Bill C-280

Financial Protection for Fresh Fruit and Vegetable Farmers Act

An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust – perishable fruits and vegetables)

This enactment amends the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to provide that the 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 fruits or vegetables and becomes bankrupt or the subject to a receivership or applies to the court to sanction a compromise or an arrangement.

Financial Protection for Fresh Fruit and Vegetable Farmers Act

[Scot Davidson, Conservative, York—Simcoe, ON]

moved that Bill C-280, an act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust – perishable fruits and vegetables), be read the second time and referred to a committee.

Mr. Speaker, we are really excited tonight for fresh fruit and vegetable farmers across Canada. It is an honour to finally have the opportunity to speak to the financial protection for fresh fruit and vegetable farmers act, Bill C-280. This bill proposes to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to support Canada's fresh produce farmers and sellers through the establishment of a deemed trust.

My community of York—Simcoe is home to the Holland Marsh, known as the “soup and salad bowl” of Canada. It produces more carrots, celeries, onions, lettuces and greens than any other single region in this country. We would love to see members at Carrot Fest this summer. Every time I look out over the rich, dark soil in the low-lying fields of the Holland Marsh and survey the endless rows of green vegetables growing there I see opportunity, the opportunity to have Canada become even more competitive as an agricultural leader in global fruit and vegetable exports; the opportunity to ensure fresh, sustainable Canadian produce is more accessible and more affordable than foreign imports for every Canadian family; and the opportunity to support the innovation and grit of our hard-working farmers right across Canada.

Sadly, in the marsh, and across the country, in the fields and greenhouses in places like Leamington, Kentville, Morrell, Brookfield and elsewhere, this opportunity is being limited by the considerable risks associated with the growing, harvesting, packing, marketing and distribution of fresh fruits and vegetables, risks that routinely threaten their farms and livelihoods. Overhead and capital costs are significant. The margins in the sector are thin, normally between 3% and 5%. The return farmers receive from their product is often delayed until it is sold and payment is only collected long after they have passed on their product for sale, far along the supply chain or well after consumers have eaten it.

The worsening recession, inflationary pressures, increased prices, tax hikes and the lingering impacts of the COVID–19 pandemic have only increased the vulnerability of the produce sector. This is underlined in 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 fresh produce buyers become insolvent. Currently, the act allows suppliers to recover their product after bankruptcy, but has no provisions to protect them in the event their produce has been resold, is no longer identifiable or is no longer in the same state. Given the perishable nature of fresh fruits and vegetables, how quickly they spoil and how many products are highly processed and mingled with other ingredients to make food, it is very uncommon that produce can be repossessed during these bankruptcy proceedings.

There also exists a “super priority” provision for farmers in the act, which is supposed to allow them to get paid ahead of other creditors during bankruptcy proceedings. However, to access this, the product must have been delivered within 15 days of bankruptcy or the appointment of a receiver, which fails to account for the payment schedule of 30 days or more that typically exists within the produce industry.

In practice, these deficiencies in Canada's bankruptcy laws means that Canadian produce farmers are faced with significant, and sometimes insurmountable, losses in the event of a purchaser bankruptcy. They have to line up along with all of the other creditors to seek payment. Otherwise, they must simply walk away from the outstanding debt owed to them. This can lead to further bankruptcies and sunk costs across the entire sector and can jeopardize our domestic food security.

Sadly, the lack of financial protection for the produce industry has real world consequences. In January of this year, 2023, Lakeside Produce Incorporated, a large-scale commercial greenhouse based out of Leamington, Ontario, filed for bankruptcy. This was a family-owned company that grew cucumbers, peppers and specialty tomatoes for 75 years, with extensive operations that included conventional and organic greenhouses, warehouses, packhouses and distribution centres right across North America.

At the time of its bankruptcy, it owed $188 million to suppliers across the produce sector, including other greenhouses, and logistics, packaging and brokerage firms. There are 17 produce companies across Canada among Lakeside's creditors, which account for $1.7 million in unsecured claims. The owner of one of these companies, a farmer also based in Leamington, wrote to me regarding this bill.

He said, “the inadequate protection for suppliers of fresh fruits and vegetables...most recently resulted in my farming operations sustaining a loss of $907,840 due to the bankruptcy of Lakeside Produce. I have devoted my entire life to the [produce] business but I, nor anyone else who is part of the fresh fruit and vegetable industry, can continue to afford these risks.”

In addition to the Canadian creditors, there are 45 companies based outside Canada, primarily in Mexico and the United States, that are owed another $4.9 million. The highly integrated nature of the fresh produce industry means that these losses will impact Canadian growers even further.

