THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Thursday, September 26, 2024
The Standing Senate Committee on Banking, Commerce and the Economy met with videoconference this day at 11:30 a.m. [ET] to study Bill C-280, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust — perishable fruits and vegetables).
Senator Pamela Wallin (Chair) in the chair.
[English]
The Chair: Hello to everyone and welcome to this meeting of the Standing Senate Committee on Banking, Commerce and the Economy. My name is Pamela Wallin, and I serve as the chair of this committee.
I want to remind everybody about the microphones. Please make sure to keep your earpiece away from all microphones at all times.
I would like to introduce the members of the committee that are here today: Senator Loffreda, the deputy chair; Senator Bellemare; Senator Deacon, Nova Scotia; Senator Marshall; Senator Martin; Senator Massicotte; Senator McNair; Senator Ringuette; Senator Varone; and Senator Yussuff.
Today, we will continue our examination of Bill C-280, An Act to Amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust – perishable fruits and vegetables).
We have the pleasure of welcoming in person: Luc Mougeot, President of the Fruit and Vegetable Dispute Resolution Corporation; Massimo Bergamini, Executive Director of the Fruit and Vegetable Growers of Canada; Quinton Woods, Sales and Plant Operations Manager at Gwillimdale Farms Ltd. and Board Member for Ontario, Fruit and Vegetable Growers of Canada.
Okay sorry. We don’t have them in the right order here.
Thank you for being here. I’m sorry our time is short. We ask you to begin with opening remarks.
Luc Mougeot, President and Chief Executive Officer, Fruit and Vegetable Dispute Resolution Corporation: Thank you, Madam Chair and members of the committee, for this opportunity to speak with you regarding Bill C-280.
As mentioned, I’m the president and CEO of the Fruit and Vegetable Dispute Resolution Corporation, or DRC. In addition to providing dispute-resolution services to the fresh produce industry on behalf of the Canadian Food Inspection Agency, we also provide technical expertise on financial risk mitigation. We provide a vetting service for company solvability at time of membership applications and require members to submit to our mediation and arbitration to resolve disputes in order to facilitate sellers, and ultimately producers, getting paid fairly and as quickly as possible. However, this system only works well when participants can meet their financial obligations as they come due.
The DRC founders set out to establish a mandatory dispute resolution system, a dedicated inspection service and an insolvency tool such as the one we are discussing today. As of now, only the insolvency tool remains outstanding. This legislation would provide our producers with an opportunity to recover a portion of their livelihoods.
Frustrating our producers further is that Canada and the U.S. had specific programs available to each other for the resolution of trade disputes regarding fresh produce. Canadian producers had access to U.S. services, but they have been restricted as the Canadian system does not offer a comparable insolvency tool to assist U.S. producers as has been discussed in this proposed legislation.
It has often been stated that protections for farmers already exist in the Canadian bankruptcy regime. I believe it has now been well established that those provisions related to timeliness and product recovery simply do not work for produce, given its perishability, supply chain, processing and other identity issues.
In my experience, the most compelling reason for this legislation is the number of firms that simply close their doors and owners who walk away from their businesses. Or worse, producers and sellers are forced to take severely undercut pricing in order for certain buyers to avoid bankruptcy.
With this legislation, a producer would have some assurance of being treated fairly. This legislation is not a guarantee of payment and is of no cost to the government, yet it will provide much relief from many risks and will return preferential treatment for Canadians to U.S. dispute resolution services.
Thank you again for this opportunity, and I look forward to your questions.
The Chair: Thank you very much.
Massimo Bergamini, Executive Director, Fruit and Vegetable Growers of Canada: Good morning, Madam Chair and members of the committee. I am the new executive director of the Fruit and Vegetable Growers of Canada, or FVGC. I am joined by Mr. Quinton Woods, who is a member of our board and sales and plant operations manager at the Gwillimdale Farms of Bradford, Ontario.
I want to thank this committee for the opportunity to present on Bill C-280. Fruit and Vegetable Growers of Canada has advocated for the financial protection found in Bill C-280 for almost 40 years. The fruit and vegetable sector deals with perishable products and short sales windows. The simple reality is that current insolvency laws offer no protection to growers who can’t reclaim goods that quickly lose value. Bill C-280 would fill this gap.
