44th Parl. 1st Sess.
May 16, 2023 10:00AM
Madam Speaker, today I am going to talk about an extremely important bill. I am going to make a big announcement: This bill is free. How many times do we have the opportunity in the House of Commons to pass a bill that costs the government nothing? It does not happen often. It is worth pointing that out.
We are talking about financial protection for fresh fruit and vegetable farmers. The bill simply seeks to give these farmers a priority claim in the event of client bankruptcy or non-payment. It would seem that the government is not amenable to this bill, because this sector has been asking for this for years and the government has consistently refused. Is it because the Liberals do not want to put their banking friends at a disadvantage? I do not know. However, honestly, this measure would cost nothing and would provide protection for our agricultural producers. I do not understand why the government has refused to take this step for so long.
The bill is quite simple. Ultimately, its objective is to place the amounts due for payment of the fruits and vegetables in trust, that is to create a deemed trust. That way, when the time comes to recover outstanding debts, the fresh fruit and vegetable farmers would be paid first. The remaining amount could be put towards their production.
This is such an important and exciting bill that I offered to co-sponsor it with my colleague who introduced it. I filled out the form. I can therefore say that the Bloc Québécois is not only in favour of the bill, but fully supports it. In fact, I thank my colleague for having proposed it.
I would also like to say a quick word to our member for Salaberry—Suroît. Many of the vegetable farmers in her riding often talk to me about this issue, and they care deeply about this kind of bill. I have no doubt that, like me, she wishes she had been the one to introduce it.
This protection that would be provided to our agricultural producers is exceptional and very appealing to them, but it also has potential outside Canada. It is also interesting from an international trade perspective because, up until 2014, our agricultural producers had this protection when they sold produce to the United States. In 2014, the United States decided to take that protection away from agricultural producers in Quebec and Canada, telling them that farmers did not even have that protection in their country, so the U.S. saw no reason to include it in their insurance plan.
That is a second excellent reason to vote in favour of this bill. The United States made a formal commitment to start discussions and reactivate this protection for our farmers. It is doubly important because currently, when our farmers export vast quantities and they want to have some guarantee, the United States Perishable Agricultural Commodities Act requires them to post a bond worth double the value of the shipment. To register and have the right to protection, they need to deposit twice as much as it is worth. Let us be serious. Our farmers, in 97% of cases, or maybe 98%, do not have enough cash on hand to do that. That means they do not post these bonds. As a result, if the client defaults or declares bankruptcy, our farmers have little or no recourse.
What will they do? If they see that there is a chance of bankruptcy or non-payment, they will rush to negotiate a cut-rate out-of-court settlement with these clients. They end up receiving only a fraction of the money that is owed to them. We have no right to do that to our vegetable farmers. We have no right, because vegetable farming is a tough job.
We often talk about climate change and variability here in the House. Vegetable growers know what it is like to have a longer warm spell, which leads to more aphids, for example. It happened last year. They know what happens when there is a drought, making it hard to grow crops. They also know what happens when there is too much water in the field. They know all the variations, and they are at the mercy of the weather. They have to deal with whatever conditions nature throws at them.
Could we at least tell them that, when they sell their produce, they will be first in line among the creditors to receive payment in the event of non-payment or bankruptcy? That seems reasonable to me.
Sometimes we are told that farmers are covered under the Bankruptcy and Insolvency Act. For that to happen, however, their produce must have been delivered in the 30 days prior to the possession date. The produce can then be repossessed, provided there is evidence showing that the produce being repossessed is the same produce that was delivered and is in the same state as it was at the time of delivery.
Imagine going back to repossess tomatoes a month later. It is not an option. That is why these farmers need this protection, and why we need to hurry and pass this bill here, so that they will very likely qualify for protection in the United States. In my opinion, it is just common sense.
Sometimes we are told that these are very small amounts, that very few claims are made in a year and that the losses are therefore negligible. There are no claims being made because there is no protection. As I mentioned earlier, farmers rush to negotiate a lower out-of-court settlement before the client goes bankrupt or defaults on their payment obligations, in order to try to salvage something from the wreckage. The current claim rate does not reflect the actual rate that we will see after this law comes into force, and I hope it will be implemented quickly.
