Hort growers seek American style financial protection

Wednesday, November 28, 2012

by SUSAN MANN

Legislation in the United States ensures American sellers along with Canadian dealers and farmers operating in the American market get paid for their fruits and vegetables when companies go bankrupt or default on payments.

But Canada doesn’t have legislation similar to the American Perishable Agricultural Commodities Act to protect produce sellers and dealers here. And that means Canadian farmers selling in the domestic market and American farmers exporting to Canada are often at the back of the line of a long list of creditors trying to get paid in the event of bankruptcies and payment default situations.

Ontario horticultural producer Ken Forth of Lynden says fruits and vegetables became covered under the American legislation in 1984. The law ensures that if farmer or dealer sellers are owed money from bankrupt buyers they’re first on the list “ahead of the banks and ahead of secured creditors” to collect their money. In the case of delinquent buyers who are slow or refuse to pay, the law enables sellers to go to court and have the buyer’s assets frozen.

The Canadian horticultural industry has been working for several years to develop legislation here that’s similar to the American bill, but Forth says those efforts were going at a snail’s pace. They got a huge boost last year when Prime Minister Stephen Harper and President Barack Obama created the Regulatory Cooperation Council. Its job is to align the two countries regulatory approaches where possible, speed up legitimate trade and travel between the two countries and improve security in North America.

Forth sits on a committee developing financial protection for Canadian produce sellers. Their final report, Securing Payments and Regulating Business Practices for the Canadian Fresh Fruit and Vegetable Industry, has been tabled with the Regulatory Cooperation Council Financial Protection for Produce Sellers Working Group. The American and Canadian governments will consider the recommendations during the next phase of the group’s work plan.

One of the priorities outlined in the report is to develop a Canadian ‘deemed trust.’ Forth says what that means is if a produce seller hasn’t been paid for their product the money from the sale of the product is still considered to be theirs and they can recover it before secured or unsecured creditors get any money from a bankrupt company. Another priority is to develop a unified licensing system for Canadian and American buyers and sellers.

Forth says the Canadian legislation won’t be exactly same as the American Perishable Agricultural Commodities Act because of differences in the structures of the two countries and in their constitutions.

Even with the filing of the committee’s final report, developing financial protection for Canadian produce sellers is still going to take “quite a bit of time but we will never give up on it,” Forth says. BF