Certainly.

Hon. Michael L. MacDonald moved second reading of Bill C-280, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust — perishable fruits and vegetables).

He said: Honourable senators, I am pleased to speak today as the Senate sponsor of Bill C-280, the financial protection for fresh fruit and vegetable farmers act. The bill before us, an initiative of the member of Parliament for York—Simcoe, Scot Davidson, arrives with near-unanimous support at third reading in the other place, passing by a margin of 315 to 1.

Colleagues, it’s easy to take for granted our accessibility to food and proper nourishment. Most of us will simply visit our local supermarket weekly, fill our cart with our usual necessities and stock our refrigerators and pantries at home. We forget just how much we actually rely upon the producers of this food: the farmers. We rely upon them three times a day, every day.

Our farmers have always played an essential role in this country. In many ways, they are a cornerstone industry. They are an indispensable workforce. They feed our families and communities — rural and urban, big and small.

However, despite their essential role in supplying our families and communities with nutritious produce, fruit and vegetable farmers, in particular, are financially vulnerable due to the nature of their product. That is the issue Bill C-280 proposes to address.

Our current bankruptcy laws do not provide adequate financial protection for Canadian fresh fruit and vegetable farmers. Unlike other sectors, fruit and vegetable producers are particularly vulnerable because the provisions of the Bankruptcy and Insolvency Act and related legislation do not account for the unique nature and characteristics of the sector; in particular, it does not account for the fact that their product is quickly perishable.

In circumstances where a buyer of produce unexpectedly becomes insolvent and is unable to or fails to pay the suppliers, these farmers will most likely incur that loss without the ability to recuperate payment or their product. Currently, under existing laws, it is near impossible for our farmers to recoup the economic value associated with the product delivered. By the time insolvency proceedings have concluded, the produce in question has long since perished and can no longer be repossessed and resold.

Adding to the vulnerability of fruit and vegetable farmers, the sector has a lengthy typical payment term whereby it can take upwards of 30 days or more after the product is delivered to buyers before the supplier receives payment. In an industry that already has a small margin on returns, this leaves our fruit and vegetable farmers particularly vulnerable to buyer insolvency, an occurrence that is unfortunately fairly common — more common than we realize.

For the most part, the sector consists of small- and medium-sized growers, many of which are family farms. Lacking the financial protections needed, the farmers are often unable to reinvest into their business in a sufficient manner, severely limiting the potential growth of the sector.

Another challenge facing our growers is the loss of protection under the U.S.’s Perishable Agricultural Commodities Act, or PACA, which provided preferential treatment and protection for Canadian companies that sell products to the United States. This protection was revoked for Canadian companies in 2014 due to a lack of reciprocal mechanisms in place in Canada, further exposing our fruit and vegetable farmers to increased financial risk.

Bill C-280 offers the financial protections this sector needs.

The legislation proposes establishing a limited deemed trust for produce sellers, which would give them priority access to the proceeds of sale, limited to only the inventory, accounts receivable and cash on hand derived from the sale of produce during the bankruptcy proceedings of an insolvent buyer.

By establishing a limited deemed trust and providing priority access, Bill C-280 ensures that Canada’s bankruptcy laws recognize the unique challenges and demands of our fruit and vegetable farmers, and provides them with the financial protections warranted for the especially perishable nature of fresh produce and the lengthy typical payment term that currently exists in the industry.

As I stated, colleagues, Bill C-280 received pan-partisan support in the other place, passing nearly unanimously by a margin of 315 to 1. This is truly a non-partisan issue.

This is about providing this essential sector with the protections it needs by recognizing the unique nature of the industry and the current deficiencies of our bankruptcy laws. This is about ensuring the viability and growth of this sector and the Canadian farming business.

It is important to note as well that this legislation comes with no cost to the government or to the taxpayer. The government would not be required to carry any financial liability or backstop any losses.

Bill C-280 also has support from across the industry as well. In fact, they’ve been advocating for these provisions for years.

During consideration of this bill, the House of Commons Agriculture and Agri-Food Committee heard from stakeholders from across the industry.

