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

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Mr. Speaker, it is an honour to rise in this place today and speak to Bill C-280, an act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act, deemed trust, perishable fruits and vegetables. I am pleased to second this bill introduced by my colleague from York—Simcoe, in June of this past year, to support the financial protection for fresh fruit and vegetable farmers.

Last week, I had the opportunity to speak to Bill S-227, establishing a national food day. During that speech, I took the opportunity to outline four factors that influence how much structure a particular food commodity gets and its efficient marketing between producers and buyers.

The factors were the perishability of the product, the complexity of its biology or technology, the ratio of buyers and sellers, and the international setting into which that product is marketed or traded. Today, I want to focus on one particular sector and one particular factor.

It is well known that fresh fruits and vegetables are highly perishable with a limited shelf life. I believe it is important for us to protect our farmers during the bankruptcy of a buyer. Unfortunately, current existing laws do not take this into account. The perishability of the product for sale is at the heart of the justification for this legislation.

This legislation aims to resolve this concern by establishing a deemed trust for fresh produce sellers, ensuring they have priority access to an insolvent buyer’s assets related to the sale of fresh product. It is important for us to note that the legislation also comes at no cost to the federal government.

The big banks will likely be opposed to this legislation, and I will come back to this point later.

The need for a financial protection mechanism has been a major focus of the sector for several years and has been included among many recommendations by stakeholders. A deemed trust mechanism is needed to address gaps in market stability, trade and food security. It is crucial that we help ensure Canadians continue to have access to fresh fruits and vegetables.

Growing, harvesting, packing and marketing fruits and vegetables comes with risks and costs that are unique to the production of perishable goods and returns on these investments are delayed until payment is collected, which is usually long after the product has been consumed by Canadians or has spoiled due to delayed payment.

Bill C-280 establishes an important tool to ensure that growers receive payment for their products, even in the event of a buyer bankruptcy. That means when produce has arrived at its destination, even if the buyer is unwilling to pay, the farmer will still get paid at least partially. Unlike in other buyer-seller relationships with perishable food, a farmer is not able to find and ship to another seller to make up for the lost sale.

It should be noted that in addition to providing healthy food to Canadians, the fresh produce supply chain supports 249,000 jobs in Canada. It is important that we continue to support these jobs and workforce in our country.

The introduction of a financial protection mechanism in Canada would also open the door to the reinstatement of preferential treatment under the U.S.'s Perishable Agriculture Commodities Act, or PACA for short, for Canadians selling produce into the United States. This preferential treatment had been in place prior to 2014 when it was rescinded by the U.S. due to a lack of reciprocal protection in Canada for U.S. sellers.

PACA was established in the U.S. at the request of the fruit and vegetable industry to promote fair trade within the industry. Since it was rescinded in 2014, several organizations representing parts of the Canadian agricultural sector have been lobbying consistently for an amendment to Canada’s laws so that the U.S. would revisit Canada’s preferential status.

The key issue that led to Canada’s preferential treatment being rescinded was protection in the case of insolvency for U.S. sellers, which has been difficult for Canada to implement since agricultural concerns are a shared responsibility between provincial legislatures and the federal government.

Before 2014, if bankruptcy or insolvency in the supply chain resulted in Canadian producers not getting paid, to start the dispute resolution process with preferential treatment under PACA would only cost the Canadian company $100. This dispute process was helpful and affordable to Canadian farmers because the traditional method of repossessing shipments would not work, as I said earlier, due to the high perishability of the product in question.

Without preferential access, Canadian companies trying to recover unpaid bills must post double the value of what they are trying to recover as a bond to make the claim. For an example, a small producer who is owed $50,000 would have to post $100,000 in cash to make a claim, effectively removing $150,000 from their cash flow or operating line for up to a year. Many cannot afford this and would simply walk away, losing what is rightfully owed to them, putting Canadian businesses at a steep disadvantage.

Canada did not choose to leave this agreement. Instead, we had our preferential status revoked in 2014 because U.S. legislators felt that their American suppliers to Canada were not adequately protected. Canadian companies are now treated under PACA the same as any other foreign licence.

In 2011, a bilateral regulatory co-operation council established by both the U.S. and Canada and created in Canada was created to address regulatory incompatibility between the U.S. and Canada that could be hampering trade. The issue of this inadequate trust protection was one of 29 issues identified.