The lack of financial protection available to fresh fruit and vegetable farmers in Canada also affects their competitiveness and capacity to trade with the United States. Currently, produce growers cannot access food protections that exist in the United States without incurring significant financial costs.

This was not always the case. Previously, Canada was the only country in the world that had preferential access to the dispute resolution mechanisms within the United States' Perishable Agriculture Commodities Act. It is known in the industry as PACA. However, the United States revoked this access in October 2014 due to a lack of a reciprocal mechanism in Canada. Now, Canadian sellers must post a significant bond worth double the value of their shipment just to initiate a claim through PACA. This severely disadvantages Canadian produce businesses, given the high volume of produce sold to buyers in the United States.

The need is clear. We need to protect Canada's food security. We need to support the Canadian fresh fruit and vegetable industries against the impact of bankruptcies. We need to work toward restoring preferential access for Canadians to the United States' dispute resolution mechanism.

To do this, Bill C-280 proposes to address the deficiencies in existing sections of Canada's bankruptcy and creditor laws by establishing a limited deemed trust to provide financial protection for Canadian produce farmers. These are the changes Canadian produce farmers require. They have been vocal in their support of establishing a deemed trust through Bill C-280.

Bill C-280 is endorsed by hundreds of farms, the Canadian Federation of Agriculture, the Canadian Produce Marketing Association, the Fruit and Vegetable Growers of Canada and many other national, provincial, regional, and industry-specific organizations.

This matters. From farm gate to dinner plate, the fruit and vegetable industry is a major contributor to Canada's GDP and creates thousands of jobs from coast to coast, right across this great country.

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.

Bill C-280 would also lead to a reduction in costs for Canadian consumers, which is just what we need right now, by as much as 5% to 15%. This would save Canadian families between $300 million and $900 million on their annual fresh fruit and vegetable purchases, improving their overall health. After eating so many carrots in Bradford, these eyes are still 20/20. It is unbelievable.

Unfortunately, the position of the Liberal government has been that the Bankruptcy Act, with its existing mechanisms, works just fine for its produce sellers. However, this is clearly not true. A cucumber, last I checked, is not the same as a sheaf of wheat. It makes no sense to treat these products and these sellers the same. Bankruptcies in the produce sector are substantially higher than other agriculture industries. They happen twice as often as they do for those in livestock, and over 10 times as often as they do in the highly regulated grain and poultry sectors.

After all, the produce industry is as unique as the fruits and vegetables they grow. It is very complex, with numerous producers and sellers involved, and with considerable integration within Canada and with our neighbours to the south, the United States. This unique sector requires a unique solution to the issues they face. Bill C-280 is the solution, a solution that would give Canadian produce farmers the certainty they deserve.

When I look out over the green, growing vegetables in the rich soil of the Holland Marsh, I see opportunity. I hope members of Parliament in the House see the incredible opportunity today, the opportunity to support Canada's fresh fruit and vegetable farmers, to stand up for Canadian consumers and to protect our country's food security. With Bill C-280, we could ensure that fresh produce farmers are paid for the food that they grow. Let us get behind them.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Madam Speaker, when I think of vegetables and fruits, I think of Peak of the Market in the province of Manitoba.

Manitoba produces the best vegetables, I would argue, in the world. Some might question that, but it is the yellow potatoes, white potatoes, red potatoes and so much more, along with the carrots, cabbage and turnips. There are so many things. Peak of the Market seems to know what it is doing. It brings everything together and puts that stamp of it being made in Manitoba or being from the Prairies.

I appreciate what the member says. I love the farmers. These people who are producing, helping us and feeding the world, are doing an incredible job. Has the member had any discussions with organizations, such as Peak of the Market, to get their sense of what he is proposing today?

[Scot Davidson, Conservative, York—Simcoe, ON]

Madam Speaker, I know the member loves the fresh fruit and produce business.

As I mentioned in my speech, we have support right across Canada from all producers. This is one thing, and I know the member for Winnipeg North prides himself on this as well, where we were getting out and talking to constituents. I would love to have him come out to Bradford and see that rich, dark soil, and come out to cut celery with me one day.

This is much needed. I encourage members to get out to talk to the farmers and to listen to what they are saying.

[Andréanne Larouche, Bloc, Shefford, QC]

Madam Speaker, I thank my colleague for his speech in which he talked about the future of farming.

This week, the Bloc Québécois has made a point of calling for more help for the agricultural industry, particularly for young farmers. It is important to recognize that, right now, farmers are not doing well from a mental health perspective. One in 10 agricultural businesses are at risk of closing in the next year because of all the problems.