Some people will also say that we are going to put our friends, the banks, at a disadvantage and that the banks will calculate that there is more risk and will charge more interest. I doubt it, because our farmers use assets as collateral when they apply for financing. This argument seems more like blackmail or fearmongering than anything else.
Others will say that this is a shared jurisdiction and that, if we really want to have a law that is equivalent to the U.S. law, then part of this falls to Quebec and the provinces. It is true that this partly falls under the jurisdiction of Quebec and the provinces, but the United States has made formal commitments. Let us start with the basics. Let us start with what the federal government can do.
Earlier, I spoke about agricultural producers and the fact that they have to contend with the weather. The Standing Committee on Agriculture and Agri-Food recently studied food prices. Produce growers explained to us that they supplied lettuce for 87¢ a head, and the week after, they saw it in grocery stores for $2.49. That means that it can be sold for even more. Suppose that the price is $2.79. Someone is making a profit, but it is not our producer. That is why we want to implement a code of conduct. They are already dealing with less than favourable conditions.
Let us talk about labour. When asparagus spears emerge, the farmer cannot let them rot. They have to be harvested, but that requires the good old federal government to finish its labour market impact assessment and issue work permits. That is a long, complex and expensive process, not to mention the number of times that someone from another sector steals their workers by offering them $2 or $5 more an hour, when it was the produce grower who paid the fees to bring the workers here in the first place.
I am not even talking about the long and perhaps somewhat unnecessary investigations where produce growers, who already have no time to sleep, are asked to fill out a bunch of forms on a series of workers, one after the other. Inspections are necessary, but they are often too intense. I hear about this a lot.
It is important to consider deliveries, shipping and how hard it is to manage fresh produce.
Other considerations include the reciprocity of standards, pesticide and fungicide residues that are allowed in from outside. The levels differ from what our farmers do here.
I cannot believe that a fruit or vegetable from Mexico costs less than a fruit or vegetable from Quebec. This is because the standards are not the same. Something has happened in the interim. The least we can do is to offer our farmers financial protection. We should do this joyfully and happily.
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Mr. Speaker, I am pleased to rise today to give a few of my thoughts on Bill C-280, which was introduced by the member for York—Simcoe. I would like to thank him for introducing this important bill.
Of course, Bill C-280 is an important bill that is going to amend both the Bankruptcy and Insolvency Act, which we will hereafter call the BIA, and the Companies’ Creditors Arrangement Act, the CCAA. Ultimately, the bill is seeking to create a deemed trust for perishable fruits and vegetables.
Let me go into a bit of background on why this particular issue is so important. For the people who are growing, harvesting, packing and marketing fruits and vegetables, we have to understand that this industry comes with a number of risks. First, there are very high costs. Second, the capital in that industry is often tied up in the farmland, the buildings, the machinery and the overhead, so we can look at the value of the company and can see that it is what is commonly termed as “land-rich, cash-poor”.
Furthermore, the challenges are exacerbated because any returns made from the selling of their produce are often delayed until that product has been sold and payment is collected all the way up the supply chain, which can be long after the farmer or another seller has passed on the product. In that whole system, there is no financial protection from losses because of buyers who have become insolvent, which adds a tremendous amount of risk to this business model. The perishability of fresh produce and the common industry payment terms make it impossible for sellers to recoup money that has been lost when a buyer goes bankrupt, and we have seen a recent example in Ontario with Lakeside Produce in Leamington.
Prior to 2014, Canada was the only country in the world that enjoyed preferential access with our largest trading partner, the United States, under its Perishable Agricultural Commodities Act, also known as PACA. That was a dispute resolution mechanism in the United States, which basically meant that Canadian produce sellers were treated on par with their American counterparts when selling to a U.S. buyer. Unfortunately, and this continues to this day, the United States removed our country's preferential access to that system because we did not have reciprocal protection here in Canada.
