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.

[George Gilvesy, Chair, Ontario Greenhouse Vegetable Growers]

Mr. Chair and members of the committee, thank you for the invitation to present to you today on behalf of the Ontario Greenhouse Vegetable Growers. I am here today with Mr. Richard Lee, our executive director.

OGVG represents over 170 greenhouse vegetable growers across the province, producing over 3,900 acres of tomatoes, peppers and cucumbers. The greenhouse vegetable sector is one of the fastest-growing segments of Canadian agriculture. Our members generate $1.4 billion in farm gate sales as of 2022, a contribution of over 14,000 jobs to the workforce and a consistent track record of growth. The sector is a valuable contributor to the Ontario and Canadian economy, and it is the future of farming in Canada that is capable of yielding over 20 times more than conventional field farming as we manage the evolution of climate change.

With over 81% of our product exported to the United States, we are an export-dependent sector providing fresh, nutritious produce to consumers across North America. Our dependency on export and trade was confirmed during the pandemic that defined the integration of the food system across North America. This dependency correlates to the need for alignment on policies that impact our ability to compete sustainably in the global marketplace while managing the crisis on food costs to the consumer.

Canada’s approach to climate change presents a major challenge to our growers. The escalating price on carbon only works where users can feasibly transition to alternative energy sources. These transitions and timelines face significant barriers with the lack of available technology and the limitations of public infrastructure, primarily in the electrical grid. Canada continues to penalize food producers, while the United States adopts incentivization to achieve its climate change goals through the Inflation Reduction Act and its various programs.

In 2024 our members will pay over $18 million in carbon tax, net of the 80% relief we currently receive. This is scheduled to be over $40 million by 2030 based on current production if the 80% relief is maintained. In summary, over a 10-year period, our members will have paid over $242 million in carbon tax.

Canada is not an island, and we have great concern that policies around carbon and plastics will influence the continued growth and investment in greenhouse production throughout Canada. Greenhouses will continue to be built to satisfy consumers' increasing needs for food security and fresh produce, but the question will be whether that investment takes place in a jurisdiction that penalizes food production or in one that provides incentives. In the interim, however, we would encourage the swift passage by the House of Commons of Bill C-234 in its original state.

For years, our members have been consciously looking at improving the packaging options for our products. We have embraced the use of packaging that is recyclable to protect the integrity of our produce, providing food safety and traceability while offering consumers new options on ready-to-eat healthy snack-size produce products.

We have serious concerns, again, about the imposition of plastics rules that ignore many of these positive attributes while also increasing food waste and the potential costs of produce by an estimated 34%—according to Deloitte—and while negatively impacting healthy eating habits. This plastics policy will create two different market requirements for the U.S. and for Canada, which may lead to products being unavailable to Canadian consumers if shippers no longer consider Canada to be a viable market for their products.

In the context of producing food, we would offer this: Does it make sense to institute policies and direct taxes that have the impact of increasing food costs? Everyone needs food, and we again would suggest that incentivizing change may provide a better approach and outcome.

We also have comments on a few other points.

OGVG strongly encourages the swift passage of Bill C-280, which is currently in front of the Senate. Financial security is a critical aspect to supporting farmers, and this bill supports a long-standing gap in the produce sector. In addition, it will provide a corrective action on a long-standing trade irritant with the United States.

OGVG advises that in the context of climate change, Canada should consider a North American perimeter strategy on pests and diseases.

Based on previous outdated pest assessments, the CFIA believes these organisms will not survive our cold winters, but the weather is changing, and so is the availability of hosts in the expansion of greenhouses and indoor agriculture. Our pest risk assessments should be re-evaluated.

As a final comment, Mr. Chair, greenhouse producers do not have access to production insurance, and our current safety nets are not representative of controlled environment agriculture. In addition, our experience with AgriRecovery has been dismal, in spite of multi-million-dollar losses and a great impact on our membership.

Thank you for the opportunity to present today.

[Catherine Lefebvre]

Bill C-280 is very good for us. It represents financial security. Given the number of clients we have, I'd say it really represents financial security for Quebec.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you very much, Mr. Chair.

Thanks to the witnesses for being with us today.

My question is for Ms. Lefebvre or Mr. Léger Bourgoin.

Bill C-280 is now at the second reading stage in the Senate, and we hope it will receive royal assent as soon as possible.

Do you have a clear message for us regarding the direction and relevance of Bill C-280?

[Ron Lemaire, President, Canadian Produce Marketing Association]

Thank you, Mr. Chair, and good morning, committee members. I want to thank the committee for the opportunity to speak on the issues impacting Canada's horticultural sector.

CPMA, as you know, represents 850 companies growing, packing, shipping and selling fresh fruit and vegetables, and is responsible for 90% of the produce sales in Canada. In 2023 the Conference Board of Canada pegged our sector's contribution to the national GDP at almost $15 billion and found that the fresh produce supply chain supported over 185,000 jobs in rural and urban communities across the country.

The issues impacting the fresh produce supply chain are diverse and complex. First, fresh produce consumption is declining. This is a concern. Government support is needed to keep produce accessible to Canadians and make it easier for Canadians to meet Canada's food guide recommendation to fill half your plate with fruits and vegetables.

Year over year, consumption rates have decreased as food prices have increased. Canadian adults should be eating seven or more servings of fruits and vegetables daily, but recent reports found that 34% of Canadians are consuming just one or two servings per day. In fact, the latest Stats Canada numbers show that almost 80% of Canadians over the age of 12 are eating less than five servings a day.

There are both health and economic consequences to these trends. A recent report by Professor Krueger at the University of British Columbia found that as fruit and vegetable consumption has decreased, the economic burden attributed to low consumption in Canada has increased to close to $8 billion annually, a 60% increase since 2015. Supporting access to nutritious produce, including through a national school food policy and school meal program, could contribute significantly to Canadians' health and well-being, while also decreasing the government's health care spending.

Second, increasing overall access to fruits and vegetables across Canada requires government programs and policies to address the regulatory burden and significant challenges impacting our sector's ability to produce and distribute fresh fruits and vegetables, such as the availability and costs of labour, production costs, transportation and border access. The national supply chain office and the development of a national supply chain strategy are important opportunities for more effective cross-government collaboration to help ensure that Canadians can continue to put our essential products on their table.

Third, it is crucial to recognize the costs of adjusting our supply chain to meet the challenges posed by emerging sustainability and environmental policies. CPMA members have been showing leadership in addressing such areas as biodiversity, greenhouse gas emissions, carbon sequestration, food loss and waste, renewable energy, soil health, water conservation and much more. The fresh produce sector has also undertaken significant efforts to align with the government's zero plastic waste agenda. Since 2019, our sector has experienced a 17% decrease in plastic volumes due to industry programs to address the government targets. However, the produce industry remains concerned with recent ECCC proposals related to the fresh produce packaging elimination strategy and targets that are impossible to meet for our sector.

We are keen to work with the government to support and build on industry's substantial efforts with regulatory and policy initiatives that align with global practices and policies to ensure the sustainability and competitiveness of the agri-food industry, offer incentives for industry efforts, provide secure access to safe food for Canadians and do not create unintentional food waste or increase the carbon footprint of the Canadian food supply.

I would be remiss if I did not mention financial protection for produce sellers and the grocery code of conduct. CPMA is greatly appreciative of the support shown by all committee members for Bill C-280. We hope you will strongly encourage your Senate counterparts to prioritize the passage of this important legislation. Also, as an interim board member of the code, I can attest to the fact that everyone continues to work hard to introduce a voluntary code that is uniquely Canadian.

As noted earlier, the issues impacting our sector are very complex. We need to take a full food system approach. We have shared with the committee our list of recommendations for the 2024 federal budget. These recommendations include areas not covered in my remarks.

I would close with this: The government needs to make food a federal priority and promote effective policies to support the production and movement of perishable items like produce to ensure the long-term viability of the fresh produce supply chain in Canada.

Thank you very much for the opportunity to join you today. I'm happy to answer questions later.

[Marcus Janzen, Vice-President, Fruit and Vegetable Growers of Canada]

Thank you, Mr. Chair.

My name is Marcus Janzen and I have the privilege of serving as the vice-president of the Fruit and Vegetable Growers of Canada. I also, during the day, have a pepper greenhouse just outside of Vancouver, British Columbia, in Abbotsford.

I'm here before you to discuss the pressing issue of stabilizing food prices in Canada, a concern that deeply affects Canadian fruit and vegetable growers, as well as all Canadian citizens. FVGC represents approximately 14,000 farms, producing 120 types of crops, and we contribute about $6.8 billion to the Canadian economy.

A 2022 survey conducted by our organization revealed that close to 44% of our growers are operating at a loss presently, and three-quarters have difficulty offsetting production cost increases that would include the carbon tax, the P2 plastics program, tariffs on fertilizer and aggressive targets for reducing fertilizer emissions. Those challenges, including Bill C-234, risk the sector's affordability and sustainability going forward.

Bill C-234 is at a critical place. By eliminating heating and cooling exemptions to greenhouses and barns, this jeopardizes our competitiveness, as we heard from the previous witnesses, particularly relative to the U.S.

We propose a series of actions that would include the following: reject the proposed amendments to Bill C-234; remove the P2 plastics program in order to further evaluate, particularly when it comes to PLUs, the unintended impacts on costs and therefore food prices; and eliminate the fertilizer tariffs in order to not disproportionately negatively effect domestic producers. We need, again, the idea of having a more cohesive regulatory conversation with government before policies are in place. We would look for the quick passage of Bill C-280, which is essentially the PACA-like trust to be reinstated.

Lastly, we would support an increased resolve to bring the grocery code of conduct into reality.

That concludes my remarks.

Opposition Motion—Passage of Bill C-234 by the Senate

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

Mr. Speaker, allow me to withdraw the comment and apologize. I want to recognize that the Bloc absolutely is in line with the NDP on abolishing the upper chamber.

The member is right. In addition to Bill C-234, there is a very important bill that we were proud to support, Bill C-282. There are a lot of supply-managed farmers in my riding who personally met with me. I met with many of their industry groups.

We were proud to support that piece of legislation, because we simply cannot trust Liberal and Conservative governments to honour the spirit of supply management. We agreed with the Bloc Québécois in putting that in legislation so that we can prevent future governments from negotiating away our supply-managed industries.

I want to give another shout-out. The member for York—Simcoe has Bill C-280 in the Senate. I hope that the Senate will respect the will of this House, because that is another important bill dealing with the Canadian Produce Marketing Association and the fresh fruit and vegetable sector.

Again, strong agricultural bills are coming from the House of Commons. I think one thing that Canadians deserve from us is for us to have consistency in our positions. If we look at the Conservative history at the Senate, it has been anything but consistent.

Financial Protection for Fresh Fruit and Vegetable Farmers Act

[The Speaker, Liberal, Greg Fergus]

The House will now proceed to the taking of the deferred recorded division on the motion at third reading stage of Bill C‑280, under Private Members' Business.

The House resumed from October 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 third time and passed.

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

Mr. Speaker, Canada's fresh fruit and vegetable growers should be paid for the fruit and vegetables they grow, full stop. Bill C-280 will ensure that fresh fruit and vegetable suppliers are not unduly disadvantaged by the bankruptcy of a produce buyer.

The deemed trust established by this bill will also support the highly integrated produce trade between Canada and the United States. Farmers and other suppliers in Canada have been pushing for these measures for almost 20 years. The absence of a deemed trust has cost produce suppliers their farms and livelihoods and has jeopardized our domestic food security. With Bill C-280, we can finally change that.

This is a common-sense Conservative bill that has been supported by all parties in this House. I want to thank all members for that, especially the Conservative shadow minister for agriculture and agri-food, the member for Foothills; the chair of the Standing Committee on Agriculture and Agri-Food, the member for Kings—Hants; the member for Berthier-Maskinongé; and the member for Cowichan—Malahat—Langford for their support. It goes to show the cross-country support this bill has.

Bill C-280 will provide financial protection measures for those growing fruits and vegetables from coast to coast to coast. This includes asparagus in Quebec, sweet potatoes in Nova Scotia, and carrots in the soup and salad bowl of Canada, home to the Holland Marsh in my riding of York—Simcoe. Of course, this week we saw the leader of the official opposition clearly loved the Ambrosia apples in the great province of British Columbia. How about those apples?

I am also grateful to Ron Lemaire and Shannon Sommerauer from the Canadian Produce Marketing Association, Quinton Woods from the Fruit and Vegetable Growers of Canada, Fred Webber from the Fruit and Vegetable Dispute Resolution Corporation, Jody Mott from the Holland Marsh Growers' Association, and of course, my number one staff in Ottawa, Patrick Speck, who worked tirelessly on this bill with me, as well as my staff in the riding: Jennifer, Michael and Carol.

My thanks to Suzanne, my wife. I told her that it would all be worth it, all the long days and nights here in Ottawa, which I know all members can appreciate.

It is time we get this over the line. I urge members to support Bill C-280 when this is voted upon next week. I trust that legislators in that other place with the red carpet, who can be a little slow sometimes, will deal with it promptly, given the multi-party support for these measures. Like we say in York—Simcoe, “Be ready, Senators”.

Right now, Canadians are dealing with the high cost of food. With Bill C-56 and other measures, the government has been talking about stabilizing food prices. Bill C-280 is going to lower prices of fresh fruits and vegetables that Canadians need now, so we all need to get behind this.

Too often Canadians, especially rural Canadians, think we cannot work together in this place. They think we cannot get anything done and they believe that whatever is accomplished does not have any relevance to or impact on their lives. In rural communities, people band together every day. They are the foundation of what it means to be Canadian. They want to see this place work for them, they want to see the way it works for one another. I firmly believe that Bill C-280 sends a message to every produce farmer and supplier that we understand the issues they face and that we are committed to addressing them.

The hard work of passing this bill is nothing compared to the boots in the muck in the Holland Marsh, which all farmers face right across Canada, but I can tell colleagues this. We are going to get behind them with this bill. We are going to get it done. Let us get Bill C-280 passed for the farmers right across Canada.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Mr. Speaker, I am pleased to be here this evening to speak to Bill C-280, which was introduced by the member for York—Simcoe. He sits next to me here in the House, and he is certainly not afraid to make his voice heard when it comes time to defend our produce growers. The Bloc Québécois is pleased to join him in his efforts.

Many members of the Bloc Québécois would have liked to sponsor this bill. I am thinking, for example, of the member for Berthier—Maskinongé or the member for Salaberry—Suroît. I, too, could have introduced this bill, because there are a lot of produce growers in my riding of Mirabel. The bill could have also been introduced by the member for Joliette or the member for Repentigny. In short, we all care a lot about this issue.

