Deemed Trust Form

NAME OF MP

Member of Parliament for RIDING NAME

House of Commons

Ottawa, ON K1A 0A6

Dear Mr./Mrs./Ms. (full name), M.P

I am writing to ask for your support about an important issue to fruit and vegetable growers in your riding, and across the country.

As you know, the COVID-19 pandemic has had a devastating impact on the food service industry. What you may not be aware of is that as a result, Canadian growers like myself are being put under considerable financial strain.

The supply chain for fresh fruits and vegetables is complex and our growers are required to put significant amounts of money and upfront operations on the line to consistently and reliably provide communities with safe, locally grown, nutritious food sources. At the same time, overhead and capital costs continue to rise while returns are delayed until the product is sold and payment is collected.

While this risk imbalance in the supply chain has been long standing, the COVID-19 pandemic’s devastating impact, particularly on the food service industry, has put Canadian growers in an even more vulnerable position. For example, in the fall of 2020, Canadian produce growers saw a 25% increase in overdue accounts receivable compared to the same period in 2019. For many, that meant they were on track to receive only half of their estimated annual income, and even then there was little to no assurance it would be paid. There is an unsettlingly large number of growers concerned that their buyers will not remain solvent through the coming year, meaning farm businesses will suffer as a result.

As a farmer in your community, I am writing to ask for your support and advocacy in establishing a deemed trust for fresh produce growers and sellers in Canada. This will not only benefit our industry, but all Canadians. A reduction in losses for Canadian fruit and vegetable growers will lead to increased economic activity, create up to 1,450 new full-time jobs and increase wages for Canadian workers. Furthermore, a strong domestic fruit and vegetable industry will translate into savings for Canadian families of $900 million annually on their food costs.

The past year has been hard on all of us, but even with vaccine distribution and the economy reopening, it may be too late for some growers to overcome financial losses. You can help protect these growers, and incentivize them to continue to produce for seasons to come, by taking action now to establish financial protection.

We know the government wants to provide Canadians with the peace of mind that our food supply is secure, but in order to do that, growers also need peace of mind – they need to know they will not suffer for reasons beyond their control.

For more information on this important issue, contact: Rebecca Lee/Executive Director, Canadian Horticultural Council rlee@hortcouncil.ca

Respectfully,

Cc:

The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance

The Honourable Marie-Claude Bibeau, Minister of Agriculture and Agri-Food

The Honourable Francois-Phillipe Champagne, Minister of Innovation, Science, and Industry

The Honourable Maryam Monsef, Minister for Women and Gender Equality and Rural Economic Development

The Honourable Wayne Easter, Chair, Standing Committee on Finance

Rebecca Lee, Executive Director, Canadian Horticultural Council

Ron Lemaire, President, Canadian Produce Marketing Association

ABOUT THE ISSUE:

The pandemic has, and will likely continue to, drive small businesses into bankruptcy. It is unsustainable for Canada’s fruit and vegetable growers to continue to assume these risks without having assurance that they will be paid.

The Bankruptcy and Insolvency Act (BIA) does not provide a workable tool or mechanism for buyers of fresh produce who become insolvent. While the BIA allows suppliers to recover their product following a bankruptcy and/or appointment of a receiver, it provides no rights when the product has been re-sold or is no longer identifiable/in the same state. Given how quickly produce spoils or is re-sold by a dealer, it would be very rare that fresh fruits and vegetables would be available for repossession.

Further, the “super priority” provision in the BIA for growers is not helpful (or relevant) for fruit and vegetable suppliers, as the provision states that the product must have been delivered within 15 days of a bankruptcy or the appointment of a receiver. The 15-day period is too short, given the 30-day payment terms typical for fresh and vegetables. It also does not cover product wholesalers involved in the buying and selling of fruits and vegetables, who are integral to the industry’s value chain.

Creating a limited statutory deemed trust, similar to the U.S. Perishable Agricultural Commodities Act, would protect Canadian produce sellers and growers in the case of an insolvent buyer, ensuring they have priority access to cash, inventory and accounts receivable related to the sale of the produce.

RATIONALE:

• A reduction in losses for Canadian fruit and vegetable growers will lead to increased economic activity, creating up to 1,450 new full-time jobs, while also increasing wages for Canadian workers.
• Consumers will see prices of fresh fruits and vegetables reduced, saving Canadian families upwards of $900 million annually.
• Canadian fruit and vegetable growers, representing one of Canada’s most essential sectors, will have assurance they will not suffer financially for reasons beyond their control and will be more incentivized to continue to keep our food supply chain on track for seasons to come.
• There is no cost to the federal government; it would not be required to carry financial liability or backstop any losses.
• The proposal is consistent with Recommendation #97 in the report from the Standing Committee on Finance (Investing in Tomorrow: Canadian Priorities for Economic Growth and Recovery) published February 2021.
• The United States has indicated that it will restore preferential access under PACA for Canadian produce sellers once Canada has established a reciprocal agreement.