The concerns we are raising today and have been raising for almost 40 years are not theoretical. The 2023 bankruptcy of Lakeside Produce in Leamington, Ontario, left over $188 million in unpaid liabilities to growers and suppliers. The collapse of the company sent shockwaves through the growing community, with some individual growers reporting losses of up to $500,000. For small and medium-sized family farms, these losses were absolutely devastating.
Had protections now offered under Bill C-280 been in place, they would have offered financial protection from the catastrophic loss of income that they require. I will now ask Quinton Woods to share his perspective.
Quinton Woods, Sales and Plant Operations Manager, Gwillimdale Farms Ltd. and Board Member for Ontario, Fruit and Vegetable Growers of Canada: Thank you, Mr. Bergamini, and good morning.
Bill C-280 also has the potential to pave the way for reinstating the Perishable Agricultural Commodities Act, or PACA, protection for Canadian growers in the United States. In 2014, my employer, Gwillimdale Farms, faced significant financial loss due to a U.S. customer stopping payment. We had no choice but to launch a formal complaint against this company through PACA in the United States.
Unfortunately, the day we filed the formal complaint, the United States pulled reciprocity for Canadian sellers. This change meant we were required to post a bond for twice the value of our claim. At the time, our claim was US$100,000. We were not in the position to post the required US$200,000 bond and were forced to walk away from our claim.
If Canada had had a financial protection system in place, we would have been able to proceed with our complaint without the requirement to post a bond. Reinstating PACA protections would mitigate such risks in the future.
This legislation does not cause financial liability or require backstopping from the government. It serves as a form of business risk management that requires no government funding while providing significant benefits to growers. It will bolster the stability of the produce sector, promoting fairness in business practices and long-term viability and growth.
A robust and secure domestic produce industry is essential for Canadian food security and food sovereignty. By protecting growers, Bill C-280 ensures a sustainable supply of fresh produce for Canadian consumers.
In this context, it’s important to highlight that in the absence of this financial risk mitigation tool, Canadian producers will increasingly see the U.S. as a safer base for their production because of the security provided by U.S. insolvency protection.
In 2021, 40% of Canadian produce was exported to the U.S. Bill C-280 aligns with the Government of Canada’s goal of increasing exports, growing domestic production and food security by fostering a resilient domestic produce industry.
Additionally, the definitions included in the legislation consider the realities of our industry, acknowledging that fruits and vegetables might be repackaged or transformed yet remain the beneficial property of the supplier. That is an important detail. This provides growers with an additional layer of protection and ensures fairness and equitability in these often-complex dealings.
We urge this committee to consider the benefits of Bill C-280 for the Canadian produce sector, domestic consumers and overall market stability and to ensure its speedy adoption. I look forward to answering any questions you may have.
The Chair: Thank you very much. We have now connected with Ron Lemaire, President of the Canadian Produce Marketing Association, so please go ahead with your remarks. You can hear us?
Ron Lemaire, President, Canadian Produce Marketing Association: I can hear you fine. Good morning, I hope you can hear me fine.
On behalf of the Canadian Produce Marketing Association and our membership of over 880 companies within the produce supply chain, I want to thank the committee for the opportunity to present our sector’s support for Bill C-280, a critical fit-for-purpose tool for an industry that is unique and currently unprotected.
As the committee is aware, Bill C-280 received 99.7% support in the House of Commons. Over the past few years, both the House of Commons Standing Committee on Agriculture and Agri-Food and the Standing Committee on Finance have repeatedly recommended the establishment of a deemed trust mechanism for fresh produce sellers, including most recently in the Agriculture Committee’s June report on improving resilience in Canada’s horticultural sector.
In addition, both MPs and senators have received multiple joint letters signed by 35 national and regional associations calling for the passage of Bill C-280. We have tabled copies of these letters with the committee here today.
I want to reiterate that the produce industry is not looking for special treatment. We are seeking a fit-for-purpose tool to protect our sector, which is essential, and enables improved food security.
