LETTER: Upcoming AGM to deal with payment protection

Resolution jointly proposed may bring financial safety net Canadian fruit and vegetable sellers have been seeking.

Further to Bar Hayre’s Aug. 14 letter regarding the lack of payment protection for fruit and vegetable sellers, this will have significant consequences for the fresh produce industry in Canada, putting jobs, Canadian farms and other parts of the supply chain at risk.

At the upcoming AGM of the Canadian Chamber of Commerce in October, a resolution to deal with this outstanding issue is being jointly proposed by the Windsor-Essex Regional Chamber of Commerce and the Abbotsford Chamber of Commerce.

The recommendation asks the federal government to support creation of a limited statutory deemed trust that provides financial protection for produce sellers in Canada in the event of bankruptcies. The assets available to trust creditors would be limited specifically to produce accounts receivable, and any cash and inventory from the sale of the produce.

The trust does not require any government funding or administration.

Historically, Canadian agriculture businesses have been protected under a long-standing preferential access to the U.S. Perishable Agricultural Commodities Act (PACA) guaranteeing protection in case of bankruptcies and when payment issues arise.

In order to address the gaps in protections between the two countries, the Canada-U.S. Regulatory Cooperation Council (RCC) mandate agreed to by President Obama and Prime Minister Harper in 2011 included a commitment to establishing a comparable Canadian approach for protecting Canadian and U.S. fruit and vegetable suppliers from buyers that default on their payment obligations.

Due to a lack of progress in fulfilling this commitment, on Oct. 1, 2014, the US Department of Agriculture (USDA) revoked Canada’s preferential access to the PACA.

Creating of a limited statutory deemed trust that provides financial protection for produce sellers in Canada in the event of bankruptcies will meet the U.S. requirements for a comparable Canadian system in order to reinstate our preferential access to PACA.

The Chambers recognize that the current situation puts Canadian agricultural companies in all provinces of Canada at an international disadvantage and have come together to call for action by the Federal Government.

 

Allan Asaph

Executive Director

Abbotsford Chamber of Commerce

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