Thank you, Mr. Chair and members of the committee.
On behalf of the Canadian Produce Marketing Association and our 850 companies across Canada, from our supply chain, basically farm gate to dinner plate, I am happy to share our comments around certain tools, incentives and tax measures that we feel are necessary to address some of the short-term and long-term issues that are going to happen to our sector due to COVID-19. You can find more information in the brief that has been submitted to the committee.
Since the start of the pandemic we've seen massive shifts within our markets. We will have both winners and losers. With Canadians staying at home and buying patterns shifting in the pandemic, at the end of April we saw retail sales up 8% for vegetables and 5% for fruit. Driving this were the staples, such as potatoes and onions, and that is currently starting to level off. Food service, representing 30% of our value chain, hasn't been so lucky. Catastrophic impact to this sector and those who supply it will be felt for years to come. While meal delivery and curbside pickup has lifted sales to restaurants for produce 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.
Many produce sales rely on volume due to small margins. When restaurants reopen, the physical space cannot accommodate the typical and needed sales within the size of the space and number of patrons. It will be a key decision. Without space and without patrons, restaurants might decide not to reopen, thus further impacting the entire supply chain.
One potential positive is the shift to e-commerce and click and collect. Some small restaurants and storefronts might decide to go online as they've been successful, and by doing so, reduce their lease costs and overhead, but this will mean not hiring the labour force they've traditionally hired.
We've also seen the opportunity for growers and suppliers to increase their e-commerce across the country, but without broadband Internet in rural communities, it's very difficult. It's key that we look at how we can add this access.
Many of our members, particularly those picking, packing and processing, are also being dramatically impacted due to the rising costs of inputs, access to labour, and operational changes. The government's announcement of $77 million set aside for the broader processing industry is appreciated but won't truly support the scope of impact that all processing groups are seeing.
In a post-COVID world, business continuity will be the challenge as we transition. The complexity and seasonality of the industry means that large-scale and small-scale operations across our entire supply chain must have access to the programs and tools developed by government leading into and out of harvest.
We recognize that the government cannot continue to pump money into the system. However, programs such as the Canada emergency wage subsidy should be reviewed and extended beyond September for particularly hard-hit sectors, such as those who supply and operate within food service and the produce supply chain. The Canada emergency response benefit and the Canada emergency student benefit must also be adjusted to support unemployed Canadians without creating a disincentive to work.
Other programs and tools that require consideration include bankruptcy protection for produce sellers; targeted tax credits for essential services now required to change business practices and purchase new equipment, including PPE; and more effective programs to access operating capital for a sector that works within very small margins and limited available capital.
I mentioned the emergency response benefit. It has created unintended consequences, specifically in the short term for many packers, distributors, wholesalers and small retailers, as they're starting to see high levels of absenteeism and challenges in rehiring. With the reality they're now facing, the decision of workers to stay home and potentially not be exposed to COVID and collect the $2,000 a month, many are choosing to pick CERB. The $1,000 cap of allowable monthly income isn't quite enough to influence them to work within the industry. We suggest increasing the allowable income limit or providing targeted exemptions to allow Canadians to collect CERB and work within the produce supply chain over the next 10 months.
The emergency student benefit is another area that is creating a disincentive for students to work. Increasing the allowable income limit or providing a targeted exemption to the income limit could encourage more students to collect the benefit and work for essential providers such as the agriculture sector.
The recent announcement of incentives and the student wage subsidy for new hires was one of our asks, and we appreciate the recent positive move and implementation of the new youth employment program for agriculture.
It is important to note that many grower businesses only begin to generate revenue at the time of harvest, with many revenues for the current season's crop realized at the end of the year, so it's key that they don't necessarily qualify for the emergency wage subsidy and cannot demonstrate that decline of 30%. We need to look at how we can include more growers into that mix.
As well, the bankruptcy protection program does not support the produce industry. We've requested a PACA-like trust model to support fruit and vegetable growers and sellers in Canada. We encourage the government to continue to look at that program, as currently we do not have sufficient bankruptcy protection.
Finally, with the changes to business structure in our supply chain around the purchase of personal protective equipment, as well as other changes in our operations due to COVID, while we appreciate the funding of $77 million, we are encouraging the implementation of a tax credit to support industry in procuring the equipment essential to keep employees safe.
We thank the government for all its work and recognize that it has implemented quite a few extreme measures at a very rapid level to support Canadians, as well as our sector. We're happy to continue to work with you to try to find more solutions as we move forward.