Currently, the Bankruptcy and Insolvency Act already includes a farmer super priority and the right of repossession when buyers go bankrupt. But these provisions don’t work for sellers of fresh produce sellers. Given how quickly our product moves through the system and is consumed or spoils, it is very rare that fresh fruits and vegetables would be available for repossession under the act. The “super priority” provision for farmers in the act is also not effective for fruit and vegetable suppliers because it states that the product must have been delivered within 15 days of bankruptcy or the appointment of a receiver. This 15-day period is too short for our sector, as payment terms for fresh fruits and vegetables are typically 30 days or longer. Numerous studies, including those by the Library of Parliament, have found that these provisions do not work for the fresh produce sector.
It is also important to recognize, as Bill C-280 does, that all suppliers across the fresh produce supply chain are vital to the stability of the market. Packers, wholesalers, brokers and others act as intermediaries between growers, retail and food service, and it is essential that they receive the necessary protection that payments are able to flow down the chain, ultimately, to growers.
Additionally, the deemed trust mechanism that would be established under Bill C-280 would operate similarly to the U.S. Perishable Agricultural Commodities Act, PACA, as has been noted. The U.S. experience demonstrates that sellers protected by the trust have more access to credit, not less, as lenders recognize the security that the trust provides.
As noted, Bill C-280 would provide an equivalent protection to that provided to the industry in the United States under the U.S. PACA, which covers all suppliers across the supply chain, and would therefore enable Canada’s ability to obtain the reinstatement of reciprocal protection for Canadian exporters under PACA, which was lost in 2014.
A letter of commitment sent on May 12, 2016, from USDA to then Assistant Deputy Minister Fred Gorrell confirmed steps required for reciprocity and comparable systems. These four criteria outlined in the letter were reconfirmed during a meeting last April in Washington, D.C., between Canadian members of Parliament, senators and Mr. Bruce Summers, the Administrator of the USDA Agricultural Marketing Service, the body responsible for PACA.
The deemed trust provisions are the missing piece of reciprocity that will be established by Bill C-280. This will enable the U.S. to reinstate preferential access for Canadian exporters to the dispute resolution system through PACA.
I must reiterate that Bill C-280 is good public policy and a safeguard for our local and rural farming communities, maintaining the integrity of our food supply chains and supporting Canadian domestic food security.
In closing, I encourage the committee and all senators to build on the momentum of the nearly unanimous support in the House of Commons and pass Bill C-280, as written, into law.
Thank you very much for this time. I look forward to answering any questions you might have.
The Chair: Thank you, Mr. Lemaire. We’ll jump into our questioning, starting with the deputy chair.
Senator Loffreda: Thank you to the panellists for being here this morning.
In its response to a 2020 House of Commons Standing Committee on Agriculture and Agri-Food report, which recommended that the federal government establish the statutory deemed trust for fruits and vegetable farmers, the federal government expressed concerns. It stated that such a trust could make it more difficult for creditors lending to produce buyers to recoup losses in the event of a buyer’s bankruptcy. This increased risk for lenders, the government explained, might make them less inclined to extend credit to those in the sector.
My experience of over 35 years in the industry leads me to concur with this assessment.
Do you think passing Bill C-280 will impact access to credit for fruits and vegetable businesses and people dealing in the sector?
I direct my question it to any of the panellists who wish to take it.
Mr. Lemaire: As noted in my testimony, we have seen this file in action in the United States. We have not seen an issue with access to credit. We have actually seen a stabilization of lending, because the lender knows that the produce seller, grower, packer and shipper are secured and that lending to those entities is a safe and stabilized environment. Also, it builds upon the trade and market opportunities for expansion of the development of lending across our entire produce supply chain.
So through experience in the U.S. and within a similar structure here in Canada, we do not see any impact whatsoever. Also, in speaking with individuals from the banking sector who have been retired and others who are ag lenders, while they are publicly concerned with speaking about this in front of committee or with the media, there is support for our sector.
The Chair: Any other quick comments from the table?
Mr. Woods: We have the three largest associations representing our industry asking for this, so if there were a concern that we had about lending, I think we would be self-addressing that concern.
Senator C. Deacon: Thank you, witnesses, for being here.