I therefore want to thank my colleague. There are some nice moments in Parliament when we can say that we are working together to do important things. Perhaps this should have been done sooner. This also reminds us of the importance of private members' bills, because they are inspired by what we see on the ground, by the people and businesses in our ridings. It reminds us of the fundamental work that members must do on the ground. I truly commend my colleague and, obviously, he is invited to come visit the maple capital of the world, Mirabel, any time he likes.

Produce growers, meaning fruit and vegetable producers, are still facing major challenges that continue to grow. We have talked about production costs, the cost of fertilizers and raw materials, and the declining demand for certain niche products as people struggle to afford things that can sometimes be perceived as luxuries at the grocery store.

We have talked about the Conservatives running deficit after deficit when they were in government. Things went from bad to worse under the Liberals. They are the kings of deficits. We have talked about bargaining power. Sometimes, small producers have to negotiate with resellers.

Bad weather is also a factor. I met some produce growers this summer as part of the Canada summer jobs program. I visited some businesses. I met Léanne and Vincent from the Entre Ciel et Terre farm in Sainte‑Anne‑des‑Plaines, Stéphanie from the Complètement légume farm in Saint‑Augustin, and Cinthya from Tierra Viva Gardens in Saint‑Augustin.

As we walked around the plots, they told us that they had lost 100%, 50% or 75% of this or that crop because of the rains. These people do not make a lot of money. They are true artisans. This serves as a reminder, and we cannot stress this enough, of the need for compensation programs here in Ottawa. However, that file is not moving forward quickly.

We can talk about the difficulties associated with climate change, bad weather, labour shortages, Immigration, Refugees and Citizenship Canada and the issue of temporary foreign workers, which creates challenges for our businesses. Then, there is foreign competition, obviously.

It is important to protect these companies when they sell their produce to resellers. How does the current system work? The member for York—Simcoe helped me gain a better understanding of how it works when someone is a fruit and vegetable grower.

Say that an American grows apples and sells them to a grocery store, to a reseller. If the grocery store goes bankrupt, this American has protection. He is registered as a supplier and, if the grocery store goes bankrupt, the government recognizes the fact that, since the supplier has not been paid, these fruits and vegetables belong to him and he is immediately reimbursed. That is the American system. Until 2014, Canadian and Quebec producers benefited from this system because they could sell their produce in the United States. If they sold to a grocery store in the U.S. and the grocery store or chain went bankrupt, they could get reimbursed the same way. This meant that we were relying on the Americans to protect our own producers.

In 2014, the Americans looked at what Canada was doing and found that Canada was in bad shape, that it had a terrible approach. They realized that their producers would not be protected if they sold their produce in Canada. If a Canadian grocery store or reseller went bankrupt, the producers would not get paid unless they went through an extremely costly process, which no small producer would go through if they could avoid it. Logically speaking, our own farmers were not protected either. The Americans told us to wake up, smarten up and protect our farmers and theirs so that there could be some sort of reciprocity.

In 2014, when the Americans tried to clue us in and told us that they were sick of protecting our farmers for us, they thought this would make the Canadian government sit up. They thought they were alerting Canada to take action. What has happened since? Cue the crickets, because nothing happened. The federal government did nothing. Now our farmers are no longer protected either in the United States or here at home. That is tough.

In 2016, we had a new Prime Minister who said, “Canada is back”. That was two years later. He went to the Fruit and Vegetable Growers of Canada and promised to get Canadian farmers back into this U.S. program, which would require Canada to adopt certain measures. Then the same old thing happened that always happens with the federal government when things are urgent: it waited and waited and waited.

Today, a courageous MP decided he would table these changes in the government's place. All of us members who have farmers in our riding are proud of that. We are proud to support him. We think this bill should have been fast-tracked directly to the Senate. We think there should not have been any nonsense. We think that there has been enough nonsense since 2014, and this process should have gone faster.

Right now, if our farmers want help, there are mechanisms. For example, in the United States, they have to file suit. There is a mechanism requiring them to pay a deposit worth twice the amount of the claim. They do not have the means to do that. The idea is to deter them so they never get paid for their fruits and vegetables and the products they sold to a reseller. It is disrespectful to the farmers who feed us and feed our cities. I want to stress that part for those who do not represent agricultural ridings. We are all connected to those farmers in some way.

Not only is it disrespectful, but it is also completely out of touch with the reality of being a farmer. Farmers have plenty to do without having to go to court, hire lawyers and waste their time on administrative procedures. Farmers are on the ground, dealing with all the problems I listed. They are in the fields, the orchards and the greenhouses. They take care of their businesses and their workers. They deal with temporary foreign worker applications while Immigration, Refugees and Citizenship Canada takes its sweet time and the federal government does nothing to make the system better. That is what they do.

This bill will make their lives easier. It is going to restore justice. It is going to reduce the risks they bear in one of the riskiest sectors on the market. As we can see, it is getting harder and harder to attract new farmers, because it is not easy work. I want to thank the bill's sponsor for making all this easier for our farmers.

The bill will make the buyer of these products liable for the value of the shipment. The shipment will not belong to the buyer until the invoice has been paid. There will be a kind of priority list so that, if the person who has ordered agricultural products but has not paid their invoice goes bankrupt, the producer will be assured of getting paid without much trouble.

Right now, the system says that farmers have the right to get paid. Fifteen days after the bankruptcy, they have the right to recover the goods that were sold 30 days before. Do members see how little sense that makes for the agricultural industry? If any member of the House is opposed to this bill, I would challenge them to eat a 45-day-old salad or some withered old strawberries or blueberries. They can do it in the lobby and I will film it.

Under the current system, what we are telling farmers is to take back their rotten produce. That is how we are treating them. The current system is rotten. It needs to be changed. We need to move forward on this. This bill needs to move forward. The Senate needs to pay close attention to this so that this bill is passed quickly.

[Chris Bittle, Liberal, Parliamentary Secretary to the Minister of Housing]

Mr. Speaker, I am pleased to rise today to talk about Bill C-280, which was first introduced by the member representing the soup and salad bowl of Canada. I know you said not to come up with new riding names, but I think the hon. member appreciates it in this particular case. I would like to thank the member for getting the process started and for the important steps that have already been taken on the way to getting the bill through the parliamentary process.

The aim of the bill is to help our fruit and vegetable growers by reducing the financial risks they face. Growers and farmers work hard, take risks and provide Canadians with healthy produce. Furthermore, growers do not get paid in many cases until their produce goes through numerous steps of a long supply chain to get to the consumer. This is risky from a financial perspective, as the bankruptcy or insolvency of any of the players along the supply chain may result in the grower not getting paid.

The government has taken important steps to make things better for growers and farmers. One example is the passing of the safe food for Canadians regulations in 2018. However, the risk is not completely gone and we can still do more. We heard a lot from witnesses during the bill's study at the agriculture committee that our growers and farmers still face the problem of non-payment if a link in the supply chain becomes bankrupt or insolvent, which is a real risk already, given the tight profit margins. In short, this is why we are supporting Bill C-280.

We in the House agree that this bill is a good idea, but as we heard during the study of it at committee, it is not perfect and there are issues that the government and this House should continue to monitor to ensure that we maximize the bill's potential to assist growers. I note two issues in particular: first, the impact of the bill on access to affordable credit for growers and sellers and the fresh produce supply chain, and second, the potential for the bill to restore Canada's preferential access to the formal dispute resolution process under the United States' Perishable Agricultural Commodities Act, the PACA, which regulates the fresh produce sector and provides financial protection for sellers.

In committee, members heard from a witness who was concerned that the changes made by the bill might make banks less willing to give loans, or they might charge more when lending to fresh produce sellers. This is because the bill would change the creditor priority in insolvency, and such changes could cause lenders to react with high credit costs or lower availability to compensate for higher risks of non-payment.

This witness had extensive experience in the fresh produce industry in both Canada and the United States, and his concerns stemmed from the impact that the PACA had south of the border. He explained to the committee that in his experience, U.S. lenders reduced crucial operating credit lines for produce sellers or required additional security, because the PACA deemed trust is paid ahead of all other loans and lines of credit in a bankruptcy or other payment default. It is important to note that the Canadian Bankers Association also raised this when the Department of Industry consulted on this issue several years ago. However, this was a minority view at committee, and most fresh produce industry representatives downplayed these credit risks. The committee gave appropriate weight to their assessment, given their knowledge and experience.

I am noting the concern here to invite the government to monitor the situation in the months following the entry into force of the legislation so that corrective measures can be taken in a timely manner if Canadian lenders decide to take the same approach as U.S. lenders. Industry witnesses before the committee emphasized the importance of trade credit to the fresh produce supply chain and, as such, I believe we will want to make sure the bill achieves its intended objectives.

A second issue to consider is getting back Canada's preferential access under the PACA. Before 2014, Canadians, like Americans, could use the PACA for free. Unfortunately, in 2014, the U.S. rescinded Canada's preferential access.

At this stage, we do not know for sure if passing Bill C-280 will result in PACA access being restored, and as far as I know, parliamentarians were not provided with any direct confirmation from the United States. While the committee heard from industry representatives that they believed restoration was likely in that case, this is another area where attention should be paid at the implementation stage. I trust that the government will do all it can to ensure that Bill C-280 leads to the restoration of preferential PACA access should the bill become law and will monitor the situation closely and on an ongoing basis.

Finally, I would like to reiterate the point made by my colleague, the member for Kings—Hants. Seemingly small legislative adjustments such as Bill C-280 can have significant positive impacts on our agricultural community. We should look for other opportunities to help our farmers and growers through regulatory and legislative tweaks, which could have positive impacts without adding more to the budget. The member from Kings—Hants mentioned streamlining regulatory approvals for agricultural products as one example. I look forward to hearing more about this and other ideas from the members of our agricultural community, including the parliamentary secretary, who is very enthusiastic about all things agricultural.

In summary, Bill C-280 is a good step toward supporting our hard-working fresh fruit and vegetable growers and making sure Canadians continue to have healthy food on the table. Let us also keep watching to make sure the bill reaches its potential.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Mr. Speaker, before I get started in speaking to this great bill, I really want to pass on that today is a very special day for our family. Today is my 38th anniversary. Hello to Leigh, wherever she is watching me.

I rise to speak to Bill C-280, the financial protection for fresh fruit and vegetable farmers act. I want to thank my colleague from York—Simcoe for introducing this piece of legislation in Parliament. I know that the member for York—Simcoe represents Holland Marsh, which is known as the soup and salad bowl of Canada. The reality is that Bill C-280 would not only be support for fruit and vegetable growers and producers in this region but also all across Canada. That is why I am so excited to support this bill today.

As a former farmer myself, I know that farming is not just a business, but it is a way of life for many Canadian families from coast to coast. This way of life is not an easy one. There are significant risks and uncertainties that farm families take on every year to grow food that feeds the world. Producers face many uncertainties every year, including unpredictable commodity prices, Mother Nature and the ability to obtain revenue for their product. Producers are forced to work within a very limited growing cycle and one bad year could put the family farm business at risk.

One of the most significant things that can impact a producer is when a purchaser of their product declares bankruptcy. When a buyer declares bankruptcy, the impacts to the producer can be devastating. Many of the farmers I represent are grain, pulse and cattle farmers. While this bill would not directly impact them, they understand the importance of protecting producers from the insolvency of businesses that purchase their product.

When I was a young farmer, a few years ago, I was in a situation where our local grain buyer became insolvent. The situation was made worse for our farm and others in the area because the insolvent party was not only buying our product but was also selling us inputs for the next year's crop. Preventable moments like this put undue stress on family farm businesses. Because of the seasonal nature of farming, farmers plan months and years in advance to keep their businesses operating.

Therefore, when a buyer who is the main purchaser in an area suddenly goes insolvent, this puts undue stress on the entire area. By the way, we are talking about an area the size of P.E.I. That is how big the purchaser of our product was and it did take down the whole region. I am sure members can imagine the uncertainty for this entire area and the undue stress it would have put on farm families. Pricing everything else accordingly while simultaneously tracking inputs so that a farmer can maintain a cost coverage to keep profitable is enough of a challenge. Adding bankruptcy, an entirely separate issue, to the equation can create a whole range of complications, crippling farmers without warning.

The way the value chain is designed, it requires the farmer to have a buyer and contracts in place before they even step into the field. That means they need to enter negotiations on how much they will sell their pound of product for, without any guarantee that they will grow a crop. That means the Canadian farmer is forced to be all in. They can do everything right. They can get the product to the buyer's doors and then not get paid for the product. It is a devastating blow for anyone when they do not get paid for the hard work they do every day. While the current mechanisms within the Bankruptcy and Insolvency Act may be suitable for the wider agriculture industry and other sectors, the current approach does not work when fresh produce buyers become insolvent.

Fruits and vegetables are perishable. The shelf life of these products is not long. This is why the risk of the buyer becoming insolvent is so much more devastating to fruit and vegetable producers. Their products can rarely be recovered because they will have already spoiled. Without the ability to recover the product or access current mechanisms in the Bankruptcy and Insolvency Act, fruit and vegetable producers can face a significant loss that could very easily put them out of business. Imagine the effect this would have on a producer's insurance, their farm and their family. There are only so many hits one can take before the ship starts to sink.

The uncertainty of producers not being paid for their products is very real, but it is also avoidable if we pass this bill into law. Members do not need to just take my word for why this legislation is needed. They can listen to the Canadian fruit and vegetable producers who have rallied behind Bill C-280 in support.

Jan VanderHout, the president of the Fruit and Vegetable Growers of Canada, stated that this will have a very positive impact on our national food supply, lowering cost to consumers.

The chair of the Canadian Produce Marketing Association stated that, for too long, Canadian produce growers and sellers have shouldered the financial risk when selling their products. The challenges of the pandemic and the massive increases in costs they have experienced over the past few years have put many in an even more vulnerable position. He hopes that all members of Parliament will vote in favour of this important piece of legislation to support the long-term viability of their sector and send a message to their growers and sellers that we have their backs.

While I said there are reasonable protections for producers, there is a lack of protection for them within the banking industry itself. I believe that too often business people, with no understanding of how the agriculture industry operates, undertake uncalculated risks that could undermine the survival of the farms they do business with. That is why I am so grateful to my colleague for bringing this bill forward in the House of Commons and why I am so proudly supporting it.

As a lifelong farmer, I know that many farmers have faced challenges where they wished there was a mechanism in place to protect from the devastation of an insolvent buyer. It would allow producers to have more protection from the buyers who hold their very livelihoods in their hands. Bill C-280 would build that certainty into the financial landscape. This increased certainty would allow for reduced produce costs that could be passed on to the grocery cart of Canadians. With food inflation limiting how many fresh fruits and vegetables Canadians can afford, reduced costs are needed now more than ever.

