For decades, the U.S. produce industry has had the protection of the Perishable Agriculture Commodities Act (PACA) offering protection from unpaid bills and other unscrupulous business dealings. Unfortunately these protections do not extend to produce truckers.
For a long time the Canadian produce industry has wanted something similar to America’s PACA, but resistance has been common from key government leaders.
In a message to the trade last January, the Fresh Produce Alliance (made up of members of the Canadian Produce Marketing Association, the Canadian Horticultural Council and the Fruit and Vegetable Dispute Resolution Corporation) pointed out they were “disillusioned” with a 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.
The Canadian produce industry has been lobbying for a number of for a PACA, but disappointed with the decision. However, they contend efforts will not cease 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.
A strategy to keep the issue before Parliament continues by The Fresh Produce Alliance.
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.
(I have been advocating for 30 years the U.S. PACA include produce trucking under the protections afforded the produce industry, particularly in a case were there is a claims dispute. However, the produce industry has shown no interest and when necessary has actually opposed it. The USDA also seems to view it as a “hot potato.” — Bill Martin)