It has to be clearly underlined that the fresh fruit and vegetable industry has been calling for a statutory deemed trust for payment protection from losses due to buyers defaulting on payment obligations. They have been calling for this for a long time, to make sure that we are on par with what our American counterparts enjoy, and they want us to do this so that our amazing producers can be on a level and competitive playing field with our closest trading partner.
I want to say from the outset that the NDP absolutely fully supports this initiative in Bill C-280. In fact, we have been campaigning on this particular change to the law since 2015, and we have continued to support it ever since then. The very first mention of it was in our 2015 election platform. When we boldly stepped out and made that commitment, we got praise from both the Canadian Produce Marketing Association and what was then called the Canadian Horticultural Council, which really praised us for taking a strong position on the issue.
Again, in the 2019 election, Rebecca Lee, the executive director of what is now the Fruit and Vegetable Growers of Canada, stated:
Canada's fruit and vegetable farmers are facing financial risks that threaten their competitiveness at a crucial time when consumers want to make healthy food choices and are being encouraged by their government to consume more fruits and vegetables. It is important that all parties recognize this, and we applaud the NDP for their commitment to making a payment protection program for produce growers finally a reality.
It is not just from our election commitments. This has been the subject of parliamentary committees, two in particular, the Standing Committee on Agriculture and Agri-Food, of which I have been a proud member since 2018, and the Standing Committee on Finance, in the 42nd Parliament, the first Parliament in which I was a member in the House.
Both of those committees, which were, at the time, comprised of a majority of Liberal members, made the recommendation that our country move toward a PACA-like system to protect our produce growers. Unfortunately the Liberal government said they would not consider it at the time.
Again, in this current Parliament, as here we are in the 44th Parliament, with regard to the Standing Committee on Agriculture, in our recent report, entitled, ”Feeding the World: Strengthening Canada's Capacity to Respond to Global Food Insecurity”, recommendation 7 of that report makes a very clear recommendation to make a statutory deemed trust.
Again, the Standing Committee on Finance, in this Parliament, in its recent pre-budget consultations, also called for the creation of a limited statutory deemed trust.
We have had multiple committees look at this issue and make those recommendations. It is time for the government to take that ball and run with it and finally put this into action. I think we are actually going to see some movement on this, thanks to Bill C-280.
Let me read into the record the stakeholder feedback. We have positive responses from the Canadian Produce Marketing Association, the Fruit and Vegetable Growers of Canada and the Fruit and Vegetable Dispute Resolution Corporation. They are all calling on members of Parliament to consider this bill and to send it off to committee for further study.
I believe that this is a critical opportunity for all members of Parliament to demonstrate our support for this sector and to safeguard Canadian food security. I want to also give an honourable mention to the Ontario Federation of Agriculture. It has also been an important voice in calling for this change.
Going forward, we are only at the second reading stage, in principle. The government has raised some concerns about this bill. It believes that no other commercial creditor has a deemed trust for unpaid claims. It thinks that this bill would favour sellers of fresh produce over sellers of other perishable products. It believes that fresh produce sellers could demand immediate payment, that this bill would benefit large retailers, that the existing dispute resolution corporation already has a mechanism or that the BIA already has provisions that adequately protect growers.
I think this will come through a committee: each one of those arguments has been thoroughly refuted and they will be coming up at committee, where we can finally put them to rest through important witness testimony and feedback.
I have seen both the CPMA and the Fruit and Vegetable Growers of Canada respond to each of those points with evidence to the contrary and I look forward to that information coming forward in committee so that we can properly make a report back to the House.
I just want to say that Canadian farmers are essential workers and they need and deserve to stay in business. They work so hard on our behalf, putting in those long hours, working in a very uncertain market and with very thin margins. The least that we can do as parliamentarians is to set up policy and laws that help them compete on a level playing field.
I believe that if we go forward with this bill, we will have a number of positive impacts. We will help reduce the number of Canadian farm bankruptcies by extending key financial protection toward them. It will encourage timely transport of produce to market, because it is going to make it more worth the transporter's money and time to ship it.
