- Member of Parliament
- Member of Parliament
- Conservative
- York—Simcoe
- Ontario
- Voting Attendance: 69%
- Expenses Last Quarter: $119,263.34
- Government Page
moved that the bill be read the third time and passed.
He said: Madam Speaker, we want to get to a vote right away tonight. I know all my colleague are excited to get Bill C-280 passed.
It is a pleasure to rise once again to speak to my private member's bill, Bill C-280, the financial protection for fresh fruit and vegetable farmers act. I am encouraged by the support this common-sense Conservative bill has had so far, but we need to keep pushing. It is all the more important as we look to address the high food prices, rising inflation and strained supply chains we see in Canada today. I will take the opportunity this evening to reiterate the urgent need for the financial protection of this bill and the benefits it will bring, and will address some of the questions raised at committee.
We all know we need a doctor maybe once a year and need a firefighter once in a lifetime if we are really unlucky, but we need a farmer three times a day, every day. That is a fact. Despite their importance in supplying local communities with safe and nutritious fruits and vegetables, there is not enough financial protection for Canadian fresh fruit and vegetable suppliers. In circumstances where buyers become insolvent and fail to pay for fresh fruits or vegetables they were supplied, farmers are out of pocket for those losses.
To address this, Bill C-280 proposes to establish a limited deemed trust that would provide much needed financial protection for the entire fresh fruit and vegetable sector in Canada. This bill would give fresh fruit and vegetable suppliers priority access to the proceeds of sale, limited to the inventory, accounts receivable and cash on hand derived from the sale of the produce, during the bankruptcy proceedings of an insolvent buyer. This will help offset the loss of their sold produce.
For too long, the existing provisions within the Bankruptcy and Insolvency Act and adjacent legislation have not provided adequate priority for fresh fruit and vegetable suppliers when insolvencies occur, as these provisions do not take into consideration the unique characteristics of the sector. While the act technically allows suppliers to recover their products following a bankruptcy, it provides no rights when the product has been resold, is no longer identifiable or is no longer in the same state, which is to be expected with most fresh fruits and vegetables.
Fresh fruits and vegetables are subject to rapid perishability. Their shelf life can be sometimes measured in mere hours. By the time insolvency proceedings have concluded, the spoiled product is no longer of any value and cannot be repossessed or resold.
The superpriority provision for farmers in the act does not address the needs of fresh fruit and vegetable suppliers, who regularly receive payments 30 days or more after they have delivered the product. These longer payment terms are typical in the industry. They accommodate the rapid pace of trade and complex storage and transportation arrangements that must be made between many parties to get fruits and vegetables to market over the course of a short growing season. As such, the requirement in the BIA that fruits and vegetables must have been delivered within 15 days of bankruptcy to be covered under the superpriority means that most fresh produce becomes unprotected. This lack of financial protection for Canada's fresh fruit and vegetable sector has had devastating consequences, as farmers and other suppliers find themselves as unsecured creditors with little recourse for their losses.
It is well established that bankruptcies are considerably higher in this sector than in any other agriculture sector across Canada. They occur twice as often as those in livestock and are over 10 times the rates of the poultry and grain sectors, which are heavily regulated in Canada. The average net loss from non-payments, partial payments and delayed payments in the Canadian fruit and vegetable trade amounts to at least 1.53% of a supplier's gross revenue. This is a significant amount for those in the fresh produce sector considering their high overhead and capital costs, small profit margins and reduced risk management capability. While this amount is significant, it does not even capture the full extent of non-payment. Many firms simply close their doors and walk away from their businesses.
These losses are routinely absorbed by farmers, but they are not captured in bankruptcy data. These losses are especially devastating considering that three quarters of Canada’s fresh fruit and vegetable producers are small businesses with sales of less than $85,000 per year, many of which rely on a single buyer for the bulk of their crop. These smaller-scale producers do not have the capability to make credit checks on their buyers, negotiate conditional sales agreements or take other safeguards typical in other industries. Their ability to pursue repayment and other forms of recourse when a buyer does not pay is also extremely limited.
As one can imagine, bankruptcies within the fresh fruit and vegetable industry can jeopardize farms and livelihoods, and the constant fear of non-payment limits our farmers’ ability to invest in their businesses, grow and actually plan for the future. The bankruptcy of Lakeside Produce in Leamington, Ontario, this past winter demonstrated just how wide-ranging the impact that bankruptcy has had on the entire fresh produce industry. When it went bankrupt, Lakeside Produce owed $188 million to suppliers across the fruit and vegetable sector. There were 17 Canadian produce companies among Lakeside’s creditors, which accounted for $1.7 million in unsecured claims.
