Thank you, Mr. Chairman and members of the committee.
I appreciate the opportunity to discuss with you the importance of a Canadian-made deemed trust in relation to fruits and vegetables. This Canadian-made legislation would protect fruit and vegetable farmers and sellers within Canada. The creation of this tool would also reinstate Canadian fruit and vegetable farmers and sellers to preferred status, which was recently revoked with our largest trading partner, the United States.
My name is Jason Verkaik. I am a fourth-generation family vegetable farmer in the Holland Marsh in Bradford, Ontario. I also chair the Ontario Fruit and Vegetable Growers' Association. I'm here to share some stories about how farmers in the growing area where I farm have been impacted negatively due to the lack of this important tool.
I was able to listen to the standing committee last Monday in regard to the deemed trust. A few themes caught my attention, one being that some people do not think this is a big enough problem to warrant a no-cost-to-government, industry-accepted, highly effective tool that was once promised to our largest trading partner.
I strongly disagree, so I decided to talk with farmers in our area. This is what I found out.
In 2008, a company called Top of the Hill Produce was forced into receivership. There was over $3 million left owing to vegetable farmers for carrots, onions, beets, cabbage, and potatoes. I was able to talk with 14 farmers who were affected by that. Not one of the farmers was able to collect anything for these outstanding receivables. The range in what was owed was as high as half a million dollars to as low as $15,000, with an average of $80,000 to $100,000 per farm.
I know the larger farms had more money left owing; however, if you take a percentage of their total sales, it represents 10% to 40%. On average, farms run a profit of 3% to 4%. These numbers would not be captured in the data that gets presented. This does not make it any less real.
What is also important to note is that there was no dispute on the quality of the vegetables, and this buyer was paid for what he used the farmers' vegetables for. Some of the farmers had to remortgage to stay in business near the end of their career.
In 2011, a vegetable packing facility went into receivership. They were called Holancin Farms. I was able to find 12 farmers with a total of over half a million dollars uncollected, ranging from $5,000 to $200,000. This does not even represent the total owing to farmers, just the ones I could catch up with.
Unfortunately for some farmers, they were involved in both of these insolvencies.
In 2014 there was another bankruptcy. Not only did they owe farmers money, but the farmers were also victims of a trickle-down effect of slow and no pay.
These examples are of Canadian losses due to insolvency.
I'll briefly tell you my experience. I had done business with one company for about 10 years. It was very good business. We had a strong relationship. We were doing close to $1 million of business between the months of October and May in any given year. Slowly, one-month regular payment turned to slow pay, which eventually turned to no pay. I was out about $143,000.
I continued to try to collect the debt and was assured I would get it. Remember, I had had a good business relationship for 10 years. After more time had passed, I lost my patience and said I would need to take stronger action. His words to me were that if I took legal action, I would force him into bankruptcy, and then I wouldn't see a dime. Shortly after that I received a cheque for $20,000 and a commitment to slowly pay what he owes. I'm still waiting to collect more, as are a bunch of other farmers, for a total of close to three-quarters of a million dollars.
Now I'm going to cite an example of having lost our preferred status with PACA. There's a farmer-packer in our area who had sold $78,000 worth of vegetables to a customer in the United States. He went through the proper process through PACA to collect what was not being paid. There was no dispute on the quality of the vegetables. During the process, our preferred status under PACA was revoked due to the Canadian government's not being able to come up with a Canadian-made deemed trust.
He was still able to access PACA; however, he was told that to be able to continue, he'd have to post double bond, which was $156,000. He was unable to come up with that money in the 90-day time frame. The case was considered resolved. Obviously that's a bad choice of words, but that's what comes across on the data sheet.
The buyer who purchased the produce was a broker, and he had no company assets outside of a couple of telephones and a desk.
When farmers fail to get paid due to insolvency, some need to remortgage to keep going. They also lose the ability to reinvest back into their farms. They lose out on being able to tap into government programs for innovation and infrastructure, such as Growing Forward, and environmental farm plans.
We do over $10 billion in fruit and vegetable trade between Canada and the United States. This Canadian-made deemed trust, along with single licensing, is protecting our food security through protecting our domestic supply and our needed trade. History teaches us that nations that take care of their food supply flourish. If a nation does not take the necessary measures to protect the very ones with the knowledge and the ability to grow food, it does not bode well for long-term sustainability.
Farmers have many risks. Weather is number one. They accept this risk and respect the challenge it brings. However, there is another kind of weather they should not have to endure, and that is whether or not they get paid. I strongly and respectfully encourage this committee to brief the minister on this need in a timely fashion and on the urgency that comes with it.
Only one solution works for the industry, our United States trading partner, and the uniqueness of Canadian law: a Canadian-developed deemed trust. This file has been on the table for half a generation. It has been studied and reviewed for decades. Over the past five years it has been brought to the forefront.
There has been thoughtful, respectful, and accurate development of a Canadian-made deemed trust by our industry through Professor Cuming. We have unanimous support within the industry to move this legislative framework forward, and we are looking for your support.
Thank you.