This bill is a practical solution to a very serious problem. Farmers should not have to fear being shortchanged when their buyer goes insolvent. It is a common sense approach for the common people who feed our country and the world. The bottom line is that our agriculture producers need to get paid for what they grow. Anytime that system breaks down, the stabilization of the entire food supply is at risk. If we do not pass this bill, we are continuing to set up our fruit and vegetable producers for failure.

Now, more than ever, it is critically important that we send this very clear signal to our agriculture producers across the country. The NDP-Liberal government has neglected farmers for far too long. By passing Bill C-280, it has a chance to stand with Canadian producers for once.

In closing, I want to mention that one of Canada's newest vegetable producers, Vermillion Growers, earlier this year opened a state-of-the-art tomato greenhouse in Dauphin, Manitoba. The folks at Vermillion Growers are working tirelessly to become a leader in growing fresh, local produce that will feed Canadians across the country.

I am very fortunate to represent this new business in Parliament, and I know that Bill C-280 will support local growers just like them. I hope all members in the House will support Canadian fruit and vegetable producers by passing Bill C-280.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I am not sure what I did to deserve such applause and support from my Conservative colleagues, but I appreciate it. Sometimes it is possible to be transpartisan when one has good ideas. I tip my hat to my dear friends.

It is a great pleasure for me to rise in the House today to speak to Bill C‑280, which is extremely important for our farmers, particularly our fruit and vegetable growers. Bill C‑280 seeks to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act to put vendors of perishable products, such as fruits and vegetables, at the top of the list by holding the production value in trust. Perishable goods are a special case when a company goes bankrupt because the supplier cannot simply take back its goods and resell them. This measure is necessary and our farmers deserve it. The Bloc Québécois strongly supports Bill C‑280.

As a representative of Quebec's agri-food capital, I am obviously very concerned about the agricultural industry and its artisans. I often say that they hold the only occupation that we need three times a day. That is why I want to thank the hon. member for York—Simcoe, who is sponsoring this bill in the House, and my esteemed colleague and friend, the hon. member for Berthier—Maskinongé, who is co-sponsoring it.

I know how important it is for our two colleagues and all my Bloc Québécois colleagues to pass this bill quickly. The protective measure it will bring in is desperately needed across Quebec. We look forward to seeing it implemented. I share their eagerness to finally see our fruit and vegetable suppliers protected, so they can avoid seeing their crops go to the compost pile without being able to do anything about it. Not everyone in the House is quite as keen, despite the unanimous support this bill has received. We asked for unanimous consent to send Bill C-280 directly to the Senate, but unfortunately, some members would not give their consent.

This is a long-standing demand. The Liberals promised back in September 2014 to address this issue with the Canadian Produce Marketing Association if they were elected in 2015. They reiterated their commitment in 2016. The NDP and the Conservatives also made similar promises in their election platforms. It was also in their platforms in 2021, so I have to wonder why this has taken so long and why Bill C-280 could not be fast-tracked to the Senate.

We are now in 2023. The first promise was made in 2014 and we are in 2023. Better sooner than later, but better late than never. I am pleased to see that we are near our goal, especially given that the implementation of our protection will also help remove an irritant in our relationship with our American neighbours.

The sector's request of such a bill has been so strong since 2014 because on October 1 of that year, the U.S. Department of Agriculture revoked preferential access from its legislation for perishable agricultural products from producers here at home. Up until that point, Canadian and Quebec farmers were protected by this legislation in cases where American purchasers declared bankruptcy. Since Canada, for its part, did not have a trust mechanism for cases of buyer bankruptcy that could have protected American farmers, the U.S. decided to remove that security from Canadian suppliers. In short, they did that in response to a gap in our legislation.

Although an alternative process has been developed between the two countries, it is extraordinarily cumbersome, especially for smaller companies, which have to undertake the tedious process of filing a lawsuit. If they decide to take on this bureaucratic ordeal, they must post a bond worth double the amount claimed in the lawsuit, according to the Canadian Produce Marketing Association. Then they are in a pickle, if I may say so. I am not just using that expression because we are talking about produce. In short, they are in a pickle and the major buyers know it. As a result, companies are forced to negotiate downward with the buyer, because they would still rather receive a fraction of the value of the fruits of their labour than nothing at all.

The U.S. is demanding that Canada provide protection similar to that offered by the U.S. Perishable Agricultural Commodities Act before it will again give Canadian producers access to its program. Passing the bill we have before us today will provide protection not only for our producers doing business domestically, but also, with a little good faith on the part of the U.S. administration, for those doing business with American buyers.

I just want to point out here that the U.S. Perishable Agricultural Commodities Act was adopted in the 1930s, so it is high time we adopted a similar mechanism.

I hope you will agree with me, Mr. Speaker, especially since you are my MP during House sitting weeks. I live in your riding while we are working here in Parliament. I hope you will hear my plea.

Over the course of many Parliaments, many committees have recommended implementing just such a measure. The Standing Committee on Agriculture and Agri-Food, which studied the bill, sent it back to the House without amendment. The committee approved it, with support from all the parties. Action on this is long overdue.

Before concluding, I want to make an aside and draw the House's attention to another issue related to food products and the difficulties that certain players in the supply chain may experience when a buyer goes bankrupt.

In my riding, there is a storage company that found itself in a difficult situation a few months ago. This company provides refrigeration and freezer services and serves as an intermediary in the transportation of perishable goods. After one of its clients went bankrupt, a bakery, the company ended up stuck with about 800 pallets of pies that did not belong to it. Since the bakery in question was under the authority of a trustee in bankruptcy at the time, the storage company could not dispose of the pies in any way. The situation went on for several weeks, causing major financial losses for the storage company since it could not get any income from the merchandise in question and it could not take on other contracts because the cargo was taking up half of its warehouse. The bakery finally hired a company to transport the stored merchandise, but that company was never paid for services rendered. The transportation company then turned to the intermediary, the storage company, for compensation for its losses, which put the storage company's financial viability at great risk.

At that point, I wrote a letter to the Minister of Transport and his parliamentary secretary. That was before the cabinet shuffle. The letter was cosigned by the Bloc Québécois transport critic, the member for Pierre-Boucher—Les Patriotes—Verchères. We felt that the intermediary was also a victim of the situation, and we asked the minister to consider including a provision in the Bills of Lading Act that would protect intermediaries responsible for goods in specific cases involving bankruptcy of the original business. Such situations become even trickier when perishable goods are involved, and I would like to take this opportunity to get everyone thinking about this issue.

In closing, to get back to the subject of my speech, let us pass this bill without delay, as its co-sponsor entreated us.

The House resumed from October 3 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 third time and passed.

[Jennifer O'Connell, Liberal, Parliamentary Secretary to the Minister of Public Safety]

Madam Speaker, I am very pleased to speak today about Bill C-280, a private member's bill introduced by the member for York—Simcoe. Allow me to extend my congratulations to the bill's sponsor on this important work as it aims to protect our fresh produce farmers and sellers who provide Canadians with access to fresh produce for their families.

Bill C-280, an act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust – perishable fruits and vegetables), addresses the need for payment protection in the fresh produce industry through insolvency law amendments in cases of buyer bankruptcy, receivership and large commercial restructuring.

The bill would create a special legal mechanism known as a “deemed trust” to pay the unpaid bills of fresh fruit and vegetable sellers ahead of all creditors if a buyer becomes insolvent. The deemed trust would provide important protection in insolvency proceedings to the sellers of fresh fruits and vegetables against unique payment risks faced by the fresh produce industry, such as the perishable nature of fresh produce.

Members of the Standing Committee on Agriculture and Agri-Food studied the bill with the assistance of testimony from representatives of the fresh produce industry and the bill was reported back to the House with unanimous support. With our support of Bill C-280, we hope to increase the likelihood that the United States will restore Canada's preferential access to the formal—

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Madam Speaker, I would like to thank my colleague from York—Simcoe for putting Bill C-280, the financial protection for fresh fruit and vegetable farmers act, forward. It is a very important bill, and it has been a long time coming. I was elected nearly four years ago and we have been talking about this through the last two Parliaments, and I know it was talked about long before then. It is great to see all parties come together to support something that will help our Canadian produce growers, packers and shippers immensely.

During a Zoom call with The Fruit and Vegetable Growers of Canada, I heard that 52% of perishable product sales to U.S. customers from Canadian suppliers await payment from the United States. California producers and suppliers have a similar problem with their Canadian customers. On October 1, 2014, the United States Department of Agriculture revoked preferred treatment for Canadian shippers under the Perishable Agricultural Commodities Act. This was taken in retaliation for an action on the part of Canada with regard to establishing some type of trust protection from bankruptcy for all fresh produce shipped into the U.S. Under that status, Canadian companies did not have to post surety bonds when trying to collect payments from delinquent buyers. No other nation had such status.

Without the special status, a Canadian shipper must now post a bond for twice the amount they are seeking to collect. Taking action to recover $100,000 would require the purchase of a $200,000 bond. Current rules severely limit the ability of produce growers and sellers to collect payment in the event that their buyer declares bankruptcy.

While products like electronics can be reclaimed by the seller, highly perishable produce is lost because of the obvious. It spoils and rots very quickly, costing Canadian and U.S. firms that operate in Canada an average of $19 million per year, but there is a policy solution to this. In 1984, the United States Congress established “deemed trust” provisions through the Perishable Agricultural Commodities Act, also known as PACA, and that protected shippers in the event their buyer became insolvent. The PACA trust helps suppliers of perishable products ensure prompt payment by buyers.

The trust gives suppliers interest in a debtor's assets. Creating a reciprocal legal framework in Canada by federal statute for a PACA-like “deemed trust” would not draw on federal or provincial public treasuries but would offer Canadian producers and suppliers the means to collect on accounts payable from U.S. customers and give U.S. producers and suppliers the means to collect on accounts payable from Canadian customers.

My colleagues have gone into a lot of the details of this bill and I would like to take a bit of a different approach. I would like to give some personal perspective and a little history of my experience in the fresh produce sector to provide some personal context on how this legislation would benefit growers and shippers.

I grew up on a produce farm. I am a third-generation farmer and my grandparents on both sides of my family were essentially pioneers in the produce industry in the area that I grew up in, which is my hometown of Grand Bend, Ontario. My dad's parents, my Oma and Opa, immigrated from Holland and were one of the first five families to start farming in what is called the Klondike marsh. My mom's parents immigrated to Canada from Poland via Germany and moved to Grand Bend after living in the Chatham area where they first started growing vegetables.

They cleared their land and began farming in the Grand Bend bog, which used to be a shallow lake that was drained to become rich farmland. They grew potatoes, onions, carrots, lettuce and onion sets over the years. Eventually, my dad's parents retired and the family farm that my grandparents started, which now involved two families, took over growing some of the vegetables that my Oma and Opa used to grow. Farmers are innovators, and I would like to give one example from personal experience.

When I was growing up, it would be time to harvest our potatoes and my dad would go out to the field and hand-dig potatoes to see what stage of growth they were at. There are many things that farmers can automate, but this is not one that can be automated. This is still done by farmers putting their hands in the dirt and digging those little nuggets out of the ground by hand. When my dad would do test digs, he would bring all these little potato nuggets home, and we would never waste them. We would cook them up and eat them for supper. I can tell everyone that those were the most absolutely delicious potatoes.

To provide some context, back in the 1980s when I grew up, the CFIA regulations stipulated that undersized potatoes could not be packaged, and so all of those small undersized potatoes that we harvested would either be discarded for cattle feed or put in a compost pile. There was an enormous amount of perfectly good eating potatoes that became food waste because of packaging regulations. There came a point where my mom thought, “Well, jeez, we're always throwing these undersized potatoes out and they're the most delicious thing ever. Why are we doing this when they taste so good?” These little mini nuggets were so delicious that we wanted to share them with everybody else. Our farm made an application to the CFIA asking that we be able to bag these mini potatoes and sell them. So, the mini gourmet potato bag was born, and our family farm became the first farm in Canada to bring mini potatoes to market.

Now, members are probably wondering why the short history lesson on my family farm. Well, I wanted to provide context from the unique perspective that I hold as the only parliamentarian who is still involved in the fresh produce industry and produce farming.

Before my parents retired from farming, their farm was growing over 1,000 acres of potatoes in southwestern Ontario for grocery retailers. To meet grocery store expectations, we also relied on local smaller farms as well as smaller farms from across Canada in different provinces to supply us with Canadian product in our season. If we could not supply the grocery stores with the product they wanted when they wanted it, then they would not even consider us as a farm to be a supplier. However, the grocery stores had to supply year-round, and so we had to grow potatoes around North America in order to keep the supply going to supply grocery stores. We had farms contracted to custom grow for us in California, Florida, Idaho, North Carolina and Michigan. Our packing facility in Grand Bend used to process anywhere from 5,000 to 6,000 acres through it per year.

Members can imagine the coordination that it would take to keep everything going when we have farms across North America supplying us. There would be a constant flow of trucks coming back and forth from all over the United States into Canada and from Canada into the States. The potatoes would be coming for us to process and package in our plant so that we could then give Canadians fresh potatoes on the grocery store shelves. We had to do this year round. With bringing upwards of 4,000 acres of fresh potatoes across the border to Canada from the United States every year, members can imagine the dollar value that would be for that product.

However, not only did we pack potatoes from the U.S., we also exported our excess crop during harvest season to the United States. The growing season in the United States is different from Canada's growing season in many parts. Being neighbours, we rely on each other to ensure a fresh food supply year-round. Canadians grow an abundance of fresh, perishable food, far greater than what we consume, and we are blessed to live in a country to be able to do so, but with that comes a huge amount of risk.

In this industry, it is standard practice to be paid 30 to 45 days from the time a product is received. As members can imagine, the shelf life of fresh produce is far less than the payment terms that sellers are working with. The intricacies of our supply chain for fresh food are far greater than anyone could ever imagine. When farmers are exporting millions of dollars in perishable food from the United States without a reciprocal agreement to ensure that they have a mechanism to be paid in the event of a dispute or a bankruptcy, it becomes a risky business. One bad deal or one dispute could literally bankrupt a family farm, especially since most companies could not afford to put up a bond worth double what they are disputing. Produce farmers work on such tight margins that one sale of a quarter of a million dollars or a half million dollars could be three to five tractor-trailer loads of goods to one customer in the States, which they might not get paid for. This could bankrupt a smaller farmer. While this might sound extreme, I have seen this happen to a young farmer first-hand.

In Canada, when there is a dispute between growers and sellers in this country, we have a mechanism to resolve those disputes, but without the deemed trust, we have no mechanism to resolve disputes between growers and sellers in the United States and Canada that is affordable for growers to access.

I am very passionate about this industry, because it has literally been my family's bread and butter my entire life. I have friends across the industry who would welcome this important change, because it would help protect the livelihoods of families, their farms and their businesses. Creating this deemed trust and having that reciprocal agreement with the U.S. would protect farms from having to bear those losses in the event of a dispute.