It has been eight years since our Canadian fruits and vegetable farmers had preferential treatment under PACA, and it is time we change that. This bill offers the financial protection needed for fresh fruit and vegetable farmers to protect and support Canadian produce growers. Bill C-280 would pave the way for a reciprocal arrangement that would support Canadian businesses selling to our largest trading partner. Obviously, that is the U.S. Our farmers need a larger market to sell perishable produce. In my area, the greenhouse industry exports more than 75% of their production across the border to the U.S. and they need to have peace of mind, when they ship their products, that they will be getting paid.

It is important to understand that Bill C-280 would not require the government to offset or backstop losses incurred by farmers in the event a buyer could not meet its financial obligations. The legislation being proposed would create a deemed trust, which would cover accounts receivable, cash and inventory of the buyer stemming from the sale of produce on short-term transactions with payment terms not exceeding 30 days. Essentially, if a Canadian company sold produce to a U.S. buyer, who then resold it but did not pay the Canadian company, the trust would provide the mechanism to recover cash or accounts receivable for what was sold.

I am very proud to support local farmers in my riding and farmers across Canada by supporting this bill to give them the peace of mind they need. In particular, in southwestern Ontario there is a large greenhouse sector and a vibrant fresh fruit and vegetable sector. A recent bankruptcy of a vegetable marketing enterprise in southwestern Ontario only further supports the need for this legislation. The Minister of Agriculture has stated to the Standing Committee on Agriculture and Agri-Food that this legislation is not necessary because there have been negligible losses due to bankruptcy. I am sure that the farm that suffered a $1-million loss very recently because of the marketing company bankruptcy would very much disagree with that statement, and I would hope that my colleagues across the aisle would not bow to pressure from the big banks and support this bill.

The recommendation for a financial protection mechanism is not a new idea. It has been proposed repeatedly by stakeholders for several years. It has been long enough. It is time for us to take these recommendations and turn them into action. We need to show farmers that we support their efforts, their time and their resources and acknowledge the financial uncertainty it takes to produce perishable goods for our country. Let us stand with our farmers and protect them so they may continue to produce these very essential needs.

I am proud to second this bill, speak to this initiative brought forward by my colleague and champion the cause for fresh fruit and vegetable producers. I hope that my colleagues around this room will also support this initiative for our farmers.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

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.

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.

[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.

[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.

[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.

[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.

[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.

[Charles Stevens]

On that one, obviously, Bill C-280 is with the government at the present time. We would love to see that pass. The reason is that the United States protected us when we took fruits and vegetables and went into the United States. They had their own deemed trust, as it's called, and they took that away. We weren't protecting them when they put product into Canada, so they gave us a slap. We need to put this in so that we reciprocate and have the same type of protection on both sides of the border.

This costs the government nothing. It's a deemed trust. There's no money, but it puts agriculture.... When my producers take apples to the States and that company goes bankrupt, we're number one on the list to get paid. We're number one over the banks, because that's the only way: We can't take back that produce. It would be bad by that time, and we'd really be at a disadvantage.

This is a pretty simple thing. We've been working at it for 20 years and have yet to get it through. Your support would be great. At the end of the day, it will protect us for every dollar, because there are companies that will buy produce.... This is done in Canada too, such as when you go to the food terminals in Montreal. It protects us from people going bankrupt and not paying the farmer.

[Charles Stevens]

Okay.

Get farmers back to farming by streamlining government inspection processes. They are complicated and drawn out, especially the temporary worker program integrity audits. There were 11 audits on my farm last year. When I started, there were none. It doesn't help the farmer when he's under stress and harvesting his crop to have somebody come in and audit. At the end of the day, he has nothing wrong, and it just overburdens them.

Establish financial protection for fresh fruit and vegetable farmers in Canada to mirror the same policy in the United States by quickly passing Bill C-280, the financial protection for fresh fruit and vegetable farmers act. Our product is perishable. We can't collect it when there is a bankruptcy.

Implement a grocery code of conduct to protect domestic farms from risk of anti-competitive practices by large retailers, which are stretching family farms to the limit.

Correct the competitive handicap for Canadian farmers due to the fertilizer tariffs by developing a fair and equitable refund or tax rebate program.

Ensure farmers have the tools that they need to protect their crops by increasing funding to the pest management centre. That is not the PMRA. They got some dollars the other day, but the pest management centre is the tool that we use to get the new technology in crop protection to the farmers of the fruit and vegetable industry. That is the key big one because without them we're going down the tube. It's very important.