I believe, ultimately, that a deemed trust is going to provide important stability in a very volatile food price inflation market.
For that reason, and as the NDP's proud critic of agriculture and agri-food, I am looking forward to voting on this bill tomorrow, to sending it to my committee and giving it the proper examination that it deserves.
I would like thank the member for York—Simcoe for bringing forward this important bill.
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Mr. Speaker, I rise to speak to Bill C-280, which amends the the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act to provide that perishable fruits and vegetables sold by a supplier to a purchaser, as well as the proceeds of sale of those fruits and vegetables, are to be held in trust by the purchaser for the supplier in the event that the purchaser has not fully paid for the produce and becomes bankrupt or subject to a receivership or applies to the court to sanction a compromise or an arrangement. My neighbour and esteemed colleague from Berthier—Maskinongé, who is our agriculture, agri-food and supply management critic, co-sponsored this bill.
Given the demand in Quebec for this measure, which could be helpful for our agricultural community, we could have introduced it. One of our wineries in Shefford reached out to let me know that, as a producer and processor in the wine industry, La Belle alliance agrees with the amendment proposed in Bill C‑280. They said they see the amendment as additional protection for produces of perishable fruits and vegetables that could help protect small- and medium-sized agricultural businesses from suffering undue losses in the event of the insolvency of commercial buyers.
Le Potager Mont-Rouge said that this is a bill that they are really passionate about because it ensures that producer sellers are financially protected. Their profit margins are already razor thin, and they are impacted by many external factors such as price fluctuations, imports and climate change, to name but a few. They have been in a situation like this themselves and have lost thousands of dollars.
This testimony from these two businesses shows how important this bill is. The Bloc Québécois is attentive to their concerns, so we are in favour of this bill and support it. I will therefore begin by explaining its benefits and then talk about the division of powers and the litigation system.
First, passing the bill could demonstrate to the U.S. government that Canada has a trust mechanism in place for cases of buyer bankruptcy. Indeed, the lack of such a mechanism in Canada was one of the main reasons why, in 2014, the U.S. decided to withdraw U.S. buyer bankruptcy and insolvency protection from Canadian suppliers. The Canadian government had actually committed to developing a legal framework similar to the U.S. Perishable Agricultural Commodities Act, or PACA, and thus restoring coverage under their bankruptcy protection law for perishable foods to protect our industry from losses in the event U.S. buyers went bankrupt.
Groups have been calling for this since their PACA coverage ended back in 2014. This protection is necessary because food products like fresh fruit and vegetables are perishable, and a supplier cannot simply take them back and resell them if a buyer goes bankrupt. The protection is intended to allow licensed suppliers that have a contract with a U.S. buyer to take legal action against the buyer in the event of non-payment due to bankruptcy.
The new process will require the value of the shipment to be held in trust in the bankrupt buyer's name so that the producer can recover this amount as a creditor. Before 2014, Canadian fruit and vegetable farmers were protected by a U.S. law if they were doing business in the United States and a company failed to make payment or went bankrupt. This is no longer the case, and the alternate procedure developed between the two countries is very complicated, especially for our smaller businesses.
Quebec's agricultural model is at the family farm scale and on a human scale. Currently, without this protection, Canadian suppliers of fruits and vegetables have to go through a special process to file suit under this legislation in the United States.
According to the Canadian Produce Marketing Association, suppliers have to deposit a bond equivalent to twice the amount required in the suit. Most suppliers do not have that much in liquid assets and the major buyers know that all too well. They are then forced to negotiate downward with the buyer to get at least some compensation instead of losing everything, especially since this type of debt is not a priority in a business' bankruptcy. Suppliers who are not protected do not have much chance of receiving decent compensation through the ordinary process. Under this bill, the trust mechanism ensures that the purchaser is the guarantor of the value of the shipment, without owning it, in the event of a default due to the application of one of the two pieces of legislation. The legislation stipulates that the buyer has 30 days to make the payment under the contract.