This will save family farms. I will always fight for Canadian farmers, their livelihoods and their legacies. At a time when food security and food sovereignty are top of mind, this is needed to protect this industry in Canada, and that is why I support this bill on behalf of my constituents and consumers.

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

Madam Speaker, I am extremely proud to be standing in the House on behalf of the fruit and vegetable farmers in my region of Cowichan—Malahat—Langford. My region and the Cowichan region have a long and storied history in agriculture. I would like to remind all members that the Cowichan Valley is in fact Canada's only Mediterranean climatic zone. The Halkomelem language is the language of the Quw'utsun; the Cowichan name is the anglicized version of that, and it roughly translates into the “warm lands”.

We are an agricultural powerhouse in the Cowichan region. I have been proud to call that area my home for over 30 years, and I am proud to be standing in this House in support of Bill C-280. This is a measure that has long been talked about in this very chamber, and we now have an opportunity to actually change the law. As many colleagues have pointed out, this is going to be of no cost but of huge benefit to the people it directly concerns.

I want to thank the people who have spoken before me: the sponsor, the member for York—Simcoe; the member for Kings—Hants; and the member for Berthier—Maskinongé. I have the pleasure of serving with two of those colleagues on the Standing Committee on Agriculture and Agri-Food. I have been the proud agricultural critic for the NDP since January 2018, so I know this subject very well. This is my third Parliament on the agriculture committee, and this subject has come up time and time again.

I do not want to delve too much into the details. We know that this issue matters because of the nature of the product we are talking about. Fruits and vegetables only have a tiny bit of shelf life before they have no more value. This is a unique product, and that is why we need to have this kind of a deemed trust.

It is not as though farmers, who are taking all the risk, can recoup losses by taking the product back; it is perishable in nature. We know that farmers deal with high costs. They have high input costs. It is expensive to buy machinery and erect greenhouses. In fact, almost all farmers' money is tied up in infrastructure, whether that is machinery or land. They are, in other words, land rich but cash poor.

This is a business model that is based on the tightest of margins, and anything the Parliament can do to ease up and make the payment process more guaranteed is something we should look at seriously. I am happy to say Bill C-280 would do that.

I would argue that, instead of this being just a Conservative bill, this bill is expressly non-partisan. I know the NDP has been fighting for this, as part of our electoral promise to Canadians, since 2015. Moreover, it is non-partisan by virtue of the fact that the second reading of this bill was unanimous. It sailed through committee. We had three meetings; we heard from a variety of witnesses. However, we decided as a committee to report this bill back to the House without amendments. It has the committee's stamp of approval, and I hope members in this chamber take note of that and seek to give it rapid passage.

This bill has been the subject of many committee studies. I have almost lost count of how many times, at different committees and different parliaments, we have seen a recommendation for this type of measure to be enacted by the House of Commons.

The time is now. I would like to see this bill pass through third reading, get to the Senate and start getting the traction it needs. The Fruit and Vegetable Growers of Canada, the Canadian Produce Marketing Association and the thousands of people they represent are watching us. They are waiting for action.

I will conclude my remarks by proudly saying that I will be supporting this bill, along with the NDP caucus. We look forward to its speedy passage to the other place; hopefully, it will eventually find its way to the Governor General's desk and receive the royal assent it deserves.

[Kody Blois, Liberal, Kings—Hants, NS]

Madam Speaker, it is always a pleasure to rise in the House to discuss and debate a bill, especially a private member's bill. That is precisely why we are here this evening. We are debating Bill C‑280, a very important bill for our farmers, especially for fruit and vegetable growers.

I believe that our agriculture and agri-food sector was very important to all Canadians before the pandemic, but it has become even more important since the pandemic. We think it is important to reinforce the supply chain, and bring in new investments and initiatives for our producers. Bill C‑280 is certainly the type of initiative that can ensure their success.

Before I go too much further, I would like to thank and congratulate the hon. member for York—Simcoe for helping to shepherd this bill through the House.

As I had the privilege of reporting this bill back before it came to third reading in debate, I know this is a bill that is supported unanimously in the House. This is an initiative that came back from the agriculture committee with no amendments and was widely supported. I would like to not only, of course, recognize the member for York—Simcoe, but also recognize that there are many members of the House, in fact, all of us, who believe in this initiative.

I would be remiss without talking about the member for Glengarry—Prescott—Russell, the parliamentary secretary to agriculture, who has been on the record for supporting these types of initiatives. The member for Cowichan—Malahat—Langford in British Columbia has also been a strong champion. Any time we had a report where he could reasonably try to find a way to get “deemed trust”, which were the words that we were using, he would make sure they were included in the report. I would say that all sides of the House see the initiative. I send my congratulations to the member for York—Simcoe for bringing it forward.

For those Canadians who are at home, perhaps watching and asking what Bill C-280 is, and wondering what these guys and gals are talking about in Parliament, this is about creating a priority under the Bankruptcy and Insolvency Act to allow farmers who are shipping product to buyers who become insolvent to have a superpriority to be able to claim.

I think back to my days at Dalhousie law school when we start talking about priority under provincial legislation. It is when one lines up and tries to reclaim some of what one is owed from the particular buyer or creditor who is required to be paid.

It is very difficult, when one is talking about a perishable product, for that product to actually be claimed. It is not like it is a sack of potatoes, although even potatoes are perishable, but this is not something like grain, something that can be recovered and come back to the supplier to be resold or recaptured for the economic value.

The member for York—Simcoe talked about the fact that not only could a perishable product be perishable, it could also be transformed into a different type of product. One thinks about fresh strawberries that are then sliced and put into different fruit salads and things of that nature. It is impossible for our farmers who are selling that product to actually be able to, under the existing legislation, recoup the economic value associated with that.

This is a type of legislation that has no cost. This is not going to cost the Government of Canada one single cent. This is about creating legislative change that prioritizes and empowers farmers to be able to support themselves.

I want to give members an example. The member opposite, of course, talks about the salad bowl of Canada. I do not know if we have the same connotation in the Annapolis Valley, but let me tell members, between our apple producers and our horticulture producers, I am very proud of the Annapolis Valley in Kings—Hants as a growing region.

I have had the opportunity to talk to the farmers about what this type of deemed trust legislation would mean. I will give an example. Andy Vermeulen, a farmer from Canning, Nova Scotia, sells a variety of vegetables. He would normally look to Atlantic Canada, or maybe Ontario or Quebec, but he also ships to New England.

The hon. member for York—Simcoe talked about the fact that there is no alignment right now between the dispute resolution that is available to the American producers and the Canadian producers who are selling into that market because we do not have an equivalent type of legislation. That is being proposed here in Bill C-280.

This would allow our farmers to have the same access to those tools, such that if Andy Vermeulen sends his product to Boston, he would have some recourse if the seller went bankrupt or does not pay. It would give further teeth to our farmers to be able to re-collect the money that is owed to them.

With the cost of living and higher costs, including for fuel, fertilizer and materials, it is very important to find a way to help our farmers financially.

This is something that can ensure we have some financial protection. It does not come with a large cost. In fact, there is no cost to the treasury.

I think this is going to be something that is supported by farmers across the country. I will give the example from Nova Scotia. I am sure for my colleagues from Quebec, Ontario, Newfoundland and Labrador, British Columbia, and everywhere in between, this makes sense. That is exactly why we can see that every member of the House is supporting it here today.

The last thing I want to say is that I think there are more opportunities for this type of thinking. Those of us at the agriculture committee often hear that people would like to see not necessarily new program spending, although those programs are great. I will get to that in a moment about some of the things that I am very proud of that this government has introduced.

Sometimes it is these little legislative tweaks, or a regulatory change here or there, that really empower farmers and our agricultural community to continue to do the amazing work they have been doing. The member for York—Simcoe talked about the hardened hands of the men and women who do really important work, and the fact that we need farmers three times a day. I think those are extremely powerful words, which I would second.

We should all be thinking about little measures that we can do, especially in the environment right now. The Minister of Finance has signalled this. The President of the Treasury Board has talked about program review and government being very smart and wise about how it spends money. I am fully on board with that, but let me also say that there is a lot that can be done on the non-cost side that could make a huge difference. We, all parliamentarians, should be looking at what we can do to build upon Bill C-280 to do even more in the days ahead. It is something that I look forward to exploring with my colleagues at the agriculture committee.

One such idea is the opportunity for an expedited pathway for regulatory approvals around seeds, feeds and crop protection products. I have talked about this at great length, but I will continue to go on the record. I will have, hopefully, even something more to say in a couple of days with this piece of legislation.

There is tremendous opportunity when we look at the applicants who come to either Health Canada, PMRA or the CFIA with existing approvals from what I would call trusted jurisdictions: the United States, Europe, Australia and New Zealand. We know that, if a process was undertaken in one of these jurisdictions, it was science-based and credible. The likelihood of it being approved in Canada is extremely high.

We have to create a model so that, if an applicant arrives at Health Canada in this country and wants to give those tools to our farmers, we can tighten the timelines between when that application is made and when the product can be registered on the basis of using some of the strengths of science in jurisdictions elsewhere. It is a really straightforward policy, and I think it would make a lot of sense. Again, it is another initiative that does not cost money.

I am proud of what this government has done on the agricultural side. I could go into it at great length, but I am proud of what we are all doing as parliamentarians here tonight to advance the interests of Canadian farmers. This bill, of course, has had Liberal support. We look forward to seeing this off to the Senate and hopefully get it into farmers' hands and available as soon as possible.

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

moved that the bill be read the third time and passed.

Madam Speaker, we want to get to a vote right away tonight. I know all my colleague are excited to get Bill C-280 passed.

It is a pleasure to rise once again to speak to my private member's bill, Bill C-280, the financial protection for fresh fruit and vegetable farmers act. I am encouraged by the support this common-sense Conservative bill has had so far, but we need to keep pushing. It is all the more important as we look to address the high food prices, rising inflation and strained supply chains we see in Canada today. I will take the opportunity this evening to reiterate the urgent need for the financial protection of this bill and the benefits it will bring, and will address some of the questions raised at committee.

We all know we need a doctor maybe once a year and need a firefighter once in a lifetime if we are really unlucky, but we need a farmer three times a day, every day. That is a fact. Despite their importance in supplying local communities with safe and nutritious fruits and vegetables, there is not enough financial protection for Canadian fresh fruit and vegetable suppliers. In circumstances where buyers become insolvent and fail to pay for fresh fruits or vegetables they were supplied, farmers are out of pocket for those losses.

To address this, Bill C-280 proposes to establish a limited deemed trust that would provide much needed financial protection for the entire fresh fruit and vegetable sector in Canada. This bill would give fresh fruit and vegetable suppliers priority access to the proceeds of sale, limited to the inventory, accounts receivable and cash on hand derived from the sale of the produce, during the bankruptcy proceedings of an insolvent buyer. This will help offset the loss of their sold produce.

For too long, the existing provisions within the Bankruptcy and Insolvency Act and adjacent legislation have not provided adequate priority for fresh fruit and vegetable suppliers when insolvencies occur, as these provisions do not take into consideration the unique characteristics of the sector. While the act technically allows suppliers to recover their products following a bankruptcy, it provides no rights when the product has been resold, is no longer identifiable or is no longer in the same state, which is to be expected with most fresh fruits and vegetables.

Fresh fruits and vegetables are subject to rapid perishability. Their shelf life can be sometimes measured in mere hours. By the time insolvency proceedings have concluded, the spoiled product is no longer of any value and cannot be repossessed or resold.

The superpriority provision for farmers in the act does not address the needs of fresh fruit and vegetable suppliers, who regularly receive payments 30 days or more after they have delivered the product. These longer payment terms are typical in the industry. They accommodate the rapid pace of trade and complex storage and transportation arrangements that must be made between many parties to get fruits and vegetables to market over the course of a short growing season. As such, the requirement in the BIA that fruits and vegetables must have been delivered within 15 days of bankruptcy to be covered under the superpriority means that most fresh produce becomes unprotected. This lack of financial protection for Canada's fresh fruit and vegetable sector has had devastating consequences, as farmers and other suppliers find themselves as unsecured creditors with little recourse for their losses.

It is well established that bankruptcies are considerably higher in this sector than in any other agriculture sector across Canada. They occur twice as often as those in livestock and are over 10 times the rates of the poultry and grain sectors, which are heavily regulated in Canada. The average net loss from non-payments, partial payments and delayed payments in the Canadian fruit and vegetable trade amounts to at least 1.53% of a supplier's gross revenue. This is a significant amount for those in the fresh produce sector considering their high overhead and capital costs, small profit margins and reduced risk management capability. While this amount is significant, it does not even capture the full extent of non-payment. Many firms simply close their doors and walk away from their businesses.

These losses are routinely absorbed by farmers, but they are not captured in bankruptcy data. These losses are especially devastating considering that three quarters of Canada’s fresh fruit and vegetable producers are small businesses with sales of less than $85,000 per year, many of which rely on a single buyer for the bulk of their crop. These smaller-scale producers do not have the capability to make credit checks on their buyers, negotiate conditional sales agreements or take other safeguards typical in other industries. Their ability to pursue repayment and other forms of recourse when a buyer does not pay is also extremely limited.

As one can imagine, bankruptcies within the fresh fruit and vegetable industry can jeopardize farms and livelihoods, and the constant fear of non-payment limits our farmers’ ability to invest in their businesses, grow and actually plan for the future. The bankruptcy of Lakeside Produce in Leamington, Ontario, this past winter demonstrated just how wide-ranging the impact that bankruptcy has had on the entire fresh produce industry. When it went bankrupt, Lakeside Produce owed $188 million to suppliers across the fruit and vegetable sector. There were 17 Canadian produce companies among Lakeside’s creditors, which accounted for $1.7 million in unsecured claims.

The lack of financial protection for the fresh produce industry in Canada also impacts our competitiveness and capacity to trade with the United States. Suppliers are no longer able to access the dispute resolution and financial protection processes that exist in the U.S. through the Perishable Agricultural Commodities Act, without incurring significant financial costs. This severely disadvantages Canadian produce businesses given the high volume of produce sold to buyers in the U.S. Having a financial protection tool in place in Canada would pave the way for the United States Department of Agriculture to restore Canadian produce sellers’ preferential access to the U.S. dispute resolution mechanism for fresh fruits and vegetables.

With the adoption of Bill C-280, we could finally ensure that Canada’s bankruptcy laws work for fresh fruit and vegetable suppliers in a form that recognizes the particular needs and challenges of the industry. By doing so, there would be considerable benefits for Canadians.