How will the member's bill meet the needs of all sorts of farmers, particularly vegetable growers? How will the bill help them to get through this period of inflation, which is so difficult for them and for young farmers in particular?

[Scot Davidson, Conservative, York—Simcoe, ON]

Madam Speaker, that relates to a quick story. When COVID first started, I had a farmer reach out to me in Bradford. He said to me, “Scot, I don't think I'm going to plant in my field this year.”

I asked him, “Ken, why aren't you?”

He said, “I'm so worried about getting paid. The stress is for my family. I cannot plant my field, sit at home and pay the $20,000 in taxes because, if I plant my fields, it's going to cost me in excess of a million dollars. If I don't get paid, I'm going to lose this family farm that has been in the family for four generations.” These are the kinds of stresses they have. Then he said, “I'm not even looking to the government for any money. I'm just looking for insurance that I am going to get paid.”

[Niki Ashton, NDP, Churchill—Keewatinook Aski, MB]

Madam Speaker, first of all, I want to indicate that we in the NDP support this proposal. In fact, it has been part of our last three federal election platforms to recognize that this support is critical for farmers and farming families to put our farmers on a level playing field with those to the south of us.

Obviously I want to acknowledge as well the impacts of climate change, which are rendering agriculture to be much more unpredictable in our country. Whether it is in western Canada or eastern Canada, it reinforces the need to support farmers during this time.

I am wondering if the member could speak to how important it is to move on this legislation as soon as possible.

[Scot Davidson, Conservative, York—Simcoe, ON]

Madam Speaker, it is so important.

We should be number one in the world in Canada with agriculture. I have always said that a General Motors plant can be moved but a farm cannot be. We have the most arable land in the whole world. That has to come into the vision for Canada. That is one thing I talked about missing in the budget. Where is the vision?

We should be number one in the world with agriculture. We should be teaching people throughout the world how to grow food and have fresh water. We need to keep pushing for agriculture.

[Arielle Kayabaga, Liberal, London West, ON]

Madam Speaker, I am pleased to rise to discuss the important matters raised by Bill C-280, which would amend the Bankruptcy and Insolvency Act, or BIA, and the Companies' Creditors Arrangement Act, to provide the claims of the sellers with a deemed trust.

This means that their claims would be paid first, in full, ahead of the claims of all other creditors if the buyer was subject to a bankruptcy or receivership and that the claims of the sellers would have to be paid in full as part of the buyers' restructuring plan of arrangement.

By way of background, it is important to note that the deemed trust proposal is a long-standing industry request. I would note that it has been studied extensively by Agriculture and Agri-Food Canada and Innovation, Science and Economic Development Canada for more than 15 years.

This means that there is ample evidence to help us assess this proposed exception to the usual order of claims in insolvency proceedings.

To begin with, I was pleased to see that the fresh fruit and vegetable sector, also known as the edible horticulture sector, is a thriving and growing sector that makes a significant contribution to the Canadian economy and food security. According to Statistics Canada, farm cash receipts from the edible horticulture sector have increased by 23% over the past five years, and the value of exports of fresh and processed fruits and vegetables have increased by 61%.

This is also a diversified sector, consisting of both small and large, domestic and foreign players. The sector is divided into different types of businesses along the supply chain, including producers and farmers, on the one hand, and resellers, wholesalers, brokers, and traders, as well as supermarkets, on the other. The size of these businesses varies considerably. For example, there are approximately 700 fresh fruit and vegetable wholesalers of varying sizes in Canada, ranging from small companies with sales of $30,000 to larger companies with sales of over $5 million per year. The distribution sector is dominated by a few large companies, including Canada's major food retailers.

According to the 2021 census of agriculture, there are approximately 14,000 farms that produce fruits and vegetables. Most fresh fruit and vegetable farms are small, and the data from Agriculture and Agri-Food Canada shows that about 40%, or about 5,600 farms, have an annual income of less than $25,000. In contrast, about 12%, or about 1,600 farms, generate over a million dollars in revenues and contribute to about 80% of the sector's total revenues.

The fresh produce supply chains also extend throughout North America and include larger American agribusiness, including farmers and sellers who export into Canada. All these players would be covered by the bill's deemed trust, in contrast to current protection in insolvency legislation, which focuses on domestic producers such as the farmers, fishers and aquaculturists.

When studying the bill, we will likely want to look at the following aspects: which parts of the sector are in need of this type of protection and whether it should be extended to all players equally. For instance, since Canada's main retail chains are also wholesalers, it would potentially mean that, if a Loblaws or Sobeys franchisee was to become insolvent, the chain could benefit from the deemed trust proposed by Bill C-280.