Food doesn’t come from grocery stores; it comes from farms. We need to protect our producers for sure. This has been an irritant in our trading relationship with the United States for quite some time — probably since the 1980s, it sounds like.
I want to capture the impact on Canadian growers and exporters: the size of the problem, the damage caused, the cost of resolving disputes today relative to industry margins. It makes a difference on gross sales and margins.
What opportunities are unlocked? Can you give some real examples of that, if at all possible, Mr. Lemaire, it would be great? I am glad you’re all here. Maybe you want to start with that.
Mr. Lemaire: Thank you, Senator Deacon. I would be happy to. Then I will perhaps hand it over to the real-life experience of Mr. Quinton Woods.
We have seen numerous companies across our produce supply chain under export strategies to the U.S. that have had to take cents on the dollar and/or walk away from transactions. The challenge is recording this information. A lot of it is anecdotal, because there is no mechanism or reporting structure to record that business transaction or loss of business with the U.S.
But having many members who have exported — and I’ll give you examples of certain commodities that would be shipped, and there would be an argument with the U.S. on the quality or the grade. The buyer would suggest 50 cents on the dollar. Without access to the dispute resolution corporation in a reciprocal manner, as Mr. Woods noted, double the value of the bond is out of scope for many within our industry, because they work with such tight margins and because of how our business is structured.
In many cases, they walk away or accept pennies on the dollar for products that they should be getting 80% to 100% on the dollar. This is factual and happening every day in our sector without the reciprocal model.
Mr. Woods: You’re right, Senator Deacon, the margins in our industry are quite slim. When we’re forced to take situations like Mr. Lemaire mentioned, it impacts growth, development and increased production. It sets back a lot of operations. I know that many farms have scaled back their production because of these types of situations, and they haven’t been able to plant their full crop the following year. It is definitely impactful, both from a financial point of view but also a food security point of view.
We’re probably not producing as much as we should in this country, based on not having a financial protection model.
[Translation]
Senator Bellemare: I’m going to put my question in French to Mr. Woods and Mr. Mougeot and perhaps to Mr. Lemaire. First, I’d like to know the average size of fruit and vegetable growers’ farms. Are they small, medium or large businesses that are affected?
Secondly, if we pass this bill, will the benefits be greater for American farmers or Canadian farmers, or is it roughly equivalent?
Thirdly, are there any other systems in the world other than what currently exists in the U.S.?
[English]
Mr. Lemaire: I can quickly answer. Thank you for your question. Then I’ll hand it over to Mr. Woods.
Numbers that we traditionally use for the number of farms are approximately 10,000 fruit and vegetable farms across the country. Of those 10,000, 7,500 are small businesses. The way the business operates is you have dealers — so the larger farms and/or other operators — that will consolidate a lot of the production and then sell that into the system. It’s very complex relative to how a product then flows.
This tool protects the fabric of rural Canada. With it, we enable and support the ability of these small farms to know that they will get paid. In a bankruptcy, it might be pennies. It might be the full amount. Without it, though, they get nothing.
How do we enable business with small- to medium-size operations, as we are functioning across the industry, is by putting this into play. This is unique to North America, the U.S. and Canada. Because we are each other’s largest trading partner for fresh fruits and vegetables, it would be equitable for both parties. It would also improve and solidify a trading relationship that drives jobs and our economy. Everyone forgets that the fruit and vegetable industry and agriculture are one of the largest economic drivers in Canada.
With this tool, we can enable and continue to drive the fresh fruit and vegetable sector into the future and enable small farms and family farms to be successful.
I’ll hand it over to Mr. Woods.
Mr. Woods: Fruit and vegetable growers represent approximately 14,000 farms across Canada, which comprises almost 120 different crops, a total farm gate sale value of $6.8 billion. We’re talking everybody from a $10,000 farm to multimillion or hundred million dollar operations.
As Mr. Lemaire says, the reciprocity with the U.S. would be very equitable. It would also give U.S. sellers protection against Canadian companies through access to our financial protection mechanism. Canadian companies would have access to theirs, as well.
Overall, it would be a great relationship.
[Translation]
Senator Massicotte: Thank you for being here today; it’s much appreciated.