That's it. Thank you so much.

[Peggy Brekveld, President, Ontario Federation of Agriculture]

I'm happy to be here.

Canada is one of the few countries that have the ability to grow more food than we will ever consume. We have the land, water and climate. We have the people and knowledge. We don't worry about hitting a landmine as we prepare the soil. We have markets, a great reputation and safe food policies. Canada has a lot going for it. The world sees us as an answer to global food insecurity.

Global food insecurity is real and significant, and it needs long-term strategic answers. What can Canada do to improve the situation? Three things come to mind: one, ensure that farmers have the vital tools they need to be the best they can be; two, protect the resources that are required to farm; and three, continue to push the envelope through research, development and knowledge transfer.

No one can control the weather, but there are some things that we can control. Cell and broadband Internet allows us to be connected to markets and should be thought of as an essential service in Canada. Insurance programs such as AgriStability need enough dollars and need to work for and with farmers. Fairness inside of the marketplace through proposals such as the grocery industry code of conduct and Bill C-280, the proposed financial protection for fresh fruit and vegetable farmers act, will make it easier for farmers to balance some of the financial risks. Continued access to farm labour, both domestic and from other shores, will ensure that crops are planted, tended to and harvested on time, and that livestock is cared for. Finally, access to inputs such as fertilizer, equipment and packaging is critical to farmers and processors. These come from global markets.

Wise decisions and cautious development of ways forward need consultation with agriculture and decision-makers such as you. We can get these things right. The industry wants to be a part of a successful way forward.

To farm, there are a few basic needs. We need farmland, soil health, and access to water and the sun, but it tends to go up and down on its own. There are ways to protect farmland that the Canadian government can help with. As we look at infrastructure investment in urban areas, such as transit, government can ask great questions: Will this encourage walkable communities and renew cities inside of their boundaries? Will intensification targets be met?

Pushing for long-term strategic land use policies inside our major cities will actually protect farmland that grows food for the world. We can't keep watching our cities sprawl and expect that we can continue to grow as much food as we do now. Technology is great, but I am not going to grow wheat inside a container anytime soon. Farmland is a finite resource, and once it is put into homes or concrete, it never goes back to farmland.

Soil health also matters, and if we don't feed our plants as recommended by crop advisers, we see degradation, because the plants will mine the soils for the nutrients they need. Farmers know this and must balance the feed that the plants need according to their needs, including manure and green solutions, synthetic fertilizers and micronutrients. We can't feed the world without paying attention to the needs of plants and our soils.

Farmers would like to be acknowledged and rewarded also for the great practices they are currently doing. There are creative ways to do this, and the promotion of best management practices needs to be strategic. Farm organizations like ours can help you with this.

Finally, too often research into the best solutions for farming can't happen because of dollars. I'm aware of sectors that are struggling to get investment in research facilities and of research that isn't field-trialled because the dollars aren't there. Publicly funded agriculture research benefits all of society. It is trusted more and can answer some of society's concerns. Both basic research and knowledge transfer are critical to seeing Canadian farmers continue to be the best they can be.

As president of OFA, I see farmers' passion for growing things. Few have a desire to stay the same. They want to be the best that they can be in an environment that has tight profit margins and has many factors outside of their control. Our slogan is “Farms and Food Forever”. Farming isn't thought about in terms of years or decades, but rather in generations, and we should reflect on global food security, or insecurity, in the same way.

Thank you.

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

moved for leave to introduce Bill C-280, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust – perishable fruits and vegetables).

Mr. Speaker, I am very excited today and I am pleased to rise to introduce the financial protection for fresh fruit and vegetable farmers act, which proposes to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act to support Canadian produce sellers.

Every time I see the dark soil and endless rows of vegetables in the Holland Marsh in my community, the soup and salad bowl of Canada, I see opportunity. In order for that opportunity to be fully realized in the marsh and across Canada, more must be done to protect Canada's fresh fruit and vegetable growers during the bankruptcy of a buyer. We know that fresh fruits and vegetables are highly perishable with a limited shelf life. Unfortunately, the existing laws do not take this into account.

This legislation would address this deficiency by establishing a deemed trust for fresh produce sellers, ensuring they have priority access to an insolvent buyer's assets related to the sale of fresh produce. I am glad to bring this initiative forward and champion fresh fruit and vegetable producers. I trust that all members in the House will support this bill.

(Motions deemed adopted, bill read the first time and printed)