It would also seem possible that big American or Canadian agribusinesses, which may have the largest unpaid fresh produce invoices, could become the primary beneficiaries of the proposed deemed trust by collecting from an insolvent buyer first, thus depriving non-fresh produce creditors of recovery at a greater rate.

At a time where inflation in grocery prices is top of mind for the House, and for all Canadians, we may want to consider whether this type of actor should benefit from extraordinary protection under the insolvency legislation.

Another question that will likely be worthy of further examination relates to the type of soft products that have been scoped in this bill. This bill excludes and subordinates other farmers that produce milk, egg and meat, and the fisheries, all of which are highly perishable and subject to their own market challenges. On the other hand, the definitions included in Bill C-280 could potentially include frozen produce, which may not be much more perishable than other products that can be recovered from an insolvent entity within 30 days of delivery under our current laws.

The unfortunate reality is that insolvencies always create difficult situations for all stakeholders. That is why it is important to examine these issues carefully. We should keep in mind the other proposals that have been made in the past to prioritize certain claims, including with regard to employee health and disability benefits, because we would be effectively determining who gets paid first.

Granting privilege may also lead other groups to ask for similar treatment. It goes without saying that the more creditors who benefit from a priority in insolvency, the less that priority is worth, and the whole concept of treating similar creditors equally could unravel.

I think it is really important that we keep measures in place that target the most important problems the sector is facing. Statistics from the Office of the Superintendent of Bankruptcy indicate that losses due to the insolvency of the fresh produce industry have been relatively low. The data shows that losses by the fresh produce industry due to insolvency are likely less than 1% of sales for most years and the estimates vary from 0.8% to 0.21% of sales over the past few years.

This is in contrast to the much more significant losses that the industry suffers because of partial payments, delayed payments or other disputes with solvent players against which the deemed trust would not protect the industry. For example, ongoing improvement of trade practices in the sector will contribute to reducing losses in the sector due to food loss and damage, because an estimated 13% of fruits and vegetables grown in Canada are not harvested or are thrown out for reasons unrelated to payment protection. That is according to the 2019 report by Environment and Climate Change Canada.

To conclude, the Canadian government strongly supports Canadian fresh fruit and vegetable growers. This can be seen in the superpriority protecting them under current insolvency legislation, as well as the action taken to date through other legislation, policies and programs that will continue to benefit the industry. The bill at hand proposes special unlimited treatment under insolvency legislation awarded to the sector's entire supply chain, including large foreign corporations. It will be important to really dig in and look at this initiative in detail to make sure that we understand how this intersects with other policies and questions in this very critical sector. I look forward to continuing this conversation on these important matters.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Madam Speaker, the bill before us would amend two federal laws, the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act to provide that the 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.

What this bill would actually do is provide special protection to suppliers of fruits and vegetables if a client were to go bankrupt. At present, the regime that applies in the event of a buyer bankruptcy allows a supplier to take back the goods sold to the buyer. In the case of fruits and vegetables, the problem is very simple. In the time it takes for the administrative measures to be completed, there is a high risk that the fruits and vegetables will no longer be fresh and their value reduced to zero. Suppliers would see the goods they worked so hard to produce be thrown away without having any recourse.

We can all agree that the provisions in the Bankruptcy and Insolvency Act are poorly adapted to the reality of our agricultural producers and to the structure of agri-food supply chains.

Bill C‑280, which is co-sponsored by my esteemed colleague from Berthier—Maskinongé, seeks to establish a trust mechanism in the event that a purchaser becomes bankrupt. 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 acts. This bill will be extremely helpful to our producers and agri-food suppliers who do business with our neighbours to the south.

Prior to 2014, Canadian fruit and vegetable suppliers were protected by a U.S. law when doing business in the United States. When an American company defaulted or went bankrupt, our companies were protected by the U.S. regime. That is no longer the case, and the alternative process developed between the two countries is cumbersome, especially for our smaller businesses.

As of 2014, the United States decided to withdraw protections for Quebec and Canadian suppliers in the event that their American buyers become insolvent or file for bankruptcy. The American government made that decision, which penalizes and undermines our Canadian farmers, business owners and suppliers, because of the lack of an equivalent mechanism in the Canadian regulatory framework.

Right now, without that protection, Quebec and Canadian produce suppliers must go through a special process to take legal action under that law in the United States. According to the Canadian Produce Marketing Association, suppliers are required to post a bond worth double the value of the shipment to initiate a claim. Most suppliers do not have that kind of cash flow and big buyers are well aware of that. Our suppliers are therefore forced to negotiate the buyer down to try to get a minimum amount of compensation rather than lose everything.

