Agriculture Committee on June 19th, 2023

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

How long have you been CFO at EarthFresh?

[Brad Wiseman]

It's been over 16 years.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

You do financing in the United States as well, so you do have experience with the type of financing we're looking at doing here in Canada.

[Brad Wiseman]

Absolutely. We have very strong relationships with Farm Credit Canada, with the Canadian banks and with U.S. institutions. We are a member of PACA. We have U.S. finance facilities to help us grow in the U.S. We make sure that our roots are in Canada, but we have direct experience and financing arrangements in the U.S. and very strong relationships, which have been based on our long-term success with banking institutions for the past 16 years that I've been there.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Just for context for members who were asking about your coming last minute, you and I met several months ago about this bill, and you did want to come so that you could express to other parties and other members your concerns with the bill.

I did ask Mr. Wiseman, but I didn't ask you, Mr. Lemaire, for your thoughts on phasing it in over a period of time to be able to do what Mr. Wiseman was talking about.

[Ron Lemaire]

This is the first time the concept has been proposed. Legislation doesn't happen overnight. There's the introduction, and if we move through the process, it comes out from the Senate. The runway to deliver will be approximately two years anyway. As we move through that process and introduce it, as with many pieces of legislation when coming into effect, we will have the ability leading up to that to work with all the stakeholders to educate. As an association, that's what we do.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Would two years coming into effect be okay with you, then, if that's what you're thinking it would be anyway?

[Ron Lemaire]

Looking at the introduction of the legislation within this Parliament and government and then the delivery of that, by the time we move, it will be the end of 2024, almost 2025, if all the ducks line up.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Okay, thank you very much.

Francis, I'll turn it over to you.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Wiseman, Ms. Damoff has been a polite pesterer in my ear on this particular issue, and this is why you and I have met in the past few weeks. I do want to assure you that she is surely representing you and EarthFresh. I certainly appreciate Ms. Damoff. We sit close to each other. We've always sat close to each other for the past seven years, and she's never torn off my ear about a certain agricultural issue except for this one.

Mr. Lemaire, I have 50 seconds. Obviously, the purpose of this bill.... I've sat on this committee for the last seven years, and PACA, I would be a hypocrite to say I've never heard about this particular issue. On the importance of the reciprocity in the U.S. for our Canadian exporters, what does that mean to our Canadian exporters and to the U.S.?

[Ron Lemaire]

It is significant, because it provides them with the leverage. When they're negotiating on a dispute over quality and price, they are able to leverage in a way that they get access to the dispute resolution mechanism without having to post double the value in the form of a bond.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Chair, I think I'm at five minutes, and I'm good.

[The Vice-Chair, Conservative, John Barlow]

Yes, you had six seconds, but I don't think you were going to get anything in there.

Mr. Perron, you have two and a half minutes, please.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

Mr. Lemaire, we'll be able to pick up where we left off. We were talking about areas of jurisdiction. I fail to see what the problem is. The laws of the provinces and Quebec regulate relations between merchants to a greater extent. What this bill is about is something else: the federal government would create a trust to provide financial security, and that doesn't seem problematic to me.

Where does the problem lie in terms of jurisdiction?

[Ron Lemaire]

Within the jurisdiction, if we're talking about the bankruptcy and insolvency framework, the organization must be declaring bankruptcy. Because of the jurisdiction being federal and provincial bankruptcy rules, we have to make sure that the organization is insolvent. This is why we need this tool at the federal level, to have a harmonized approach across all provinces to protect the company selling across the country.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

In that case, there's no problem. Some people tell us that there is a problem in terms of areas of jurisdiction, but in reality there is not.

[Ron Lemaire]

If we implement the PACA-like trust in the way it is being presented in Bill C-280, no.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

That's perfect. Thank you very much.

You spoke earlier about the complexity of the entire chain, which includes sellers, packers and so on, and about the importance of not changing the terminology. In addition, the bill should specify that the producer must absolutely be paid at the outset.

Do you have any other recommendations? In your opinion, do we need to make other amendments to the bill or should we adopt it as it stands? Do you have any other comments for the committee?

[Ron Lemaire]

Adopt it as is relative to the way we position the supplier. Why that's important is it will protect the first level of sale to the final level of sale. That's key in support of the entire supply chain and stability.

I will say concerning the comments made around potential food inflation, again, we've reviewed this very aggressively to make sure we are reviewing all risk. In the U.S. model, we have not seen a food inflation impact because of borrowing relative to factoring and all the other tools that the industry uses. There are tools that are used at a very limited level because of how we operate, but those tools are used today, depending on the way the company borrows and the way the company is structured, which is what I mentioned earlier around the complexity of the CPMA membership and the diversity of companies across our supply chain.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much, Mr. Perron and Mr. Lemaire.

To wrap it up, we have Mr. MacGregor for two and a half minutes, please.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Chair.

Mr. Lemaire, I was glad to hear Ms. Damoff raise the topic of an economic impact. When we had Mr. Davidson here presenting on his bill, he was talking about a farmer in his riding and how economic impacts are linked to certainty. The farmer was always having questions as to whether to plant a crop because of the uncertainty of whether he would get paid.

We also had Keith Currie here, president of the Canadian Federal of Agriculture. I want to read from his testimony. He said:

Not only would this bill ensure that financial protection, but let's not lose sight of the confidence that it gives growers to go forward, not only to grow for the year, but to look at growing my business, expanding my business. The economic input that has, not only from the immediate rural area with further employment, but all the communities it's going to support and grow down the road, as well as the food security issue, both domestically and internationally.

Is there anything you want to add to Mr. Currie's comments about that link between certainty and economic impact? Have you done any kind of analysis of what this could mean, allowing local Canadian businesses to expand their operations?

[Ron Lemaire]

There's no formal analysis that has been done just because of the volume and numbers of growers and the diversity of the supply chain, but I concur with Mr. Currie's testimony, as I mentioned earlier, and that of the witnesses on June 12.

I do feel, as I mentioned earlier, that this is focused on bankruptcy protection, but it is a stability model. Delivered in the right way, looking at the risk and supporting the whole supply chain, it will enable companies to continue to invest in innovation, labour, growth, and in the event of a bankruptcy, which we've been fortunate—well, unfortunately, there's been one with Lakeside recently and a few small independent retailers. In the event of a bankruptcy, that grower, that packer, that shipper would be protected, which they currently are not.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you.

I'll end it there, Mr. Chair.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much, Mr. MacGregor.

If you don't mind indulging me as the chair, I have one quick question for each of you.

Mr. Wiseman, you mentioned that EarthFresh operates in the United States and you operate under PACA in the United States, and all American companies operate under PACA.

Why would it be more of a risk to have this system in place in Canada than what you're already operating under in the United States?

[Brad Wiseman]

In Canada, EarthFresh Farms Inc. is a Canadian company. We've just set up new operations in the U.S. Our core operations are in Canada. Our major financing model comes from Canada. With that, our U.S. operations are just in their starting stage. When we look at the banks, the priority payables are more of a concern in Canada because we've been here for decades and have been very successful.