Excellent.
Honourable members, I also appreciate this opportunity to build on the remarks of my colleague from Agriculture and Agri-Food Canada and to talk a little bit about the marketplace framework supports in place for all sectors, but particularly from a fresh produce perspective.
To start, it should be noted that our marketplace frameworks are, for the most part, laws of general application working to support an efficient and effective marketplace, with predictability and stability for business, and sufficient transparency and protections for consumers. While Canada's insolvency regimes contain strong protections for creditors, including fresh produce sellers, some stakeholders have advocated for a perishable agricultural commodities act, or PACA-like system. Here it's worth elaborating how our insolvency regime works and why the adoption of a PACA-like system could pose some challenges.
The insolvency regime provides an orderly, transparent set of rules for distributing assets of an insolvent business amongst creditors. Because it deals with the rights of creditors, the integrity of the insolvency regime is crucial for well-functioning credit markets, a growing economy, and an innovative business environment. To this end, the insolvency regime seeks to balance competing interests amongst creditors while being mindful of the economy as a whole.
In addition to the cost sharing programs and regulatory protections discussed by my colleague at Agriculture Canada, insolvency law contains financial safeguards for suppliers and farmers.
The Bankruptcy and Insolvency Act gives suppliers of goods the right to repossess those goods under certain conditions. Canadian farmers, fishers, and aquaculturists have a deemed trust over the inventory of a bankrupt debtor for products delivered within 15 days of a bankruptcy or the appointment of a receiver.
As you can see, the system already attempts to look at all interests in its aim for balance and strong economic outputs. That said, we have continued to investigate whether additional innovations are required. The government has taken a considered, evidence-based approach to assessing financial protection options for all players in insolvency, including for produce suppliers.
For example, financial risk mitigation options were studied by federal-provincial working groups between 2007 and 2009. The industry's financial losses due to insolvency were found to be very small. It was reported that greater insolvency protections would not protect sellers against more significant sources of loss, such as fraud, disputes over quality, or slow payment. Financial protection for produce sellers was included in the agenda of the regulatory co-operation council, or RCC, in 2012.
In public consultations on insolvency legislation held in 2014, stakeholders were asked about increased protections for fresh produce sellers in insolvency. The adoption of a PACA-like regime was supported by the fresh produce industry. However, lenders, legal experts, and insolvency professionals urged caution due to potential negative economic implications. In particular, there were concerns that a PACA-like system could result in the shifting of losses amongst creditors. Lenders and creditor groups cautioned that altering priorities in insolvency could have a negative impact on the costs and availability of credit for business.
While there have been some studies and mixed views on pursuing a PACA-like system in Canada, particularly in insolvency, it is also important to note that PACA is a comprehensive regulatory regime that goes beyond insolvency. The U.S. PACA deemed trust applies in all cases of non-payment, such as for quality disputes, fraud, and slow payments. A deemed trust and insolvency would not protect against these losses. A PACA-like system such as this would fall outside of federal insolvency jurisdiction and require provincial legislation.
As my colleagues have already noted, we continue to engage with the fresh produce sector to understand their business and how best to ensure they achieve solid market outcomes.
With respect to any specific proposal for changes in insolvency, we will continue to consider evidence-based proposals that can further the goals of this important marketplace framework.
Thank you. We will certainly be pleased to take any questions you may have.