Keith Currie, President of the Canadian Federation of Agriculture, offered the following:

While this bill would provide the much-needed financial support to our fresh fruit and vegetable sector, which supports nearly 250,000 jobs in this country, it is about much more than that. Bill C-280 is about preserving the fibre of local and rural farming communities, maintaining the integrity of our food supply chains and supporting Canada’s domestic food security.

He continued:

. . . risk management is a big part of what we do. From the moment that seed goes in the ground or that calf is born, there is a risk that I won’t see a crop at the end of the day or see that calf mature into a milker or head to market. However, unlike cash crop, livestock or supply-managed producers in Canada, fresh fruit and vegetable producers carry additional risks and costs that are unique to the production of perishable goods.

Mr. Currie outlined that the government has protections in place for other sectors, including, for example, the Canadian Grain Commission holding roughly $1 billion of financial security from individual licence holders to pay grain sellers in case a grain buyer becomes insolvent. But no such financial security exists for the fruit and vegetable sector.

Offering the Canadian Federation of Agriculture’s support to the legislation, Mr. Currie stated that Bill C-280 is “. . . a tailored solution to a clear gap in our risk management tool kit for Canadian producers.”

The Fruit and Vegetable Growers of Canada, or FVGC, is also adamant in their support for the bill, and hopeful for its swift adoption. At the Agriculture and Agri-Food Committee, the association stated:

This legislation offers a framework that bolsters the stability of our industry and promotes fairness in business practices, ensuring the viability and growth of our sector for years to come.

FVGC sees this bill as a game-changer, providing our members with much-needed protections and possibly leading to greater market opportunities. . . .

A more robust and secure Canadian produce industry, backed by these protective measures, would help to address the growing concerns of Canadian food security and food sovereignty.

The association also explained why the finer details of the legislation are significant:

A key aspect of this legislation is that, once the proceeds from the sale of fresh produce are deemed to be held in trust for the supplier, they are not included in the company’s property. This is significant, because it means these assets would be protected, and it does not take away from other creditors’ ability to access their claims . . . .

Additionally, the definitions included in the legislation consider the realities of our industry. Acknowledging that the fruits and vegetables might be repackaged or transformed, and yet remain the beneficial property of the supplier, is an important detail.

Colleagues, this legislation will also potentially pave the way for reinstating the Perishable Agricultural Commodities Act, or PACA, protection in the U.S. for Canadian growers. As I had mentioned, PACA was revoked for Canadian growers nearly 10 years ago because of a lack of reciprocity in Canada. The reinstatement of protections under PACA for Canadian exporters would be welcomed enthusiastically by our growers, ensuring preferential treatment and a dispute resolution mechanism that had been crucial for Canadian companies that sell to the United States.

Patrice Bourgoin, General Manager of the Quebec Produce Growers Association, echoed this sentiment at committee, stating that Bill C-280 reflects the tried-and-true model in the United States, and that implementing this legislation would, indeed, pave the way for Canadian reinstatement under U.S. regulations.

The Quebec Produce Growers Association also explained how important it is to provide protection and stability to the supply chain by stating:

If one of the links has not received payment, it affects the entire system, right down to the family farm. . . .

Colleagues, Bill C-280 offers a solution by way of a safety net that the industry not only wants but needs.

Again, there is no burden to the government; there is no burden to the taxpayer.

This legislation would create a more predictable and stable market by providing the financial assurances our farmers deserve — financial assurances that will allow our farmers the opportunity to reinvest in their business, and that will ultimately result in a reduction of costs to Canadians, saving consumers an estimated 5% to 15% on their annual fresh fruit and vegetable purchases.

This bill is a game-changer for this sector, colleagues. I ask for your support in sending it to committee as soon as possible.

Thank you.

The Hon. the Speaker pro tempore informed the Senate that a message had been received from the House of Commons with Bill C-280, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust — perishable fruits and vegetables).

(Bill read first time.)

The Hon. the Speaker pro tempore: Honourable senators, when shall this bill be read the second time?

(On motion of Senator Ravalia, bill placed on the Orders of the Day for second reading two days hence.)

[English]

The Hon. the Speaker pro tempore informed the Senate that a message had been received from the House of Commons with Bill C-280, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust — perishable fruits and vegetables).

(Bill read first time.)