The lack of financial protection for the fresh produce industry in Canada also impacts our competitiveness and capacity to trade with the United States. Suppliers are no longer able to access the dispute resolution and financial protection processes that exist in the U.S. through the Perishable Agricultural Commodities Act, without incurring significant financial costs. This severely disadvantages Canadian produce businesses given the high volume of produce sold to buyers in the U.S. Having a financial protection tool in place in Canada would pave the way for the United States Department of Agriculture to restore Canadian produce sellers’ preferential access to the U.S. dispute resolution mechanism for fresh fruits and vegetables.
With the adoption of Bill C-280, we could finally ensure that Canada’s bankruptcy laws work for fresh fruit and vegetable suppliers in a form that recognizes the particular needs and challenges of the industry. By doing so, there would be considerable benefits for Canadians.
The financial protection would strengthen a pivotal industry in Canada, increase economic activity and bring economic benefit to the entire fresh fruit and vegetable value chain. With greater certainty and reduced risk, we would see more investment and growth as Canadian farms and greenhouses expand their operations and return operations to Canada that had migrated to the United States when access to PACA was lost. These measures would also result in a reduction in prices for Canadian consumers, which I know is top of mind for all MPs in this House tonight. We would expect to see a decrease in prices for Canadians by as much as 15%, which would save families as much as $900 million on their annual purchases of fresh fruit and vegetables.
While this bill was being studied at committee, there were questions about why the bill would extend the deemed trust protections to all suppliers of perishable fruits and vegetables, which is perhaps considered by some to be too broad. However, it is important to remember that within the fresh fruit and vegetable industry, the large retail trade, farmers’ markets, food service and hospitality trades are far less affected by the lack of financial protection. For the most part, it is the growers and others involved in the first sale, such as packers, brokers and shippers, who are most vulnerable to payment disruption and who would need the financial protection afforded by Bill C-280 the most.
That said, this industry is highly integrated, and bankruptcies involving producers, dealers, shippers, wholesalers, distributors and retailers impact the stability of the market. A bankruptcy at any point along the supply chain can result in farmers going unpaid, so it is essential that all suppliers receive the necessary protection. Crucially, protecting fresh produce suppliers equally is needed to access the equivalent protection offered by the Perishable Agricultural Commodities Act in the United States, which covers all suppliers along the chain.
Another question raised has been the impact of these financial protections on the banking industry. While it is true that by giving priority access to produce suppliers, banks will see their claims receive a lower priority, the benefits of protecting fresh fruit and produce suppliers outweigh the distributional impacts for the banking industry. Moreover, the banking industry would actually benefit from the increased predictability of payments when lending to those in the fresh fruit and vegetable sector. This has been the case in the United States under the PACA deemed trust, which has been reported to be a net positive to the banks, in addition to the produce sector itself.
Canada relies on boots on the ground, hands in the muck and rubber boots on the farm to provide fresh locally grown produce to our citizens. When these farmers suffer losses due to buyer insolvency, it threatens our very food security by reducing the availability of Canadian grown products.
We already know this is happening. Earlier this year, a Statistics Canada report showed that there was a significant decline in fresh fruit and vegetable availability for Canadians in 2022. More than three-quarters of all produce consumed in Canada is imported. As access to fresh produce from foreign markets is increasingly jeopardized by climate change, carbon taxes, trade protections and supply chain issues, our food security becomes more and more threatened right here at home. For much of our nation's history, Canada was far more self-reliant in the fresh fruit and vegetable trade, with production far outpacing consumption, but the failure to reduce risk and provide certainty to the fresh fruit and vegetable sector has seen this decline significantly. This needs to change.
Fundamentally, Bill C-280 recognizes the need to support Canada's produce sector, just as we support other agriculture sectors, by ensuring that Canada's bankruptcy laws recognize the particular challenges and demands of growing and selling fresh fruits and vegetables. Canada's fresh fruit and vegetable farmers should always be paid for the fresh fruits and vegetables they sell. By passing Bill C-280, we can ensure that our food security is protected and that our produce sector is strengthened. By putting this important financial protection tool in place for produce supplies, we will support the economy and lower costs for all Canadians from coast to coast to coast, so let us get it done.
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