The financial protection would strengthen a pivotal industry in Canada, increase economic activity and bring economic benefit to the entire fresh fruit and vegetable value chain. With greater certainty and reduced risk, we would see more investment and growth as Canadian farms and greenhouses expand their operations and return operations to Canada that had migrated to the United States when access to PACA was lost. These measures would also result in a reduction in prices for Canadian consumers, which I know is top of mind for all MPs in this House tonight. We would expect to see a decrease in prices for Canadians by as much as 15%, which would save families as much as $900 million on their annual purchases of fresh fruit and vegetables.

While this bill was being studied at committee, there were questions about why the bill would extend the deemed trust protections to all suppliers of perishable fruits and vegetables, which is perhaps considered by some to be too broad. However, it is important to remember that within the fresh fruit and vegetable industry, the large retail trade, farmers’ markets, food service and hospitality trades are far less affected by the lack of financial protection. For the most part, it is the growers and others involved in the first sale, such as packers, brokers and shippers, who are most vulnerable to payment disruption and who would need the financial protection afforded by Bill C-280 the most.

That said, this industry is highly integrated, and bankruptcies involving producers, dealers, shippers, wholesalers, distributors and retailers impact the stability of the market. A bankruptcy at any point along the supply chain can result in farmers going unpaid, so it is essential that all suppliers receive the necessary protection. Crucially, protecting fresh produce suppliers equally is needed to access the equivalent protection offered by the Perishable Agricultural Commodities Act in the United States, which covers all suppliers along the chain.

Another question raised has been the impact of these financial protections on the banking industry. While it is true that by giving priority access to produce suppliers, banks will see their claims receive a lower priority, the benefits of protecting fresh fruit and produce suppliers outweigh the distributional impacts for the banking industry. Moreover, the banking industry would actually benefit from the increased predictability of payments when lending to those in the fresh fruit and vegetable sector. This has been the case in the United States under the PACA deemed trust, which has been reported to be a net positive to the banks, in addition to the produce sector itself.

Canada relies on boots on the ground, hands in the muck and rubber boots on the farm to provide fresh locally grown produce to our citizens. When these farmers suffer losses due to buyer insolvency, it threatens our very food security by reducing the availability of Canadian grown products.

We already know this is happening. Earlier this year, a Statistics Canada report showed that there was a significant decline in fresh fruit and vegetable availability for Canadians in 2022. More than three-quarters of all produce consumed in Canada is imported. As access to fresh produce from foreign markets is increasingly jeopardized by climate change, carbon taxes, trade protections and supply chain issues, our food security becomes more and more threatened right here at home. For much of our nation's history, Canada was far more self-reliant in the fresh fruit and vegetable trade, with production far outpacing consumption, but the failure to reduce risk and provide certainty to the fresh fruit and vegetable sector has seen this decline significantly. This needs to change.

Fundamentally, Bill C-280 recognizes the need to support Canada's produce sector, just as we support other agriculture sectors, by ensuring that Canada's bankruptcy laws recognize the particular challenges and demands of growing and selling fresh fruits and vegetables. Canada's fresh fruit and vegetable farmers should always be paid for the fresh fruits and vegetables they sell. By passing Bill C-280, we can ensure that our food security is protected and that our produce sector is strengthened. By putting this important financial protection tool in place for produce supplies, we will support the economy and lower costs for all Canadians from coast to coast to coast, so let us get it done.

The House proceeded to the consideration of Bill C-280, Financial Protection for Fresh Fruit and Vegetable Farmers Act, as reported (without amendment) from the committee.

Agriculture and Agri-Food

[Kody Blois, Liberal, Kings—Hants, NS]

Mr. Speaker, I have the honour to present, in both official languages, the 11th report of the Standing Committee on Agriculture and Agri-Food entitled Bill C-280, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust – perishable fruits and vegetables).

Sometimes Canadians watch this House and think that we cannot get along, but I want to give special credit to the sponsor of this bill, the member for York—Simcoe. During the opportunity for the member to come to our committee, he is in the soup and salad bowl of Canada, and he brought a whole bunch of vegetables to the committee as a sign of goodwill.

We are in full support of this legislation. It is a great opportunity for the parties to work together in the House. I would like to congratulate the hon. member.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Chair.

I just wanted to take a quick opportunity to thank all of the staff who work so hard for us on these reports, and say thank you to the committee members for getting Bill C-280 passed. I know our fruit and vegetable farmers will be happy to see this go back to the House. It's great to be able to work together to get something done, so congratulations, team.

[The Chair, Liberal, Kody Blois]

I call the meeting to order.

Welcome to meeting number 70 of the Standing Committee on Agriculture and Agri-Food.

Thank you for your patience, colleagues, during the few minutes that we had some technical difficulties. Thank you to our team for getting us up and online.

We had more substitutions earlier on, but our regular members have come back.

I will welcome Ms. Khalid, who is here for Mr. Turnbull.

Welcome back to the committee. It's always great to have you.

Colleagues, pursuant to the order of reference of Wednesday, May 17, 2023, the committee is meeting to proceed with the clause-by-clause consideration of Bill C-280, an act to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act (deemed trust – perishable fruits and vegetables).

To help us with the clause-by-clause study of Bill C-280, I would like to welcome our witnesses.

From the Department of Agriculture and Agri-Food we have Mr. Tom Rosser.

Welcome back. You're no stranger, of course.

From the Department of Industry, we have Samir Chhabra, director general, marketplace framework policy branch; and Paul Morrison, special adviser, corporate, insolvency and competition directorate.

Thank you, gentlemen, for joining us here in the room.

I'd like to provide the members of the committee with some instructions and a few comments on how the committee will proceed with the clause-by-clause.

As the name indicates, this is an examination of all the clauses in the order in which they appear in the bill, except for the short title, which will be considered at the end. I will call each clause successively, and each clause is subject to debate and a vote.

If there are amendments to the clause in question, I will recognize the member proposing it, who may explain it. The amendment will then be open for debate. When no further members wish to intervene, the amendment will be voted on. Amendments will be considered in the order in which they appear in the bill and in the package each member received from the clerk. Members should note that new amendments must be submitted in writing to the clerk of the committee.

The chair will go slowly to allow all members to follow the proceedings properly—slowly but efficiently.

Amendments have been given an alphanumeric number at the top right corner to indicate which party submitted them. There is no need for a seconder to move an amendment. Once moved, you will need unanimous consent to withdraw it.

During debate on an amendment, members are permitted to move subamendments. These subamendments must be submitted in writing. They do not require the approval of the mover of the amendment. Only one subamendment may be considered at a time, and that subamendment cannot be amended. When a subamendment is moved to an amendment, it is voted on first. Then another subamendment may be moved or the main amendment may be considered and voted on.

A lot of you have been around Parliament for a while and know the procedure. I'm sorry if that was repetitive; it's just for the benefit of the group.

Once every clause has been voted on, the committee will consider and vote on the short title, the title and the bill itself. If amendments are adopted, an order to reprint the bill may be required so that the House has a proper copy for use at report stage. Finally, the committee will have to order the chair to report the bill to the House. That report will contain only the text of any adopted amendments as well as an indication of any deleted clauses.

There you go. It's a lot of procedure, folks.

Pursuant to Standing Order 75(1), consideration of clause 1, the short title, is postponed.

(On clause 2)

On clause 2, as I understand it—I have my agenda here; I think it's been shared—we have G-1, which is the first amendment to be called.

I'll look to you, Mr. Drouin, if you'd like to explain G-1 to us.

[Brad Wiseman]

I do understand the memorandum on the summary of the U.S. reactions to PACA. The issue is we have to get a clear guidance from the banking industry on how they will interpret Bill C-280. That's what we need to do.

The memo and the analysis did not take into consideration the priority payables, and it's going ahead of the bank when you had secure facilities for working capital purposes. We need full clarity, and we don't want to do it after the fact. Now's the time to get it right, to have clear interaction, in present day, with the banking institutions.

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

Thank you very much, Mr. Chair.

Mr. Wiseman and Mr. Lemaire, thank you both for being here and helping guide our committee through its study of Bill C-280.

I also have some questions on the credit issue. It's not the first time I've heard this brought up. I think it's the first time it's come up from a witness, Mr. Wiseman.

I've heard from the government, through conversations we've had in advance of this bill, that there were some concerns about that. I've also had conversations with the staff of the CPMA. I believe in one of those conversations there was a lot of talk about the United States and how, in fact, having this trust actually adds more stability, which might encourage lenders to look more favourably on the person who's needing access to that credit.

I think there was reference to industry having provided a white paper by a lawyer or an economist whose firm had worked with banks on both sides of the border in support of this.

Mr. Lemaire, are you aware of that? Is that document something that could be produced and tabled with this committee so that all members could have access to it?

[Ron Lemaire]

We do have the benefit of the Fruit and Vegetable Dispute Resolution Corporation, and these are all of the tools within the DRC. What would happen if there was a bankruptcy with Bill C-280 protecting the supply chain? Let's say a packer was then able to generate some funds out of the bankruptcy. If they did not pay their grower, the grower could then leverage the Dispute Resolution Corporation to bring them to a dispute to access the monies owed. That's what the DRC is there for. What the DRC does not do is provide the protection of bankruptcy.

[Brad Wiseman]

I absolutely agree with that comment.

The risk would be lower because you're making a stronger business model for the entire industry. That's what's great about Bill C-280. The challenge is that the banks are losing the security because the growers are going ahead of the banks. That is the challenge. That is the uncertainty.

We have a great opportunity to get it right and we still need to do further investigations with the banking institutions.

[Brad Wiseman]

I'm bringing up the concern because I have a clear understanding of what the technical issues are. It becomes a priority payable. I have direct experience with U.S. financing and PACA. With it becoming a priority payable, there is the risk that it will come off the borrowing days, and right now there is no clear guidance from lenders.

I'm taking this opportunity of bringing it to the committee to say, “Let's take our time. Let's see. How will the banking industry decide how it interprets Bill C-280?” We do not want to be in a situation where we have a borrowing base calculation, but then packers, wholesalers and retailers that have focused just on produce get it all ground down due to the large payables that they would have.

We still do not have a clear understanding. We still need to take that time. We still need to do that analysis.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Chair.

Thank you, witnesses, for being here today and for your testimony.

Mr. Wiseman, I have a question for you to start off with.

In this legislation, Bill C-280, the provision would not come into effect until after 30 days of not being paid, and 35 to 40 days is when most banks would say that the debt is bad and will refuse to finance against such debt. Payments in arrears are often strung out and made partially for much longer than that. Do you believe this legislation would affect the financing of receivables?

[Ron Lemaire, President, Canadian Produce Marketing Association]

Good evening, Mr. Chair and committee members.

On behalf of the Canadian Produce Marketing Association, I want to thank the committee for the opportunity to speak to Bill C-280 , the financial protection for fresh fruit and vegetable farmers act.

CPMA represents over 830 companies growing, packing, shipping and selling fresh fruits and vegetables in Canada. We support Bill C-280, as it is a critical fit-for-purpose tool for an industry that is unique and currently unprotected. CPMA also concurs with witness testimonies of June 12 which frame rationale and support for the bill.

It's from this perspective of a diverse membership that CPMA would like to emphasize the importance of maintaining the existing provisions of Bill C-280 that provide financial protection to all suppliers of fresh produce. I'd also like to table, in both official languages, a letter sent earlier this spring to all members of Parliament from 35 national and regional organizations from across the country voicing their support for this important legislation across the entire supply chain.

As noted by previous witnesses, all suppliers across the fresh fruit and vegetable supply chain are vital to the stability of the market. Packers, wholesalers, brokers and others act as a critical intermediary between growers, retailers and food service, and it is essential that they receive the necessary protection to ensure that payments are able to flow down the chain and ultimately to the grower. What happens when those suppliers go bankrupt and can't pay the farmer or simply walk away because they cannot turn a profit? The farmer doesn't get paid, and the Bankruptcy and Insolvency Act does not provide effective protection for fresh produce sellers in Canada due to the high perishability of their products and the industry's longer payment terms.

During the committee's June 12 meeting, there were questions around the definition of “fruit and vegetable supplier” and whether Bill C-280 might benefit retailers. It's true that retailers often operate in closed ecosystems where produce is bought and distributed by centres and sold to corporate stores, franchises or through other commercial relationships, in effect, operating as a wholesaler. At the same time, we must recognize that this business relationship still ultimately results in fresh fruit and vegetable growers requiring payment for their product, payments that could be jeopardized if the deemed trust protection is limited to the first level of sale.

As an example, in the 2015 bankruptcy of Target Canada, Sobeys Wholesale, which was contracted to supply produce and other foods, was left in a position to self-insure $3 million in debt. Had they not done this, we would have seen a ripple effect in the Canadian produce industry that would have been significant.

Under the provisions of Bill C-280 as written, all suppliers would benefit equally. This definition of “supplier” is key to providing the equivalent protection we see in the U.S. Perishable Agricultural Commodities Act, PACA, which covers all suppliers along the chain. Bill C-280 would therefore enable Canada to obtain and reinstate the reciprocal protection for Canadian sellers that was lost under PACA in 2014.

A letter of commitment was sent on May 12, 2016, from the USDA to then AAFC assistant deputy minister Gorrell, confirming the steps required for reciprocity and comparable systems. These include: mandatory licensing of fresh produce dealers on a federal level; the availability, comparability and effectiveness of dispute resolution systems; investigative and enforcement authority; and a deemed like trust system, which would allow for comparable outcomes to the PACA system in the United States. We have three of the four steps.

In closing, I will note that this has been a long road. There is now political will and unanimous support at second reading. This is a clear sign of the importance of Bill C-280 and the need to move this legislation forward. In doing so, you will provide a vital tool that will stabilize a fragile system. I would encourage the government to move forward as quickly as possible.

We'd like to thank Scot Davidson and all of you in this room for your support to move this important issue forward.

I look forward to the opportunity for any questions.

[Brad Wiseman, Chief Financial Officer, EarthFresh Farms Inc.]

Thank you very much.

EarthFresh Farms Inc. is a Canadian produce company based in Burlington, Ontario, that specializes in growing, packing and distributing potatoes, especially organic potatoes and exclusive premium varieties, to retailers and food service companies in Canada and the U.S.

With over 15,000 acres of its own varieties of potatoes, the company produces the largest stock of exclusive potatoes in North America. Overall, we ship 450 million pounds of potatoes to Canadians from coast to coast. As well, we have four packing facilities. We have one in P.E.I., which is the largest fresh packing facility for potatoes. We have our head office in Burlington, Ontario. In Millgrove, Ontario, we have a growing, packing and storage facility. We have a new Atlanta, Georgia, operation, where we're also a member of PACA.

I'd like to thank AAFC for the ongoing support, the National Research Council and IRAP for helping us drive growth, innovation and the significant benefits of Canada's support for all the projects that they have funded. We'd like to thank Innovation Canada for the accelerated growth service program that we're very proud to be part of.

