Fruit and vegetable producers optimistic as Bill C-280 moves to second reading

A bill that will provide fresh produce sellers in Canada with financial protection in case of buyer bankruptcy has moved to second reading in the Senate.

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Bill C-280, the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act was adopted by the House of Commons on Oct. 25, with its first reading in the Senate the next day.

Presented to the House with no amendments, the private member’s bill sponsored by York-Simcoe MP Scot Davidson was passed with one vote against by Oakville North-Burlington MP Pam Damoff.

Why it matters: The bill offers financial protection to fresh produce sellers similar to that offered to
counterparts in the U.S.

Bill C-280’s deemed trust emulates the United States Perishable Agricultural Marketing Act’s Trust in providing fresh produce sellers in Canada a way to secure payment in case of buyer bankruptcy with no additional burden on the government.

Ottawa-based Fruit and Vegetable Dispute Resolution Corporation (DRC) is a member-based, non-governmental organization that addresses dispute resolution and provides default contract rules and licensing. Bill C280 would secure the final piece of the puzzle, a trust system to back the complaint and force payment.

Fred Webber, retired DCR president and CEO, said the U.S. system was implemented for food security reasons.

“When somebody in the world has a product to sell, the United States is a market of first choice because it is the safest place to sell,” Webber told Farmtario in an earlier interview. “We need to erase any fear there is of people selling to Canada.”

In a cash-based industry where perishable product flows quickly through the system, the current bankruptcy right of repossession is useless for farmers and sellers, said Ron Lemaire, Canadian Produce Marketing Association president.

“In the event of a bankruptcy in produce, you basically have nothing to repossess. It’s not like a washing machine.”

When a small independent grocer went bankrupt in Eastern Canada, the wholesaler was left on the hook for sold stock because there was no secured creditor recognition, Lemaire said.

“He couldn’t see his growers lose their farms, so he took the hit on that one. In this event, if we had the (proposed Bill C-280) trust (and) if there was some asset available, he could have recovered something.”

Lemaire said the same goes for the greenhouse grower who had more than $900,000 in unsecured claims when Leamington’s Lakeside Produce declared bankruptcy earlier this year.

“We work on such tight margins that $1 million is significant to your business,” he said. “(Bill C-280) is no guarantee you get 100 per cent of your money, but it’s more than the nothing we’re getting right now.

“We have (cross-party) support. Now we need the Senate to do their due diligence in the most expedited way.”