Packer Insight - No PACA trust for Canada
Canadian produce industry leaders have had a setback in the quest for a PACA-like trust for produce sellers. ( File photo )

Canadian produce leaders say they’re not giving up on a Perishable Agricultural Commodities Act-like trust for produce sellers in Canada despite cold water being thrown on the idea by key government leaders.

In a Jan. 31 message to the trade, leaders of the Canadian Produce Marketing Association, the Canadian Horticultural Council and the Fruit and Vegetable Dispute Resolution Corporation (together forming what they call the Fresh Produce Alliance), said they were “disillusioned” with a Jan. 8 letter from Navdeep Bains, Minister of Innovation, Science and Economic Development and Lawrence MacAulay, Minister of Agriculture and Agri-Food, to the Standing Committee on Agriculture and Agri-Food.

The letter was a response to the committee’s request for an examination of the Fresh Fruit and Vegetable Model Law as a payment protection program for Canada’s fresh produce industry.

“The insolvency frequency of the fresh produce industry does not warrant the right to such an extraordinary remedy, which would have a significant effect on credit cost and availability and shift losses to other creditors,” according to the Bains-MacAulay letter.


Industry disappointment

After several years of hard lobbying on the issue, the industry was disappointed with the decision but said efforts would not stop to convince lawmakers of the need for a PACA-like trust for Canada.

“While consideration was given to Canada’s loss of preferential treatment to the PACA dispute resolution process in the United States, the government does not support the industry’s claim that produce businesses have been substantially impacted by this decision with many companies not being able to afford the PACA double bond and writing off monies owed,” according to the Fresh Produce Alliance letter. Canadian leaders have been asking for a PACA-like payment protection program for more than 30 years, since the PACA was established in the U.S. in 1985. The PACA puts produce sellers first in line among creditors of a bankrupt firm.

The issue has added urgency since 2014, when the U.S. Department of Agriculture revoked the privileged status Canadian sellers had under the PACA, because Canada lacked a similar program. Since then, Canadian firms that want to file a complaint against a PACA licensee have to provide a surety bond before the complaint will be investigated. The bonds are twice the amount of the claim.

Redoubled efforts

The Fresh Produce Alliance is working on a strategy to keep the issue alive in Parliament.

As part of the strategy, the FPA said a letter is being sent to the key parliamentarians which expresses the industry’s deep disappointment and also identifies areas for continued effort.“We want to reaffirm our commitment to achieving a solution for industry and will continue to keep our members advised as we move forward,” according to the letter, signed by Canadian Horticultural Council Executive Director Rebecca Lee, CPMA President Ron Lemaire, and DRC President and CEO Fred Webber. “CPMA, DRC and CHC will continue to now look at our efforts at making sure our politicians realize there is a public policy value in having farmers protected when they sell fresh fruits and vegetables in the event of a bankruptcy,” Lemaire said Feb. 7.

Lemaire said the Bains-MacAulay letter failed to correctly measure the effect of not having preferential access to PACA in the U.S. and the effect of not having bankruptcy protection in Canada.

“They misrepresented the information in the letter to the standing committee, which we need to correct,” he said.

That remark was echoed by Fred Webber, president and CEO of the DRC.

“The industry is in no way going to give up,” the DRC’s Webber said Feb. 5, pledging to give Canadian lawmakers the data they need to draft legislation.

California-based Western Growers has advocated that Canada adopt a PACA-like deemed trust for the benefit of U.S. suppliers into Canada, just as Canadian sellers have PACA trust protection when they ship to the U.S.

“It continues to be an ongoing effort, but I’m most impressed with the collaboration of the CPMA, the DRC and CHC and their ability to continue to provide resources and information and that, optimistically, will lead to a solution on the Canadian side,” Matt McInerney, senior executive vice president of Western Growers said Feb. 6.