Thank you for allowing me to be a witness with respect to Bill C-280. It is exciting how close we are, but there's still further work to be done. I'm here to represent the Canadian processor and highlight the financial challenges the bill will have throughout the entire value chain. The value chain is the producer, the processor, wholesaler, retailer, food service and then eventually the product gets to the end consumer. The end result will be an increase in prices for the end consumer due to the increased cost of borrowing for working capital requirements at each stage of the value chain.

The key summary points are as follows.

Ensuring Canadian producers are protected under the bill in its current state will cause processors like EarthFresh to have priority payables with the producers. Priority payables, like payroll, taxes and pension costs, are deducted under all operating, banking and borrowing base calculations. This will cause processors not to have the ability to utilize any portion of their operating facilities with lenders.

Companies throughout the value chain will be forced to invest significant reserves in the business or find alternative sources of high interest financing because nothing will be secured against those facilities. This will create significant challenges for businesses throughout the value chain to grow and have innovation.

Potentially, prices for the end consumer could increase by a minimum of 5% in order to find alternative financing solutions, such as the factoring of AR or AR insurance.

As members of the CPMA, which we're very proud of and involved with, we have discussed the challenges from the processor perspective. Unfortunately, the current Bill C-280 does not have the correct solution. In addition, further investigation has to be done to understand the material financial challenges it will cause throughout the value chain.

The overview of key concerns has been discussed, but right now there's still insufficient analysis of the financial effect throughout the entire value chain. We need to take our time. We need to work with the lending industry, the banks, to see how they will interpret Bill C-280 right now. We cannot do it after the fact because it will have a significant financial burden on the entire value chain if it moves forward in this state.

Now we have the chance to get it right before we move forward. I have looked at the analysis that we currently have. Right now, it dates back to 2015, so there's further work to be done.

As well, current U.S. banks deduct the priority payables from the borrowing base. This is confirmed by my own direct financing experience with U.S. national and regional banking institutions.

To summarize, I look forward to further discussions of the issues and solutions. As well, I have the following suggestions.

Quantify the impact to processors and other agri-food businesses. This can be done by engaging in direct conversation—this is, for me, the most important—with Canadian banking institutions, with Farm Credit Canada and EDC, noting that the majority of FCC businesses are with term loans that only have collateral on assets outside of working capital; with more businesses in the value chain; and finally, with corporate lawyers who have a key understanding of Canadian and U.S. financing.

Thank you.

[The Vice-Chair, Conservative, John Barlow]

I call this meeting to order.

Good afternoon, colleagues. I apologize for the delay.

We're having some sound issues with Mr. Turnbull. We're going to try to figure them out, but we'll get started. From what I understand, Mr. Turnbull is not up for questions in this first hour, so I think we can proceed to keep us on schedule. Hopefully, before we go to the second hour of discussion on the environmental agriculture report, we can get Mr. Turnbull back online.

We'll proceed with what we have for this meeting.

Colleagues, welcome to meeting number 69 of the House of Commons Standing Committee on Agriculture and Agri-Food.

Today's meeting is happening in a hybrid format. The proceedings will be available via the House of Commons website. So that our guests are aware, the webcast will always show the person speaking, rather than the entirety of the committee.

I know, Brad, your kids are watching, but no screenshots of how well dad is doing today are allowed, if you don't mind.

Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. If interpretation is lost, please inform me as quickly as possible, and we'll try to get that squared away before we proceed.

To our guests, before speaking, please wait until I recognize you by name. You'll see the red light on your microphone turn on, and then you'll be ready to go. When speaking, for the interpreters, speak as slowly and succinctly as you can.

To my colleagues, I remind you that all comments must be made through the chair.

Pursuant to the order of reference of Wednesday, May 17, the committee will resume consideration of Bill C-280, an act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust – perishable fruits and vegetables).

I would like now to welcome our witnesses. With us today we have, from the Canadian Produce Marketing Association, Ron Lemaire, president. From EarthFresh Farms Inc., we have Brad Wiseman, chief financial officer.

You'll each be given up to five minutes for your opening remarks. I will give you a signal when you have one minute left to wrap up your comments, and then we will begin our questions from the members of this committee.

Moving forward, we'll start with Mr. Wiseman from EarthFresh Farms. You have five minutes, please.

Government Business No. 26—Amendments to the Standing Orders

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

Madam Speaker, it is always a pleasure to bring the voices of Chatham-Kent—Leamington, and tonight I bring them in person to the debate on Motion No. 26.

I want to begin by asking a question: What is the role of Parliament?

It is a rhetorical question for sure, but it has a clear answer: It is to serve Canadians, and that concern is at the heart of the matter being debated tonight. The Liberal-NDP coalition has unilaterally pressed for making hybrid Parliament, a temporary model of Parliament, into a permanent model. Such a dramatic change to a long-held procedure cannot and should not be implemented without clear consensus from all recognized parties within this chamber.

On May 5, the World Health Organization formally declared the COVID-19 pandemic emergency to be over. The governing coalition cannot hide behind a past crisis to avoid accountability and transparency, because ultimately that is a by-product. I hope that is not the intention, but that is a by-product behind this procedural change. Instead of helping Canadians who are struggling to pay their bills and put food on the table, the government is actively working to avoid facing the Canadian people.

Both accountability and engagement suffer in a hybrid Parliament. We have seen the core constitutional principle of responsible government, which is accountability to Parliament, weaken under the current hybrid system. I do not think anyone is challenging that.

In this session of Parliament alone, House administration decided to cancel dozens of committee meetings due to a lack of resources for virtual participation. That fact alone should give my colleagues across the aisle pause. The importance of committee work cannot be overstated. It is at committee where drafted legislation is reviewed, and at times it is there, after all, that corruption and mismanagement are uncovered.

Here are some examples. It is at the finance committee that the extent of the implications of another deficit budget are examined and highlighted. It is where amendments are tabled, debated and hopefully passed to improve the lives of Canadians, though unfortunately not this year.

At the fisheries and oceans committee, which I attended this morning, the bungling of the Department of Fisheries and Oceans' handling of the bilateral Great Lakes Fishery Commission file has united both houses of the U.S. Congress and all four accredited parties of this chamber in calling for a change in how the commission is managed. This failure has caused our American partners to walk away from the board table and risk the $8-billion fishery industry through the return of an invasive species, the sea lamprey, which devastated the Great Lakes in the 1950s and actually led to the original creation of the Convention on Great Lakes Fisheries.

Earlier this evening, I attended an agriculture and agrifood industry committee where the four parties representative of this chamber reviewed Bill C-280 for my colleague from York—Simcoe, a bill to bring about some protections for fresh vegetable and fruit growers in case of bankruptcy of their buyers.

Committee work is important, then, for advancing legislation and for government accountability, yet through the mechanics of a hybrid Parliament, the Prime Minister and his cabinet have been able to duck and weave their way around facing questions from His Majesty's loyal opposition. This defies a founding tenet of our Westminster parliamentary system, in which the role of the opposition is to hold the government to account. There are technical glitches. The ministers avoid standing in their place in this chamber or at committee, choosing instead to surround themselves with screens in their offices right here on the Hill to avoid accountability when a poor grasp of a file is on full display.

Is this acceptable? As parliamentarians, is it not our duty to serve our constituents to the best of our abilities? How can we do that if the government enshrines opportunities to avoid accountability?

I do not deny that by almost every quantifiable metric, productivity and accountability are higher when we are working in person, but to quote General Patton, “Always do everything you ask of those you command.” This is not what the Minister of Procurement demonstrated as the minister was directing our federal workers back to work in the office. How is it just to deny a provision to federal workers while granting the same privilege to politicians? This is a textbook example of “Do what I say, not what I do.”

Beyond televised acts of accountability, there are innumerable interactions that help our constituents, advance public policy and generally contribute to the building of constructive relationships among colleagues, both within our caucuses and across party lines. Stifling these small but consequential interactions through a hybrid system is simply flawed.

I am sure I do not need to explain the many ways that constituents' problems can be solved with a quick word to a minister while the bells ring for a vote, or the important information that stakeholders draw to our attention when they visit us personally in our offices, or how a casual word with a colleague bumped into in the hallway helps to build the trust needed later to be confident that a future agreement struck at committee will be honoured. This has been mentioned several times this evening. These are just some of the examples of inter-personal dynamics that a hybrid Parliament prevents and discourages.

Again, it must be asked how Canadians are best served by their parliamentarians. Is it through increasing the personal convenience of members of the House or is it instead through encouraging maximum transparency and accountability, part of which is through ensuring that both official languages in Canada are given equal weight?

Conservatives have a long and proud history in building and supporting a bilingual Parliament.

I do not speak French, but I am learning French with Duolingo.

That is as far as I can get right now, which is why it is all the more alarming to hear from the International Association of Conference Interpreters, Canada region, and its president, Linda Ballantyne, who said that a hybrid Parliament has meant that “English has predominated and French has been snuffed out.”

In part, this is due to a skyrocketing injury rate among staff interpreters. We have gone from a single disabling injury before the pandemic to 90 incidents. With a dwindling pool of interpreters, we cannot tolerate the harm done to these crucial women and men in the functioning of our democracy. It is for these reasons that Conservatives put forward a common-sense recommendation to have the House of Commons proceedings return entirely to in-person while maintaining the voting application. Considering that 97% of chamber interventions are now made in person, this recommendation would have led to little change to the nature of House debates, yet such a change would free up a badly needed translation service while also reducing some workplace risks that interpreters have faced.

To reiterate an earlier point, far too many committee meetings have been cut short or outright cancelled due to a lack of resources, particularly the presence of interpreters to ensure our meetings are conducted bilingually. By cancelling the important work done at committees, Canadians are deprived of one avenue of making their voices heard, especially when it comes to holding this government or any government to account.

Regrettably, truncated committee work has formed just one portion of a broader pattern of hybrid proceedings eroding government accountability to Parliament. Finding an effective way of combatting the pandemic and ensuring that parliaments continued to function the world over was a global concern, yet perpetuating the solutions found during the pandemic to the post-pandemic era seems to be a problem unique to the Canadian federal government. According to Andy Williamson, an Inter-Parliamentary Union researcher, some of the digital and remote working practices at foreign legislatures “will have been temporary as they are no longer felt necessary”. Indeed, he advised that just 46% of legislatures will retain remote functionality while “in some cases this might only be for use in exceptional circumstances.” To answer a question heckled across earlier, even within Canada, no provincial or territorial legislature currently has a full-fledged hybrid system.

Succinctly, no other comparable legislature has rushed headlong into a permanent embrace of full-fledged hybrid proceedings or, if it is being entertained, it is with eyes wide open to the potential downsides. Despite the advances of technology and the rise of the Internet, some problems are best solved the old-fashioned way. Sometimes precedent and procedure are in place because they work. It is with a reckless disregard for the health and functioning of Parliament that the governing coalition has pressed for the permanent status of a hybrid system.

I must ask again. What is the role of Parliament? Is it to serve the interests of Canadians or the convenience of its members?

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

Thank you very much, Mr. Chair.

Ms. Lee, when I asked the people from Quebec earlier, they were unanimous about the fact that growers needed this bill

Is the rest of Canada also unanimous about the need for rapid action? Do all the growers want to see Bill C‑280 passed?

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

From your understanding in reading this particular bill, growers and greenhouse growers would be protected under Bill C-280.

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

Thank you for that.

For my next question, just for the fruit and vegetable growers, I know because of how connected our two economies are, Canada and the United States, that you have a lot of contacts down south and that may also involve members of the government in the United States Department of Agriculture and members of Congress. Is there a guarantee that, if we do embark on this path of getting Bill C-280 passed into law, we will regain preferential status under PACA?

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

If I'm interpreting you correctly, that in itself is not a statement that could be adequately used as an argument against Bill C-280. It's great that it exists, but additional protections are needed through Bill C-280.

[Patrice Léger Bourgoin]

Essentially, action is needed urgently and we need the financial protection mechanisms in Bill C‑280.

Production costs have been increasing substantially for two or three years now. Transportation costs, including the price of diesel, to ship products to the United States have increased dramatically. The financial risk for the Canadian horticultural sector is greater than ever.

I might also add the fact, which you yourself mentioned earlier, Mr. Perron, that extreme weather conditions can, from one day to the next, cause considerable losses.

It's unrealistic to think, given the current economic context in our sector, that we can continue to have access to the huge U.S. market without some form of protection.

[Patrice Léger Bourgoin, General Manager, Quebec Produce Growers Association]

The bill's implementation would provide priority access to an insolvent client's cash, inventories and accounts to help offset the losses associated with a product that was delivered but not yet paid for. As my colleague Mr. Woods said just now, the introduction of a mechanism that would give Canada some financial protection would open the door to restoring preferential treatment under the U.S. Perishable Agricultural Commodities Act, the PACA, for Canadian companies that sell products to the United States. This preferential treatment was in place prior to 2014, when it was revoked by the United States because there was no reciprocity.

It's essential to protect the supply chain. If one of the links has not received payment, it affects the entire system, right down to the family farm. In such a context, even if the seller is an intermediary, there has to be protection, and growers who sell through a third party depend on a domino arrangement to receive payment.

It's worth mentioning that once the act is enacted, the government would no longer have a direct role to play in the insolvency process and would have no financial responsibility once there is royal assent. So the act wouldn't require the government, and hence taxpayers, to compensate or cover losses incurred by a farmer if a buyer was unable to meet its obligations. Basically, the proposed model in Bill C‑280 reflects the parameters of a tried and true model used in the United States. It's a financially achievable solution that would not place any additional burden on the government.

The adoption of Bill C‑280 would promote a predictable and more stable market for companies through the safety net that would be established.

To conclude, I would like to underscore the fact that the Quebec Produce Growers Association firmly supports Bill C‑280.

Thank you.

[Quinton Woods, Chair, Trade and Marketing Working Group, Fruit and Vegetable Growers of Canada]

Good evening.

As Rebecca said, my name is Quinton Woods. I am Fruit and Vegetable Growers of Canada's trade and marketing working group chair, and the sales manager of a root vegetable operation at Gwillimdale Farms. Gwillimdale is a premier grower, packer and shipper of root vegetables, located on the northern tip of the Holland Marsh.

Bill C-280 is a topic about which I am highly passionate. I want to point out that this proposed legislation could pave the way for reinstating the Perishable Agricultural Commodities Act protection for Canadian growers by the United States. PACA had been a crucial protection for Canadian growers, ensuring prompt payment and offering a dispute resolution mechanism. The loss of this privilege in 2014, because of the lack of reciprocity in Canada, dealt a significant blow to our industry, exposing our growers to increased financial risk.