According to the testimony heard by the Standing Committee on Agriculture and Agri-Food when examining this issue, the United States and the United States Department of Agriculture have been very clear. They will be looking for a deemed trust before they agree to have a conversation on whether they will give us back the treatment we had previously. A public servant also confirmed that “the trade of fresh produce between Canada and the U.S. has continued to rise over the last four years, by 55% for fresh fruits and 26% for fresh vegetables, showing that the U.S. remains an important market for [Quebec and] Canadian fresh produce.”

Clearly, reinstating protection for our farmers who do business in the United States is not all that far-fetched. In fact, I would argue that it is necessary and urgent. I also want to remind the Prime Minister that he committed to fixing this problem not two weeks, two months or even two years ago. In 2014, when he had only just been elected to lead his party, he committed to fixing this problem if he took office, as he did in the 2015 federal election.

Spoiler alert: His party has been running the federal government for almost 10 years. Why has it taken this long to get something done in support of our agricultural sector? This bill has the support of every party in the House. What is more, the bill is an environmental and social measure.

I do not know why it has taken so long. That said, when it comes to Liberal standards, we have seen worse than taking 10 years to deliver on a promise.

In closing, I would like to remind my colleagues in the House that I have the honour and privilege of representing the people of the Lower St. Lawrence, a rural and proudly agricultural region.

In my region, we have 2,000 farms that produce annual revenues of more than $600 million, a major contribution to the gross domestic product of the region, Quebec and Canada. Dairy farming alone represents nearly half of all agri-food operations in the Lower St. Lawrence region, but our passionate farmers work in countless other sectors, such as maple syrup production in Témiscouata, hog farming, cattle farming, and grain and potato farming. There are also produce growers who grow fruits and vegetables on our fertile land.

During my many visits and meetings with produce growers, I noticed that the representatives from the farming industry firmly and unanimously support this bill. That is why my esteemed colleagues in the Bloc Québécois will support our colleague from Berthier—Maskinongé, the agriculture, agri‑food and supply management critic, so that Bill C‑280, the bill he co-sponsored, may come into force as soon as possible. I invite all my esteemed colleagues on both sides of the House to do the same.

For the sake of regions such as the Lower St. Lawrence, where farming has been an integral part of our daily lives for centuries, and for the sake of helping the farmers who put food on our tables remain competitive and financially healthy, we must move forward with Bill C‑280.

[Niki Ashton, NDP, Churchill—Keewatinook Aski, MB]

Madam Speaker, before I begin, I would like to express my solidarity with the striking members of the Public Service Alliance of Canada, who have been working without a contract for two years. New Democrats have always championed the rights of workers, and it is our moral duty to support the hard-working public servants who tirelessly serve our communities and our country.

PSAC, which represents over 155,000 striking members, is engaged in a critical struggle against an unfair federal government. This is the largest strike against a single employer in Canada's history. The Liberals, and the Conservatives before them, have utterly failed to address the concerns of workers in the public sector. Under the Liberals, we have witnessed a sustained assault on workers' rights by way of back-to-work legislation, as well as a disregard for the welfare of workers in the public service.

In solidarity with the Public Service Alliance of Canada, we demand that the Prime Minister and the federal government address the key issues raised by PSAC members, which include decent wages that prevent workers from falling further behind; a more inclusive federal public service; remote work enshrined in collective agreements; a right to disconnect after hours; an increase in indigenous language benefits; and good, secure jobs. The government needs to recognize the steeply rising cost of living and the impact of inflation on families. It should then call for a fair pay raise to reflect these realities.

We, therefore, call upon the Liberals to work to ensure that the federal government engages in good-faith negotiations with members of PSAC. We must seize this opportunity to create lasting change for our public sector workers and for all Canadians who believe in fairness, justice and the right to be treated with dignity and respect. Our message to the Prime Minister and the government is clear: It is time to come to the bargaining table with a genuine commitment to fairness and justice for workers in the public sector.

I rise today to discuss and debate Bill C-280, an act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act. We in the NDP are proud to support this bill as it would give protections to long-struggling farmers whose crops we depend on. The NDP has a long record of advocating for farmers. In fact, it was small farmers in the Prairies, alongside union members, who moved to fight to protect people from the excesses of the market. They stood with Canadians feeling the brunt of the Great Depression and founded the CCF, which was the precursor to the NDP. That commitment to standing with rural and northern Canadians continues to this day.

People in my part of the country know those who are and are not our friends. We remember what happened when the Conservatives were in power and what was done to communities like the ones I represent. They sold off the Canadian Wheat Board. I raise this today because we are talking about the need for collective solutions to support farmers, farm families and farm communities. That is exactly what the Canadian Wheat Board was all about.

