Legislation offers greater support for companies when buyers go out of business, and could inspire US to change its own rules
Fresh produce industry groups in Canada have welcomed the passing of a new law that ensures financial protection for the country’s fruit and veg suppliers in cases where a contracted buyer goes out of business.
The law, known as Bill C-280, is also regarded as a step closer to achieving a similar safety net for produce suppliers in the US.
In a statement, the Fruit and Vegetable Growers of Canada (FVGC), the Canadian Produce Marketing Association (CPMA), and the Fruit and Vegetable Dispute Resolution Corporation (DRC) said they were “thrilled” to the legislation, known in full as the Financial Protection for Fresh Fruit and Vegetable Farmers Act, pass at third reading in the Canadian Senate.
The bill, which now only requires royal assent to be formally adopted, establishes what is known as a deemed trust financial protection mechanism for fresh produce sellers in Canada, one that will help secure payment in the event of buyer bankruptcy.
“The passage of Bill C-280 has been the result of decades of advocacy by organizations and industry members across the fresh produce supply chain and in the broader agriculture sector,” said CPMA president Ron Lemaire.
“We are grateful to all who have supported this work over the years, and greatly appreciative of the efforts of Bill C-280’s sponsors and parliamentary champions in moving this important legislation forward.”
As well as welcoming the support it offers to individual companies, industry leaders also regard its potential impact on food security as extremely important.
FVGC executive director Massimo Bergamini noted that fresh produce suppliers make “significant contributions” to local economies and public health. “The establishment of a deemed trust for all fresh produce sellers will strengthen food security in Canada and help ensure that our sector can continue to fulfill its important roles,” he said.
In addition to its impact on domestic produce sales, a lack of such financial protection currently means Canadian suppliers can no longer enjoy the preferential treatment they previously had under the US Perishable Agricultural Commodities Act (PACA).
Instead, companies that export fresh produce across the country’s southern border must pay double the bond on their shipments to access the PACA dispute resolution mechanism – a cost that regarded as “simply untenable” for many.
The new act paves the way for the US Department of Agriculture to restore Canadian produce sellers’ preferential access.
“The positive impact of Bill C-280 on the highly integrated fresh produce industry cannot be overstated,” said DRC president and CEO Luc Mougeot. “The lack of a financial protection mechanism in Canada has been a pain point in our trading relationship with the United States for many years.”
He added: “We look forward to working with our US counterparts to put in place reciprocal protection and provide stability for produce sellers on both sides of the border.”
FVGC, CPMA, and DRC thanked all Senators for their work in considering the legislation, and expressed their appreciation to both chambers of parliament for their recognition of the “positive impact” that the bill will have on Canada’s fruit and vegetable supply chain.