Gwillimdale’s operation was directly affected in 2014. Coming out of the recession of 2009, a U.S. customer, with whom we had done business with for many years, stopped paying us. We were left with no choice but to launch a formal complaint against this company through the PACA in the United States. Unfortunately, the day on which we filed the formal complaint, the United States pulled reciprocity for Canadian sellers. That meant we were required to post a bond for twice the value of our claim. At that time, our claim was worth $100,000 U.S, and we were required to post a bond for $200,000 U.S. We were not in a position to post the bond at that time and were forced to walk away from our claim. If Canada had implemented a system prior to revocation of reciprocity, we would have been able to continue our formal complaint without posting a bond.

The proposed legislation would be of no cost to the government, as it would not be required to carry financial liability or backstop any losses. However, it will provide significant benefits to growers, and one could argue, it is a form of business risk management, but one that requires no government funding. This legislation offers a framework that bolsters the stability of our industry and promotes fairness in business practices, ensuring the viability and growth of our sector for years to come.

FVGC sees this bill as a game-changer, providing our members with much-needed protections and possibly leading to greater market opportunities. We urge you to consider these benefits as you deliberate on this legislation. Our members depend on it, and the bill will bolster the strength and sustainability of the Canadian produce sector at a time when it is sorely needed.

We cannot forget that the benefits are not restricted to our growers. A more robust and secure Canadian produce industry, backed by these protective measures, would help to address the growing concerns of Canadian food security and food sovereignty.

Thank you for your your time and consideration.

[Dr. Rebecca Lee, Executive Director, Fruit and Vegetable Growers of Canada]

Thank you very much, Mr. Chair and members of the committee, for the invitation to appear before you today.

Quinton and I appreciate this opportunity to address you on behalf of the Fruit and Vegetable Growers of Canada. I am Rebecca Lee, executive director of FVGC. We represent growers across the country involved in the production of over 120 different types of fruit and vegetable commodities over 14,000 farms.

We are here today to express our strong support for Bill C-280, the financial protection for fresh fruit and vegetable farmers act. As you all know, the produce sector has been pushing for this for many years. We greatly appreciate the support we've received from the committee members, from all parties, on this initiative. Speaking on behalf of Canadian growers, we strongly urge all parties to see to it that this bill passes swiftly so that it can provide the necessary safeguards to our growers in what is surely a volatile and uncertain time for our industry.

Our sector is quite unique and differs from other commodities in that our products are highly perishable and our window for sales very narrow. This is why the existing protections for agriculture products in the Bankruptcy and Insolvency Act are not adequate. In the event of a purchaser's insolvency or bankruptcy, our growers are left with limited recourse and significant losses.

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

This not only provides growers with an additional layer of protection. It is also an instrumental tool in ensuring fairness and equitability in these often complex dealings. Additionally, the definitions included in the legislation consider the realities of our industry. Acknowledging that the fruits and vegetables might be repackaged or transformed, and yet remain the beneficial property of the supplier, is an important detail.

I will now let Quinton Woods, FVGC's trade and marketing working group chair, explain further.

[Keith Currie, President, Canadian Federation of Agriculture]

Thank you, Chairman.

As most of you here know, I am Keith Currie, president of the Canadian Federation of Agriculture. CFA represents about 190,000 farm families and farmers and ranchers right across this country, from coast to coast to coast.

I want to be very clear from the outset that we are absolutely in support of Bill C-280. It's a bill for which I personally have been advocating for many years. I want to make it clear that we are certainly in support of it.

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

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

These producers typically don't see a return on their investment until the product is sold and payment is collected, long after the farmer has passed on their product. What happens when those suppliers go bankrupt and can't pay the farmer, or simply walk away because they can't turn a profit? The farmer doesn't get paid, and the Bankruptcy and Insolvency Act does not provide effective protection for fresh produce sellers in Canada due to the high perishability of these products and the industry's longer payment terms. You simply cannot repossess spoiled fruit or recover your losses, as we've heard at length tonight.

The government has put forward solutions for other sectors within agriculture. For example, the Canadian Grain Commission holds roughly $1 billion of financial security from individual grain licence-holders to pay grain sellers in case a grain buyer becomes insolvent. However, no such financial security exists for the thousands of small and medium-sized fresh fruit and vegetable producers right across this country.

Bill C-280 would establish a critical financial protection mechanism for fresh produce sellers in Canada to help secure payment in the case of a buyer declaring bankruptcy. It's a tailored solution to a clear gap in our risk management tool kit for Canadian producers.

We must remember that these farmers play a vital role in supporting and supplying local communities with safe and nutritious food and vegetable products. In a context of escalating food prices, increased costs of production and supply chain dynamics that are threatening Canada's food security, can we really afford to leave these producers exposed any longer?

Our members across the country are strong supporters of Bill C-280 and look forward to this bill being passed as quickly as possible.

Thanks for this opportunity. I look forward to questions.

[Fred Webber, Past President and Chief Executive Officer, Fruit and Vegetable Dispute Resolution Corporation, As an Individual]

Thank you, Mr. Chair and members of the committee, for this opportunity to speak with you regarding Bill C-280, the financial protection for fresh fruit and vegetable farmers act.

As you indicated, I retired as the president and CEO of the Fruit and Vegetable Dispute Resolution Corporation in 2021, having been part of the DRC since its origins and inception nearly a quarter of a century ago. The DRC is currently embedded in the Safe Food for Canadians Act and is a requirement for most firms that purchase and sell fresh fruits and vegetables. I continue to consult with the DRC as needed, and I am available to DRC members as an arbitrator.

Prior to moving to Canada in 2005 and becoming a dual Canada-U.S. citizen, I was at the United States Department of Agriculture, specifically with the PACA, or Perishable Agricultural Commodities Act, branch. My entire professional career has been spent resolving payment issues in the fresh fruit and vegetable sector.

My specific involvement with financial protection for Canadian farmers in relation to insolvent buyers began in the late 1990s as the DRC was being formed. The DRC founders set out to establish a mandatory dispute resolution system, a dedicated inspection service and an insolvency tool such as the one we are discussing today. Today, only the insolvency tool remains outstanding. When a firm ceases to operate, owes money and becomes insolvent, the DRC has no way to help recover any dollars owed. This legislation would provide our farmers with an opportunity to recover at least a portion of their livelihoods.

Frustrating our farmers further is this: Canada and the U.S. had specific programs available to each other for the resolution of fruit and vegetable trade disputes. Canadian farmer rights in the U.S. have been restricted, as the Canadian system does not offer comparable assistance to U.S. farmers. For many, this development has closed opportunities to expand and prosper.

Why has this important risk mitigation tool continued to stall? I believe it is due to misunderstandings and unfamiliarity with the sector. I will offer a few examples as an explanation as to why I believe this tool has been studied for so long.

In the beginning, a study was put forth indicating that the U.S. model of a deemed trust used taxpayer money to pay farmers whose customers became insolvent. It is now well established that no taxpayer money is involved in the U.S. PACA model and that this research was in error.

There was also—as was mentioned previously by Mr. Davidson—a significant misunderstanding with regard to the Canadian and U.S. constitutions. The Canadian farmers were familiar with the PACA model and wanted to follow it closely as a basis for the Canadian model. We now understand that, unlike the U.S. model, familiar or similar legislation in Canada cannot come into play until an insolvency occurs and federal jurisdiction has taken over. That is not a problem for the industry.

It has often been stated that protections for farmers already exist in the Canadian bankruptcy regime. I believe it has now been well established that those provisions simply do not work for produce, given perishability, supply chain, processing and other identity issues.

Another reality we have faced is the lack of viable information. I can verify that StatsCan and the superintendent of bankruptcy have valiantly tried to help. It is unfortunate that their systems lack the granularity to provide the specific insolvency information on fresh fruits and vegetables. Reorganizations and receiverships further complicate the compiling of meaningful data. Extracting unreported business failures has also been unsuccessful.

In my experience, the most compelling reason for this legislation is the number of firms that simply close their doors and walk away from their businesses. This is a regular occurrence. In a typical scenario, there will be several farmers owed money. They do not know who else is owed money, nor do they know whether another creditor has taken the assets. Without this information, they are not able to spend the significant dollars to investigate and place the firm into an insolvency position. With this legislation, a farmer would have some assurance of being treated fairly.

Thank you again for this opportunity, and I look forward to your questions.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you.

Similarly, as was pointed out earlier, small and medium-sized growers are often at the mercy of distributors, retailers, or whatever they might be called, which are more aggressive towards our growers.

Is Bill C‑280 really an important step forward? Could some improvements be made to ensure that it is?

[Richard Lehoux, Conservative, Beauce, QC]

Thank you for your answer, Mr. Davidson.

You mentioned at the outset that farming was important and that it should be given more specific attention. That is precisely the purpose of Bill C‑280.

Do you think this bill will have an impact on small and medium-sized growers? The trend has often led to preferential treatment for the very big producers. Will this bill have a positive impact on small and medium-sized growers? Will it at least encourage some of them to start up again?

As my colleague mentioned earlier, many fruit and vegetable growers in every province have shifted to grain or other field crops. Do you think this bill could have a positive impact on a possible return to fruit and vegetable crops and enable smaller farms to successfully enter this market?

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

Yes—a hundred per cent. I think that when there's uncertainty in business.... Let's be honest. We have trying economic times right now, especially for farmers, whether it's increased input costs—again, alluding to corrugate—climate change or different banks being worried about different things with different farmers. I think this is one piece of legislation that would give certainty to creditors, to say, “You know what? That person's receivable is going to be backed by this deemed trust, that Bill C-280”, which we're going to come out with.

I think it is actually going to help the industry immensely. It's something that, again, fresh produce farmers have been waiting for. It's time for this committee to get it done—for sure.

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

Yes. My office spoke to Mr. Cuming on a couple of occasions.

I think that for this bill that was drafted and that's in front of you, Bill C-280, the first and foremost thing that people have to understand—I think we have a witness here who is going to be able to explain it, if you have those questions, a lot better than I can—is that, under their constitution, the U.S. is set up differently than Canada is. I think that's what Mr. Cuming was referring to: how legislation like this would work in Canada.

That's why we worked with Fred Webber and others to make sure this legislation respects provincial jurisdiction first and foremost. This was written respecting how Canada's Constitution and Canada's law in only federal jurisdiction.... Again, we did consult with him on that.

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

I have a quick question, Mr. Davidson.

In the 42nd Parliament, we had an individual, Mr. Ronald Cuming, appear before the committee. He had worked with a draft of this law. Did you ever take a look at his draft? Is Bill C-280 in any way similar to what he had come up with? Are you familiar with the work he had done previously?

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

Thank you very much, Mr. Chair.

Welcome, Mr. Davidson, to our committee.

It's nice to see Bill C-280 come here. Congratulations on getting such a strong showing of support at second reading. I think that's put a lot of wind into the sails behind this bill. Obviously, from what I've seen with the questioning so far, you're getting a pretty favourable response.

I'm always interested in learning a little about what inspires MPs to come up with their PMBs. You mentioned that particular farmer in your riding. Were there any other examples that led you to take this path?

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

That's an excellent answer. Once again, we're happy to hear what you have to say.

I'd like to return to some things you said. Earlier, you mentioned a grower who was hesitating about planting his crops. I too have heard the same sort of arguments. I even saw that a number of crops had not been planted because the grower was afraid of not having enough labour for the harvest, owing in part to problems in connection with foreign workers. Unfortunate experiences from previous years have made people cautious.

I've also seen some growers switch to field crops because they require less labour given that the process can be mechanized. We all know that growing fruit and vegetables is extremely arduous. They are subject to bad weather and unpredictable climate conditions. We need to do everything possible to help them. From this standpoint, Mr. Davidson, the bill you are defending, C‑280, is excellent. The committee will continue its efforts to have it passed quickly.

Thank you.

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

Thank you, Mr. Chair.

Thank you to my colleague Mr. Davidson, my colleague and friend from the soup and salad bowl.

I believe I have the honour of representing probably the highest vegetable production—in gross value, anyway. Not that we would ever compete or be competitive, but ours has both the greenhouse sector and the processing sector in our ridings.

You mentioned Lakeside Produce. This is just a sampling of the letters that came into my office encouraging us and this committee to look at Bill C-280. I very much appreciate your bringing that forward.

Lakeside Produce had a chilling and devastating effect, so I appreciate your bringing that out. It's been brought out that only 0.1% of the transactions of the values end up in bankruptcy. That's been one of the challenges of this legislation.

Why is it still needed if only 0.1% of the transactions end up in bankruptcy?

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

Thank you, Mr. Chair, and good evening.

I'm very excited to be here at agriculture committee tonight. I'm very grateful for the unanimous support Bill C-280 received at second reading, and I look forward to further co-operation as we work to pass this bill. Together we can finally establish a limited deemed trust for our hard-working produce farmers right across this great country.

This couldn't be a more pressing and timely issue right now. Earlier this month a Statistics Canada report showed that there was a significant decline in fresh fruit and vegetable availability for Canadians in 2022. This year also saw a high-profile bankruptcy of Lakeside Produce in Leamington, Ontario, which had crippling financial implications for the entire produce industry.

This was followed up by an in-depth article in the Toronto Star, “Is this the end of lettuce?”, where it was reported that more three-quarters of all produce consumed in Canada is imported. This threatens Canada's food security, as access to fresh produce from foreign markets is increasingly being jeopardized by climate change, trade protections and supply chain issues.

According to experts cited in that article, Canada was previously “way more self-reliant in fresh fruits and vegetables—we produced a lot more of what we consumed domestically. And since World War Two, all that has seriously deteriorated, largely because there's very limited policy supports for [produce growers] compared to, say, the grain or the animal sectors.”

At its core, Bill C-280 is a recognition of the need to support Canada's produce sector just as we support other agricultural sectors, by ensuring that Canada's bankruptcy laws recognize the particular challenges and demands of growing and selling fresh fruits and vegetables. This is achieved by establishing a limited deemed trust for produce sellers, which would give them priority access to the proceeds of sale, limited to only the inventory, accounts receivable and cash on hand derived from the sale of produce during the bankruptcy proceedings of an insolvent produce buyer. This will help offset the loss of their sold produce.

The mechanism accounts for the especially perishable nature of fresh produce and the typical payment term that exists in the industry, both of which are significant deficiencies of the agricultural protection and dispute resolution mechanisms that currently exist.

There is a clear need for financial protection for Canada's fresh fruit and vegetable growers. This very committee has acknowledged as much on multiple occasions. You might think that no one reads your report, but Mr. Chair, I do. I spend day and night reading agriculture reports and Senate committee reports. It's unbelievable.

Bill C-280 enacts the very protections this committee has recommended the government put in place. It will strengthen an industry whose supply chain supports more than 249,000 jobs in Canada, amounting to $9.8 billion in wages. It will make our food security more resilient by reducing losses in an agriculture subsector that experiences more bankruptcies than most others. It will enhance the affordability and the accessibility of fresh fruits and vegetables for Canadians.