The single desk allowed for Canadian grain farmers to have security when it came to predicting their crops, marketing their crops and trading some of the best grain in the world. It ensured that the hard work of farmers was being recognized and valued through our trade relationships. Unfortunately, a number of years ago, Stephen Harper and his Conservative government went against the wishes of so many farmers in western Canada and dismantled the Wheat Board.

Since that time, we have seen big corporations in agribusiness, big grain corporations, make significant profits. Farmers continued to work hard. Some were not able to withstand the loss of the Wheat Board. Many farmers I speak to have regained some ground, but many speak very clearly about how losing the single-desk Canadian Wheat Board was a major loss.

In fact, the loss has reverberated in communities across my region. I have the honour of representing Churchill, and we know that the Port of Churchill was one of the most regularly used ports to export grains to certain parts of the world. It was and is obviously used seasonally, but it has not recovered since the loss of the Wheat Board. The rail line leading to the port has also lost a lot of ground since we lost the Wheat Board. This bill today recognizes that there need to be collective solutions to support farmers and farm families.

I also want to recognize the impacts of climate change on farming. We know that freak climate events are wreaking havoc across our country, and increasingly around the world. While many who are not involved in farming also face various challenges, we know that, for farmers, these kinds of weather events mean the loss of their livelihood and security, and they have already had devastating impacts on entire agricultural regions in our country.

As the economic situation of many Canadians becomes more and more difficult, unfortunately the government's actions are only compounding the situation. If we go to any rural or northern community in our region and elsewhere, we will hear the same thing: The growing season is shorter and weather is more unpredictable. Yet, following a long tradition of previous Liberal and Conservative governments, the current government sits idly by destroying our planet one oil subsidy at a time. It lacks the courage even to use the term “just transition”, much less to put into practice the need to remake our economy into one where everyone thrives. Instead, it is farmers, northerners and indigenous communities who are the first to pay the price for government inaction. This needs to change.

We have seen the breakdown of supply chains across the globe, and farmers are paying the price. COVID-19, the war in Ukraine, climate change and other factors have exposed the weaknesses in our supply chains. It is more difficult than it has ever been to transport food, especially fresh fruit and vegetables, from farm to store to table. At the same time, farmers' debts are growing. Furthermore, farmers do not currently have the right to regain products claimed under the Bankruptcy and Insolvency Act if they have not been resold or are no longer identifiable in the same state. Food that is spoiled, for example, is not considered to be in the same state, and farmers just lose the product. This is kicking someone when they are down, and it is unacceptable.

Farmers have been clear. They expect the types of changes needed to put them on a level playing field with our closest trading partner, the Americans. They expect a statutory deemed trust for payment protection from losses due to buyers defaulting on payment obligations, and so do we. That is why these sorts of calls have been part of our last three NDP federal platforms in 2015, 2019 and 2021. We have been very clear. We have called for a payment protection plan for produce growers. We have called to restore protection for growers selling to American consumers. The reality is that Liberals need to stop dragging their feet on this. Meetings will not cut it. Farmers have been waiting during seven years of Liberal inaction, and this needs to end. Farmers saw with horror how the Conservatives let a raft of honest farmers lose their financial protection, and the Liberals have sat back and refused to restore it.

These types of common-sense policies will reduce the number of farm bankruptcies, encourage timely transport of produce from farmland to fridge and provide a measure of stability in an already volatile food price inflation market. We thank the member for bringing forward the bill and encourage all members of the House to support it.

[John Barlow, Conservative, Foothills, AB]

Madam Speaker, before I begin my remarks on this bill, which was brought forward by my colleague from York—Simcoe, I want to say that I appreciate having the support of all the opposition parties on this very important private member's bill. However, in response to my NDP colleague, I am also extremely proud to have been part of a government that eliminated the Wheat Board and gave Canadian farmers marketing freedom and never-before-seen success. That is something farmers are extremely proud of.

Again, I want to thank my colleague from York—Simcoe. Certainly, I think all of us in the House appreciate his passion for his riding, or what he would call the “soup and salad bowl” of the country.

I had the opportunity to tour the Holland Marsh with my colleague last fall, and I had the chance to get down, get my hands dirty and harvest celery and carrots. This is something that does not really happen very often in southern Alberta in the foothills. That was an opportunity to see first-hand the dedication and commitment of those farm families to grow and produce the finest-quality fresh fruit and produce anywhere in the world. It just shows why this legislation, this private member's bill, is so important. It aims to create a limited statutory deemed trust to provide critical financial protection and assurance to our producers of these perishable fruits and vegetables in the event that a purchaser becomes bankrupt or goes into receivership.

