Agriculture Committee on June 12th, 2023

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

It is, yes.

[The Chair, Liberal, Kody Blois]

Okay.

Paragraph (b) would just simply be to say that, after 30 days of invoking that intention in a bankruptcy situation, the purchaser would have to pay the entire amount owing.

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

Yes, it's 30 days.

[The Chair, Liberal, Kody Blois]

What I'm getting tripped up on is paragraph (c) where it says, “the purchaser, trustee or receiver”—obviously, “trustee or receiver” would deal in a situation where there is bankruptcy—“does not pay to the supplier the entire balance owing when it becomes due as provided in the invoice.”

That references the actual piece in a situation of bankruptcy, not just a situation where a purchaser has not paid and is not in a bankruptcy situation. Do you follow me?

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

That's correct.

Yes, I follow you.

[The Chair, Liberal, Kody Blois]

This applies only in a bankruptcy situation, not just when a company may have not paid their bill.

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

This is a bankruptcy situation.

[The Chair, Liberal, Kody Blois]

That's your understanding. Okay, good.

Then the second question I had was around perishable fruit and vegetables. Is it your understanding in the conversations you've had with industry...? I take notice that they're going to be on next, so we can ask them this question as well.

Is there a working definition of “perishable fruits and vegetables”, or is it just common sense, like strawberries and carrots, something that could be perishable? Is there a technical definition? Do you know?

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

If you look under “Definitions” in proposed subsection 81.7(7), it says:

perishable fruits or vegetables includes perishable fruits and vegetables that have been repackaged or transformed by the purchaser to the extent that the nature of the fruits or vegetables remains unchanged.

[The Chair, Liberal, Kody Blois]

If this carrot was cut and repackaged but it's still a carrot, does that apply?

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

It's still a carrot.

If you made soup out of it and now you're selling soup, then it's not. It's an original thing.

[The Chair, Liberal, Kody Blois]

The intent of the legislation is specific just to whole fruits or vegetables that are not otherwise processed in any form.

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

That's correct.

[The Chair, Liberal, Kody Blois]

Okay, that's helpful.

That's all I had in terms of technical questions.

Thank you, Mr. Davidson.

I'd like to make a motion or ask the committee.... We have all of this lovely product from York—Simcoe. I think we should put it together as members of Parliament and take this to the Ottawa Food Bank or some local food bank and donate it. Is that something we should all do?

[Some hon. members]

Agreed.

[The Chair, Liberal, Kody Blois]

Good.

Colleagues, we'll work with the clerks and analysts to do that.

Thank you, Mr. Davidson, for bringing it from, as you call it, the salad bowl of Canada.

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

It's the soup and salad bowl.

[The Chair, Liberal, Kody Blois]

It's soup and salad. I'm sorry. I just thought it was salad.

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

It's all good.

I'll get you the T-shirt. It will have “Gwilly” on the front.

[The Chair, Liberal, Kody Blois]

I would like that T-shirt.

Colleagues, we're going to break for a few minutes. We'll come back with our second panel and our witnesses.

Thank you, Mr. Davidson.

[The Chair, Liberal, Kody Blois]

Colleagues, we're getting back with our second hour. Thank you to our technical team for the quick turnaround.

Colleagues, we have four different witnesses for the second hour of our panel. We have, appearing as an individual, Fred Webber, past president and chief executive officer of the Fruit and Vegetable Dispute Resolution Corporation. I believe he's joining us online. From the Canadian Federation of Agriculture, we have Keith Currie, president, who is in the room, and Brodie Berrigan, director, government relations and farm policy. From the Fruit and Vegetable Growers of Canada, we have Dr. Rebecca Lee, executive director, and Quinton Woods, both of whom are joining us here in the room.

Welcome, and thank you so much.

We are also welcoming Ms. Catherine Lefebvre, President, and Mr. Patrice Léger Bourgoin, General Manager, both from the Quebec Produce Growers Association.

Welcome to our committee.

We're going to start with up to five minutes each for your opening remarks. We should have enough time for two rounds of questions.

I'm going to start with Mr. Webber.

It's over to you for up to five minutes.

[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.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Webber.

We'll now turn to the Canadian Federation of Agriculture.

Mr. Currie and Mr. Berrigan, you have up to five minutes.

[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.

[The Chair, Liberal, Kody Blois]

Thank you very much.

We'll now turn to the Fruit and Vegetable Growers of Canada.

Dr. Lee or Mr. Woods, you have up to five minutes.