Thank you, Mr. Chair and honourable members of the committee. On behalf of the Canadian fresh fruit and vegetable sector, I welcome the opportunity to share our comments regarding the financial repercussions that the COVID-19 pandemic poses for the fresh produce industry and its supply chain.
The CPMA represents the entire fresh fruit and vegetable industry, from farm gate to dinner plate. Our comments are reflective of a wide array of members who work daily to provide Canadians with the fresh and healthy fruit and vegetable options they demand and who have continued to do so during these extremely challenging and stressful times.
To begin, the CPMA would like to recognize and express our industry’s appreciation for the high level of engagement and collaboration the federal government has shown in working with industry during these challenging times. In particular, I would like to thank the government for their flexibility and collaboration with industry in granting exemptions to international travel restrictions for temporary foreign workers and in providing some financial support to employers of foreign workers to help recover costs for the two-week isolation protocol.
We look forward to an ongoing working relationship to find solutions to mitigate the impact of the outbreak on Canadian families and to ensure they will be able to continue to put our safe, healthy and nutritious fruit and vegetable products on their tables throughout this crisis and afterwards.
With Canadians staying home and buying patterns shifting during the pandemic, we have seen retail sales up 8% for vegetables and 5% for fruit, but at the same time, consumers are spending less time browsing grocery stores for unique items, and sales for shorter shelf-life products and specialty items are lower.
While the CPMA members within our national retail category have navigated COVID effectively to meet consumer demand for produce items, there are many other companies within the supply chain that are not so fortunate. Food service represents 30% of our value chain, and the catastrophic impact to this sector and those who supply it will be felt for years to come.
While meal delivery and curbside pickup have lifted food service produce sales from zero to 20% and sometimes 30% of traditional volume, it will be a long recovery, as physical distancing and consumer fear will play a role in how restaurants reopen. For many, the physical space available, which cannot be changed to accommodate new social distancing requirements while also allowing sufficient customer capacity, will be a major factor in the economic decision on whether to reopen.
Those operators who still owe distributors for product ordered when they closed their doors will not be serviced when they try to reopen until they pay these bills. Many of our members are also being dramatically impacted due to the rising costs of inputs, access to labour and operational changes. For a sector that works with a very small margin and limited available capital, we are at a point where more effective programs to access operating capital without going into unmanageable debt are paramount. I will touch on this more later in my comments.
In a post-COVID world, business continuity will be challenging as we transition. It is crucial that the government ensure the supply chain is supported from farm gate to dinner plate. Government programs created or adjusted to support the produce industry must provide the necessary flexibility, adaptability and longevity to minimize losses to the industry. The impact to businesses in our sector is happening not only today but will continue for the next 12 to 24 months. The complexity and seasonality of our industry mean that both large- and small-scale operators must have access to programs and tools developed by government for both the short term and the long term.
The CPMA recognizes and commends the speed at which the Government of Canada operated to create macro level programs to support industry at the outset of the pandemic in Canada. Many of the programs created have provided support to segments of our supply chain. Yesterday's announcements are a good example, but moving forward it will be important to provide a more focused approach to reduce the unintended consequences and impacts to some businesses, which include increased debt, challenges in accessing domestic labour, and more.
In addition to foreign workers, the produce supply chain relies on a steady supply of domestic labour. The CERB has created unintended consequences in the short term for many packers, distributors, wholesalers and small retailers, which are facing greater challenges to hire at a time when Canadians are relying on them to provide the food they need. The Canada emergency response benefit must be adjusted to support unemployed Canadians without creating a disincentive for Canadians to work, as the $1,000 allowable monthly income amount is not enough encouragement during these unique times.
Additionally, the Canada emergency student benefit has the potential to impact seasonal and summer employment opportunities within our sector. I would encourage greater flexibility for students to collect the benefit and work for essential service providers like agriculture and agri-food.
On a positive note, programs like the Canada emergency wage subsidy have been key for those of our members who qualify. They were able to maintain staffing during the initial food service market shift, but now we must review this tool and potentially extend it beyond September for targeted essential services like the produce supply chain. This will help alleviate the economic stress companies are forecasting under the new normal.
Early in the pandemic, access to temporary foreign workers was the single greatest threat to our production, food security and integrity of the food supply chain in Canada. While some of the industry's key labour concerns have been addressed to a point, logistical and financial challenges remain. CPMA would like to echo the concerns of our partners at the Canadian Horticultural Council about the significantly reduced number of workers who have been able to come to Canada, particularly looking ahead to harvest.
CPMA also supports the recommendations made by the Canadian Horticultural Council in relation to the government's business risk management programs, including additional support for farmers through AgriStability and AgriInvest. We all know there will be winners and losers during this pandemic. As members of the committee are fully aware, the Canadian produce industry has been requesting for many years that a financial protection tool for produce sellers be implemented.
Unfortunately, over the next two years, the COVID business environment has driven and will drive businesses into bankruptcy, and our sector has no effective protection. Canadian produce sellers now more than ever are at risk in the event of a bankruptcy. Without a limited statutory deemed trust, we will potentially see more companies dragged into economic hardship. At a time when food security is second only to health care in terms of priorities for all Canadians, it is crucial that the government provide all possible safeguards for the Canadian food supply chain, including a deemed trust mechanism for produce sellers and farmers.
From growers to packers, shippers, processors, wholesalers and retailers, our industry has incurred unprecedented costs to develop COVID-related business plans and new procedures to ensure business continuity and to prepare for the eventual return to work. Many CPMA members are addressing, and will need to address, employee concerns by implementing physical and social distancing measures and ensure access to PPE.
Why is this important? In B.C., one greenhouse packing operation had 30% of their workforce not show up to work one day following the announcement of a suspected COVID case. The need for PPE is recognized as necessary to ensure business continuity and staff morale while working to keep absenteeism low.
In a survey completed last week, 87% of our members reported they are actively purchasing PPE and other health screening tools. However, challenges pertaining to the access of these essential supplies have been noted by many CPMA members. A shortage of supplies and long lead times to order products like hand sanitizer, gloves and N95 masks have only added to the complexity.
I must note that the added costs of purchasing this equipment cannot sustainably be absorbed by the industry. While the announcement by the minister yesterday was encouraging, CPMA recommends that the government implement a PPE tax credit to support industry in securing the equipment needed to keep workers and the public safe.
Additionally, the inconsistency of a harmonized delivery of isolation protocols and measures at a local level is also causing frustration across the industry. The need to have common risk-based models is vital to provide and enable competitiveness and public safety.
Finally, we must also recognize trade and regulatory flexibility. This pandemic has clearly demonstrated the need to bolster our food security to ensure the ongoing viability of our food system and strong domestic global strategy. The supply chain linked to transportation, border access, ports of entry and exit must all be maintained. The regulations such as hourly service for truck drivers should be harmonized wherever possible, specifically with the U.S.
The produce supply chain is a globally integrated model that relies on both domestic and international networks. Recognizing the government's efforts to provide some flexibility in the enforcement of non-food safety labelling requirements to ensure that the smooth flow of essential products continues is needed more than ever.
Further flexibility to allow nutrition facts from other countries, especially the U.S., and to allow English-only mandatory labelling information in provinces other than Quebec would help to ensure that grocery stores can continue to provide food.
I apologize for being long.