I want to mention that the Liberals could bring forward this legislation any time. Interestingly, their 2015 election platform committed to follow through on exactly what my colleague has brought forward today. It is another promise made and another promise broken; it has been almost nine years, and they have yet to follow through on that election commitment.

Again it falls upon the Conservatives to do what the Liberals have failed to do and stand up for Canadian farmers. This legislation would ensure that produce sellers have priority access to an insolvent buyer's cash, inventory and accounts related to the sale of fresh produce.

The current rules severely limit the ability for produce growers and sellers to collect payment when their buyers declare bankruptcy. This is unique, as my colleague from York—Simcoe said, because if a distributor or a vendor went bankrupt, many times those products could be returned to the producer. Electronics, a bicycle or whatever the commodity or product was, it could be returned.

Obviously, with fresh fruit and vegetables, it is a very different situation. Either the product is consumed, or it rots in the warehouse, leaving the producer nothing. They cannot resell it because it has expired and rotted. They cannot collect the product back from the bankrupt retailer.

First, I want to give a bit of background on where we stand. The United States Perishable Agriculture Commodities Act, which many of us have heard referred to as PACA, provides protection to producers of perishable products in the case of a buyer's bankruptcy or insolvency. More specifically, it protects fresh fruit and vegetable growers.

The PACA provisions require buyers to maintain a statutory trust on fruit and vegetables received and not yet paid for. The reason for this is as follows: In the case of a business failure or bankruptcy, the debtor's true assets are not available for general distribution to other creditors until valid claims of trust from producers have been satisfied. This is to protect those fresh fruit and vegetable growers. PACA provided Canadian producers with the same rights as their American suppliers.

While Canadian firms had been the only non-U.S. entities benefiting from these same protections when operating in the United States, the lack of a comparable system here in Canada was a trade irritant to the United States. Not surprisingly, in late 2014, the United States revoked Canada's preferential access to PACA's payment dispute resolution mechanism. This was due to Canada's lack of a similar protection here in Canada, and it was stated that the preferential access would not be reinstated until a similar piece of legislation was passed in Parliament.

Again, it brings us back to the Liberal Party's 2015 election promise to do such a thing, which it has not done. As a result of that, fruit and vegetable growers here in Canada have been waiting more than eight years for the Liberals to act on the campaign promise. However, once again, the Liberals have not followed through on that commitment. With their track record when it comes to Canadian agriculture, this is not surprising.

From what we have heard here tonight, certainly this legislation is long overdue, but it seems that when those things come up the Liberals go out of their way to create trade irritants with the United States rather than solving these issues. We have certainly heard that with PACA tonight, front-of-package labelling, animal vaccines and removing critical pest management products from Canadian farmers that are impacting our American colleagues.

We also heard, just in committee today, from the Food Processors of Canada, that higher interest rates, higher input costs and the carbon tax are putting our producers and our processors in a very precarious financial position, putting even more urgency on this type of legislation, which would provide protection and cost certainty for our processors.

Throughout the years, as a long-term sitting member of the Standing Committee on Agriculture and Agri-Food, I know that this type of legislation has been supported unanimously by all the members of the committee. It has been a recommendation in numerous studies that we have done at the agriculture and agri-food committee, and yet the government has yet to act on that. Clearly, this is not a priority for the Minister of Agriculture, for the Minister of Innovation, for the Minister of International Trade or certainly for the Prime Minister. Time and again, the Liberals have targeted farmers with higher carbon taxes, burdensome red tape, removal of valuable pest management tools, and fertilizer tariffs. Liberal mismanagement on important trade files has put these critical international markets at risk.

We also heard from the Fruit and Vegetable Growers of Canada that 44% of fresh fruit and vegetable producers are selling their products at a loss, so there is no question that these bankruptcies and insolvencies can and will happen. In fact, we know they have already happened. Therefore, it is no surprise, when a survey goes out to Canadian farmers asking them if they feel that the current Liberal government is doing a good job supporting agriculture, that only 2% of the farmers surveyed say that they think the Liberals are doing a good job. It is from decisions or inaction on these types of critical pieces of legislation that this frustration and anxiety arise.

When we talk about why this legislation is needed, it only takes one bankruptcy to have a devastating impact throughout the industry, and certainly a ripple effect throughout all of our small rural communities that rely on these family farms. Certainly if we talk to my colleague from York—Simcoe and many of the members of Parliament around his riding, we will hear that the economics of the small communities in those rural areas rely on these industries.

