Fruit, vegetable growers to get protection from buyers who go bankrupt

OTTAWA — Fruit and vegetable growers will get top priority to collect from bankrupt Canadian food retailers, under a new private member’s bill that recently passed third reading in the House of Commons and is on its way to becoming law in the Senate.

Just as important, Bill C-280 will bring Canada into line with American policy on protection for farmers after such bankruptcies. The change is expected to resolve a long-standing trade irritant with the U.S. that has hampered the Canadian fruit and vegetable sector for years.

The bill gives farmers first dibs on collecting their debts when a Canadian food retailer, wholesaler or distributor goes bust. The January 2023 bankruptcy of Leamington’s Lakeside Produce focused attention on the issue, with 17 Canadian producers accounting for $1.7 million in unsecured claims out of a total $188 million debt. Growers have no leverage in these situations because they sell highly perishable goods that can’t be returned.

The bill harnesses a special Crown power known as “deemed trust” to automatically grant growers’ claims first priority. That hammer is lacking from the current industry dispute resolution process in Canada.

A similar trust guarantee has applied in the U.S. for years, but in 2014, Canadian growers selling into the U.S. were effectively cut off from participating in that system because Canada didn’t offer reciprocal treatment. As a result, some Canadian greenhouse operations relocated south of the border rather than try to serve the American market from Canada anymore.

The bill’s sponsor, MP Scot Anderson (CON — York-Simcoe), expressed hope last month that some of this lost production could be repatriated to Canada. Passage of the bill was also expected to cut Canadian fresh fruit and vegetable prices by as much as 15 %, saving consumers $900 million annually, Anderson said last month during final debate on the bill, which was supported by all parties.

“Canada relies on boots on the ground, hands in the muck and rubber boots on the farm to provide fresh locally grown produce to our citizens,” the MP said. “When these farmers suffer losses due to buyer insolvency, it threatens our very food security by reducing the availability of Canadian grown products.”