The reduction in costs for Canadian consumers will save as much as 5% to 15% on their annual fresh fruit and vegetable purchases, and it will open the door to reinstating reciprocal access to the financial protection establishment by the Perishable Agricultural Commodities Act in the United States, which will greatly support Canadians exporters who have been disadvantaged for far too long, despite the significant volume of produce sold to buyers in the U.S. every day.

Here today, Mr. Chair, we have an obligation to support our Canadian farmers. Instead of dire warnings of the “end of lettuce”, Bill C-280 represents the beginning of something more. Canada's produce sector can be positioned not only to feed Canada but to feed the world like never before.

Thank you to the committee. I look forward to your questions.

[The Chair, Liberal, Kody Blois]

I call this meeting to order. Colleagues, welcome to meeting number 67 of the House of Commons Standing Committee on Agriculture and Agri-Food.

I'll start with a few reminders. You know the format. This meeting is taking place in hybrid format and the proceedings will be made available via the House of Commons website. Just so you are aware, the webcast will always show the person speaking rather than the entirety of the committee. Of course, taking screenshots or photos of your screen is not permitted.

I have a couple of notes here, colleagues. We have Ms. Hedy Fry subbing in for Ms. Taylor Roy. Welcome to the committee, Ms. Fry.

We also have Mr. Epp subbing in for Mr. Barlow this evening.

Pursuant to the order of reference of Wednesday, May 17, 2023, the committee will commence its consideration of Bill C-280, an act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act, regarding a deemed trust for perishable fruits and vegetables.

I would now like to welcome the sponsor of the bill for the first one-hour panel, Mr. Scot Davidson, the member of Parliament for York—Simcoe. I do want the record to show, of course, that the MP for Simcoe helped bring some vegetables from the area. We certainly appreciate that—all committee members. I'll leave it for folks at home to see.

Good job, Mr. Davidson. We're all proud of our horticulture sector and I know that it exists in your riding.

Before I turn it over to you for five minutes for your opening remarks, I would be remiss if I did not recognize Theo and Diane Rood, who are the parents of Lianne Rood. They are in the committee gallery in the back.

It's great to have you here on Parliament Hill with us. You should be very proud of your daughter. She's a tremendous member of Parliament.

Mr. Davidson, we'll go over to you for five minutes.

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

That's exactly where I was going with my next question.

May I ask what representations AAFC has made to Finance around the implementation of Bill C-280 once it's passed and, in particular, the speed it can happen at and how quickly we can lobby the U.S. for recovery for our Canadian sellers under PACA?

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

Thank you.

The minister supported Bill C-280 today. That was good to see. In the past she has provided information that there are only negligible losses in the fresh market sector, and I just had a bankruptcy in my region that affected a producer to the tune of $1 million.

May I ask to what extent the banking sector has lobbied AAFC and/or the minister regarding Bill C-280?

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

Okay. Thank you for that.

You probably thought you were going to be safe from a PACA question today, but I'm going to prove you wrong. I was very happy to see the vote today on Bill C-280. This has been a long time coming. I guess my question is this. It's been a long journey. In the 42nd Parliament both this committee and the Standing Committee on Finance made recommendations. In this Parliament this committee and the Standing Committee on Finance again made recommendations.

I guess after seven and a half years of your government being in power, it's taken the opposition—it's taken us—to get this bill up front, debated and sent to committee. In other words, the initiative lay with us. Every time we tried to convince your government that this is what people wanted and needed and that this was what was needed to protect our perishable fruit and vegetable sector because existing tools did not work—and they have been explaining this to your department time and time again, ad nauseam—they lost their preferential access in the United States, which I sure hope came up in your discussions with your U.S. counterparts.

Why now? Why has your government now done an about-face, and why is it now going along with what has been demanded for so long?

Financial Protection for Fresh Fruit and Vegetable Farmers Act

[The Speaker, Liberal, Anthony Rota]

Pursuant to order made on Thursday, June 23, 2022, the House will now proceed to the taking of the deferred recorded division on the motion at second reading stage of Bill C-280, under Private Members' Business.

The question is on the motion.

The House resumed from May 16 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.

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

Mr. Speaker, York—Simcoe is the soup and salad bowl of Canada and Lake Simcoe. At this very moment, the planting season has begun for fresh fruits and vegetables, and I want to wish all farmers right across Canada the best of luck.

I know we are not allowed to use props, and I will set him down, but Gwilly flew in all the way from Bradford West Gwillimbury for this debate tonight.

Canadian farmers have been doing their part, working hard this spring to plant delicious produce to feed our nation. These farmers deserve our support, no matter if they are growing carrots in the Holland Marsh, potatoes in Brookfield, celery in Winnipeg, bell peppers in Abbotsford, tomatoes in Leamington or peaches in Vineland.

Through the establishment of a limited deemed trust for produce farmers, we can safeguard Canada's food security, promote Canadian produce exports and increase the affordability of domestic produce for Canadian consumers. Simply put, the trust is a tool that would be used by sellers of produce to recover the money made from the sale of their produce when a buyer goes bankrupt.

Unfortunately, the Liberal members have made it clear that they are completely out of touch with the boots-in-the-mud, real-world realities faced by our country's produce farmers. the Liberals claim that their one size-fits-all approach to Canadian agriculture works and that the bill is not needed, but they could not be more wrong. The government fails to acknowledge that fresh fruits and vegetables are highly perishable or that produce growers have unique challenges that differ from other products and industries.

There are already many supports available to other agricultural sectors, like dairy and grain, that are not available to the produce sector. It is common sense to provide support that is crafted specifically for the produce sector. More than anyone else, Bill C-280 would benefit the small and medium-sized family farms and farming operations, which are the backbone of the country's produce sector.

Seventy-five per cent of fruit and vegetable producers are small businesses. Their average sales are $85,000 or less a year. This is a sector with small margins, and it is these sorts of farms that will benefit most from limited financial protection. One missed payment from a bankrupt buyer could lead to many of these farms closing their doors for good.

Fortunately, this bill will promote financial stability across the entire supply chain and support payment for suppliers all the way back to the producers. A stalk of celery is not the same as a carton of eggs, and a tomato is not the same as a piece of beef. The government must recognize the unique challenges facing the produce sector and recognize there are currently glaring deficiencies in our bankruptcy laws for these growers.

Bill C-280 has been a long time coming. I would like to thank the Canadian Produce Marketing Association, the Fruit and Vegetable Growers of Canada, the Holland Marsh Growers' Association and the many other agriculture organizations that have supported this important bill.

I am also grateful for the real-life expertise of Fred Webber, former president of the Fruit and Vegetable Dispute Resolution Corporation. Fred was also an official in the U.S. Department of Agriculture, where his responsibilities included the PACA deemed trust. His insights were invaluable as this bill was drafted.

Hard-working farmers do not want a handout. After all, this bill costs taxpayers nothing. They just want to be able to sleep at night without worrying about unpaid invoices and spoiled product as they work to grow the fresh fruits and vegetables we all enjoy.

Canadian fresh produce farmers deserve to be paid for the food they grow. They are the ones knee-deep in the mud working the field every day to grow our country's fruits and vegetables. It is time for members of this House to roll up their sleeves, put on their rubber boots and support this common-sense Conservative bill, Bill C-280.

[Andréanne Larouche, Bloc, Shefford, QC]

Mr. Speaker, I rise to speak to Bill C-280, which amends the the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act to provide that perishable fruits and vegetables sold by a supplier to a purchaser, as well as the proceeds of sale of those fruits and vegetables, are to be held in trust by the purchaser for the supplier in the event that the purchaser has not fully paid for the produce and becomes bankrupt or subject to a receivership or applies to the court to sanction a compromise or an arrangement. My neighbour and esteemed colleague from Berthier—Maskinongé, who is our agriculture, agri-food and supply management critic, co-sponsored this bill.

Given the demand in Quebec for this measure, which could be helpful for our agricultural community, we could have introduced it. One of our wineries in Shefford reached out to let me know that, as a producer and processor in the wine industry, La Belle alliance agrees with the amendment proposed in Bill C‑280. They said they see the amendment as additional protection for produces of perishable fruits and vegetables that could help protect small- and medium-sized agricultural businesses from suffering undue losses in the event of the insolvency of commercial buyers.

Le Potager Mont-Rouge said that this is a bill that they are really passionate about because it ensures that producer sellers are financially protected. Their profit margins are already razor thin, and they are impacted by many external factors such as price fluctuations, imports and climate change, to name but a few. They have been in a situation like this themselves and have lost thousands of dollars.

This testimony from these two businesses shows how important this bill is. The Bloc Québécois is attentive to their concerns, so we are in favour of this bill and support it. I will therefore begin by explaining its benefits and then talk about the division of powers and the litigation system.

First, passing the bill could demonstrate to the U.S. government that Canada has a trust mechanism in place for cases of buyer bankruptcy. Indeed, the lack of such a mechanism in Canada was one of the main reasons why, in 2014, the U.S. decided to withdraw U.S. buyer bankruptcy and insolvency protection from Canadian suppliers. The Canadian government had actually committed to developing a legal framework similar to the U.S. Perishable Agricultural Commodities Act, or PACA, and thus restoring coverage under their bankruptcy protection law for perishable foods to protect our industry from losses in the event U.S. buyers went bankrupt.

Groups have been calling for this since their PACA coverage ended back in 2014. This protection is necessary because food products like fresh fruit and vegetables are perishable, and a supplier cannot simply take them back and resell them if a buyer goes bankrupt. The protection is intended to allow licensed suppliers that have a contract with a U.S. buyer to take legal action against the buyer in the event of non-payment due to bankruptcy.

The new process will require the value of the shipment to be held in trust in the bankrupt buyer's name so that the producer can recover this amount as a creditor. Before 2014, Canadian fruit and vegetable farmers were protected by a U.S. law if they were doing business in the United States and a company failed to make payment or went bankrupt. This is no longer the case, and the alternate procedure developed between the two countries is very complicated, especially for our smaller businesses.

Quebec's agricultural model is at the family farm scale and on a human scale. Currently, without this protection, Canadian suppliers of fruits and vegetables have to go through a special process to file suit under this legislation in the United States.

According to the Canadian Produce Marketing Association, suppliers have to deposit a bond equivalent to twice the amount required in the suit. Most suppliers do not have that much in liquid assets and the major buyers know that all too well. They are then forced to negotiate downward with the buyer to get at least some compensation instead of losing everything, especially since this type of debt is not a priority in a business' bankruptcy. Suppliers who are not protected do not have much chance of receiving decent compensation through the ordinary process. Under this bill, the trust mechanism ensures that the purchaser is the guarantor of the value of the shipment, without owning it, in the event of a default due to the application of one of the two pieces of legislation. The legislation stipulates that the buyer has 30 days to make the payment under the contract.

Under the Canada-United States Regulatory Cooperation Council initiative, Agriculture and Agri-Food Canada and the U.S. Department of Agriculture are committed to establishing comparable approaches in order to achieve the common goal of protecting fresh fruit and vegetable vendors from Canada and the United States from buyers who are not concerned with their payment obligations.

I will start with a bit of background. The legislation was first was created in the 1930s to try to protect vegetable producers from the multiple bankruptcies of their buyers. It then became an important tool in rebalancing the commercial relationship between producers and buyers. It is essentially designed to allow a licensed supplier who has a contract with a U.S. buyer to sue that buyer under the act in the event of a default in payment because of bankruptcy. The process will allow the value of the shipment to be placed in a trust in the name of the bankrupt so that the supplier can recover the amount owed as a creditor. Given the speed with which produce is resold by a merchant or spoils, it is quite rare that a fresh produce repossession situation will meet these criteria. This means that perishable food producers would be given super-priority status so they do not have to wait for the bankruptcy settlement to recover their property. However, in the context of the above conditions, producer associations explained that 15 days is not long enough, given that typical payment terms are about 30 days. However, 30 days is too long to expect to recover a product that can be resold. This provision is not well suited to the structure of the supply chain, which often operates with intermediaries such as wholesalers.

Second, with regard to jurisdictions, the most sensitive issue is the fact that Canada cannot really quickly pass a law like the one in the United States. The Perishable Agricultural Commodities Act, or PACA, is a program to protect farmers in case of bankruptcy, but it also encompasses all of the dispute settlement mechanisms for perishable goods. In Canada, the Bankruptcy and Insolvency Act falls under federal jurisdiction, but the regulations surrounding contracts fall under the jurisdiction of Quebec and the provinces. A legal framework like the PACA therefore cannot be developed unless there are negotiations or a collaboration between the federal government and the provinces, which is what we are hoping will happen. One of the arguments put forward by the federal government is that most trade disputes are resolved before bankruptcy occurs and so most of the American framework deals with issues that fall under provincial jurisdiction. Since it is complicated to operate using multiple dispute settlement regimes, the federal government just gives up rather than trying to find even a partial solution to the problem. We need to work on that.

Third, the official figures are much lower and limit the timeframe for claims to about 15 days. The major difference between the government and the industry figures can be explained by the fact that in order for it to become an official statistic, the producer must file a complaint. Most of the time, producers do not necessarily use official channels because they are too complex, and even more so after the end of privilege. Producers often have special business relationships with their client and try to accommodate them. The argument that there are few claims or that they represent a small percentage of farm receipts is very subjective. Producers used to have protection, but no longer do. We are simply being asked to restore protection given that, because of its proximity and the nature of goods, the United States is by far the most important trade partner for perishable goods. Restoring this protection for our producers who do business with the United States is not far-fetched at all.

Although the government is putting forward some arguments to demonstrate that an insurance similar to PACA is not the best option, especially because of the cost of credit and shared jurisdictions, we will continue to defend this bill. We are under the impression that the Liberal Party seems to want to defend its friends in the banking sector.

In conclusion, this bill is simply a response to the agricultural sector. Two years after Canadian producers' preferential access to PACA was removed, the Standing Committee on Agriculture and Agri-Food studied the issue. A number of key witnesses appeared before the committee. The NDP, the Liberal Party and the Conservative Party have all, at various times, pledged to fix the problem. From our perspective, it is clear that we need to move forward with this bill.

I thank my Conservative colleague for introducing this bill. It can make things better for businesses in Shefford, as I said in my introduction. Obviously, the pandemic was a unique situation, and it also exacerbated various issues in the agricultural sector.

I want to say one last thing. As the member for Shefford, I proudly represent a riding where agriculture is at the heart of its economy. This bill is a common-sense measure that gives farmers a little extra help to get through this difficult period, for their mental health, for their survival. As we know, farm succession is already facing several threats. Perhaps this bill will address some of the concerns of the next generation of farmers and give them the desire to continue, to produce what we eat every day and what sustains us. We need farmers.

Once again, I thank my colleague for this bill. The Bloc Québécois will be voting in favour, to support our agricultural model.

[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)