I am sure the government will try to argue that there has been no demonstrated reason why this legislation is needed, but that is simply not true. We already had the Lakeside Produce company in Leamington, Ontario, file for bankruptcy earlier this year. There were 17 Canadian produce companies listed among Lakeside's creditors, totalling more than $1.6 million in unsecured claims. We can imagine the impact that has on the small family farms that are out those dollars and those products. Another 45 produce companies outside Canada, mainly in Mexico and the United States, are owed another $4.85 million. Not only could Canadian companies be in these circumstances, but this is a highly integrated industry and the ripple effects are significant. In addition to Lakeside Produce, in October 2021 a New Brunswick produce retailer declared bankruptcy, with more than $3 million owing to its creditors, including farmers and wholesale produce retailers.

It is absolutely critical that we give our fresh fruit and produce farm families this assurance, this economic safety net and certainly this protection so they can go about their business knowing that a bankruptcy will not put their own farm at risk. Also, as Canadians, we need this protection to ensure that our food security is protected.

I would encourage all members of this House to support this private member's bill and support Canadian farmers.

[Darren Fisher, Liberal, Parliamentary Secretary to the Minister of Seniors]

Madam Speaker, it is always an honour to rise on behalf of the good people of Dartmouth—Cole Harbour, in Nova Scotia. I certainly appreciate the opportunity to discuss Bill C-280 with my esteemed colleagues here in the House today.

We will undoubtedly hear more about the merits of this bill from our colleagues. For my part, I will focus on offering an overview on the changes it would bring to our insolvency regime, in particular where it would place fresh produce sellers in relation to other creditors, including farmers of other types of perishable products, employees, pensioners and potentially smaller and more local suppliers.

To fully grasp Bill C-280, we must start by considering how our insolvency laws currently work. There are two main insolvency laws in Canada: the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act, the CCAA. These laws address both business and personal insolvencies.

Business insolvency solutions include both restructuring and liquidation options to distressed businesses to mitigate impacts and make the best of a bad situation. If restructuring is not feasible and a liquidation is required, the BIA ensures the orderly liquidation of assets and distribution of proceeds to creditors. At the top of the list are deemed trusts and superpriority creditors, which currently include limited amounts for farmers, fishers and unpaid suppliers, including the fresh produce suppliers that are meant to benefit from this bill. It also includes amounts owed to employees for unpaid wages. Next are secured creditors, followed by preferred creditors and unsecured creditors, which would include most unpaid suppliers, such as landlords and construction and repair businesses.

First, as I briefly mentioned, there is already a limited superpriority for Canadian farmers, fishers and aquaculturists, which entitles them to payment ahead of other creditors for amounts owing on products delivered within 15 days of bankruptcy. The superpriority available to farmers under this provision applies to the bankrupt buyer's inventory or the proceeds of the sale of the inventory. Unlike Bill C-280, the existing superpriority applies to all Canadian farmers, including producers of other perishable agricultural commodities such as milk and eggs.

Second, any unpaid suppliers of goods, including fresh produce sellers, can seek to recover unsold, identifiable goods from a bankrupt purchaser within 30 days of delivery. Canada's insolvency laws balance debtors' and creditors' interests, enabling businesses, including those in agriculture and agri-food, to access credit, invest, create jobs and treat creditors equitably.

Typically, changes to priority payments in insolvency are only made in exceptional circumstances. My colleagues may, for example, remember Bill C-228, which elevated the claims in insolvency for amounts owing to pensioners, who in some unfortunate cases have seen reductions in their pensions and retirement benefits due to the insolvency of their employers.

Bill C-280 creates a deemed trust for the claims of fresh produce sellers. A deemed trust is an extraordinary legal tool that, when used, makes the proceeds of a sale the property of the seller and not the buyer. Even if the seller is not yet paid, in an insolvency the deemed trust would let sellers recover amounts ahead of all creditors and outside of the insolvency process. This is a much stronger legal tool than is currently enjoyed by any other private commercial creditor group in insolvency.

First, the deemed trust would apply to the entire fresh produce supply chain. This means marketers, intermediaries and wholesalers of fresh produce who are engaging in everyday business transactions, just like every other supplier or wholesaler of other goods to the bankrupt purchaser. I note that this could also include multinational grocery corporations that wholesale fresh produce to their affiliates and large American sellers selling into Canada.

Second, it would apply to all the assets of the company, not just the inventory.

Third, whereas the existing protections for farmers apply only to produce from Canadian farms, American and other international fresh produce farmers and suppliers participating in a Canadian insolvency would benefit under Bill C-280.

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

The time provided for the consideration of Private Members' Business has now expired and the order is dropped to the bottom of the order of precedence on the Order Paper.

The House resumed from April 19 consideration of the motion that Bill C-280, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust – perishable fruits and vegetables), be read the second time and referred to a committee.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

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.