Under the Canada-United States Regulatory Cooperation Council initiative, Agriculture and Agri-Food Canada and the U.S. Department of Agriculture are committed to establishing comparable approaches in order to achieve the common goal of protecting fresh fruit and vegetable vendors from Canada and the United States from buyers who are not concerned with their payment obligations.
I will start with a bit of background. The legislation was first was created in the 1930s to try to protect vegetable producers from the multiple bankruptcies of their buyers. It then became an important tool in rebalancing the commercial relationship between producers and buyers. It is essentially designed to allow a licensed supplier who has a contract with a U.S. buyer to sue that buyer under the act in the event of a default in payment because of bankruptcy. The process will allow the value of the shipment to be placed in a trust in the name of the bankrupt so that the supplier can recover the amount owed as a creditor. Given the speed with which produce is resold by a merchant or spoils, it is quite rare that a fresh produce repossession situation will meet these criteria. This means that perishable food producers would be given super-priority status so they do not have to wait for the bankruptcy settlement to recover their property. However, in the context of the above conditions, producer associations explained that 15 days is not long enough, given that typical payment terms are about 30 days. However, 30 days is too long to expect to recover a product that can be resold. This provision is not well suited to the structure of the supply chain, which often operates with intermediaries such as wholesalers.
Second, with regard to jurisdictions, the most sensitive issue is the fact that Canada cannot really quickly pass a law like the one in the United States. The Perishable Agricultural Commodities Act, or PACA, is a program to protect farmers in case of bankruptcy, but it also encompasses all of the dispute settlement mechanisms for perishable goods. In Canada, the Bankruptcy and Insolvency Act falls under federal jurisdiction, but the regulations surrounding contracts fall under the jurisdiction of Quebec and the provinces. A legal framework like the PACA therefore cannot be developed unless there are negotiations or a collaboration between the federal government and the provinces, which is what we are hoping will happen. One of the arguments put forward by the federal government is that most trade disputes are resolved before bankruptcy occurs and so most of the American framework deals with issues that fall under provincial jurisdiction. Since it is complicated to operate using multiple dispute settlement regimes, the federal government just gives up rather than trying to find even a partial solution to the problem. We need to work on that.
Third, the official figures are much lower and limit the timeframe for claims to about 15 days. The major difference between the government and the industry figures can be explained by the fact that in order for it to become an official statistic, the producer must file a complaint. Most of the time, producers do not necessarily use official channels because they are too complex, and even more so after the end of privilege. Producers often have special business relationships with their client and try to accommodate them. The argument that there are few claims or that they represent a small percentage of farm receipts is very subjective. Producers used to have protection, but no longer do. We are simply being asked to restore protection given that, because of its proximity and the nature of goods, the United States is by far the most important trade partner for perishable goods. Restoring this protection for our producers who do business with the United States is not far-fetched at all.
Although the government is putting forward some arguments to demonstrate that an insurance similar to PACA is not the best option, especially because of the cost of credit and shared jurisdictions, we will continue to defend this bill. We are under the impression that the Liberal Party seems to want to defend its friends in the banking sector.
In conclusion, this bill is simply a response to the agricultural sector. Two years after Canadian producers' preferential access to PACA was removed, the Standing Committee on Agriculture and Agri-Food studied the issue. A number of key witnesses appeared before the committee. The NDP, the Liberal Party and the Conservative Party have all, at various times, pledged to fix the problem. From our perspective, it is clear that we need to move forward with this bill.
I thank my Conservative colleague for introducing this bill. It can make things better for businesses in Shefford, as I said in my introduction. Obviously, the pandemic was a unique situation, and it also exacerbated various issues in the agricultural sector.
I want to say one last thing. As the member for Shefford, I proudly represent a riding where agriculture is at the heart of its economy. This bill is a common-sense measure that gives farmers a little extra help to get through this difficult period, for their mental health, for their survival. As we know, farm succession is already facing several threats. Perhaps this bill will address some of the concerns of the next generation of farmers and give them the desire to continue, to produce what we eat every day and what sustains us. We need farmers.
Once again, I thank my colleague for this bill. The Bloc Québécois will be voting in favour, to support our agricultural model.
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