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.