[English]
I’m having a small problem. It’s a big one in my head, though. All this stuff — I know bankruptcy is tough for everybody. That means people will lose money. When you are in bankruptcy, nobody is going to put more money in. So if we find a way to give you more money, it basically means we’re taking that additional money from farms like you, small business people predominantly, because the banks are probably well reserved. Anybody unsecured will lose a higher proportion. So I feel sorry for you, but that’s bankruptcy.
Now why should we take money dedicated to other small and medium family operations and give it to you? Why would that be fair?
One could argue the whole thing is crooked; we need to review it all. Possibly, that is the right answer. Maybe it’s just not fair. But for us to pick and choose, and give you that money and take away from somebody else, I have problems with that.
Do you want to comment?
Mr. Woods: I’ll comment on that. The concept of the deemed trust is just that when we sell our fruits and vegetables, it would be sold under a trust. So if there were a bankruptcy of our customer, we would have access to cash and receivables through that trust.
We’re not taking —
Senator Massicotte: [Technical difficulties] detriment taking money away from another small creditor.
Mr. Woods: But we also have to understand there are already super priorities already in place for agriculture. They just don’t work for our industry, because our industry norms do not follow under the requirements of the super priorities.
Senator Massicotte: Is that because the people like us made the wrong decision when it was done; it wasn’t done properly?
Mr. Woods: I think it’s just the evolution of time and how the industry has evolved. As Mr. Lemaire said earlier, we have 15 days from delivery to make a claim under that super priority whereas our industry typically operates on net 30-day terms.
The Chair: We’ll just get Mr. Lemaire to clarify this, because you referenced it in your remarks — that even with the super priority, it doesn’t capture this particular group.
Mr. Lemaire: That’s right.
The Chair: Okay, go ahead and explain that for a moment, thanks.
Mr. Lemaire: As Mr. Wood was saying, it is the way the tool is structured. It was a great point by the senator: Did the government do it wrong when they first set this out? The government was trying to create a model that would encompass all farmers. That’s a very complex system to try and fix where there are so many differences across the agricultural sector. For our sector itself, fresh fruits and vegetables, it is not captured in the way the Bankruptcy and Insolvency Act was written at that time.
We actually had Professor Ron Cummings, who was one of the individuals helping to establish that original act, develop what you see in front of you today based on his knowledge of how to effectively correct what was not put in place originally.
On that same note, we’re not taking away from others in this. As an example to the senator, if there is a bankruptcy — and to Mr. Woods’s note, relative to what is under trust — if I sold my raspberries and tried to go to reclaim them, they are gone; they are either rotten, sold or they are in the garbage. But if I’m another small business — let’s say I’m equipment provider — I can go in and repossess my production line or my tractor. There are things in the system that are physical, that they can get.
We don’t have that ability. This is really what the crux of it is, why it works so well under the U.S. framework and how the structure is established here to effectively support the farmers and produce sellers in Canada.
The Chair: Thank you. It’s very important, because I think there was some misunderstanding that you are captured by this, but because of the nature of the product, it’s very different.
Senator Ringuette: There is no issue of reclaiming or repossessing. If the entity is in bankruptcy, it’s a no-touch for everyone, until the group of bankruptcy lawyers and accountants come into play. So that is a correction in regard to the facts.
Now, Senator Bellemare asked a very pertinent question. Maybe I can phrase it otherwise for you, Mr. Mougeot, to answer. We were told that 40% of Canadian fruits are sent to the U.S. So what is the value of the U.S. fruits and vegetables coming into Canada on a yearly basis?
Mr. Mougeot: As dispute resolution service, we don’t track that. Mr. Lemaire would be the best person to answer that question as to the imports. Sorry about that.
Mr. Lemaire: Currently, our industry is over $10 billion in Canada. When we look at that percentage of the imports of products, it is a significant volume coming in from the U.S., but we are in a global market with products coming in from South America, South Africa and a range of other countries.
Senator Ringuette: I am sorry to interrupt you. I might need to clarify the question. My question is this: On a yearly basis, what is the value of American fruits and vegetables coming into the Canadian market? That should be available through Statistics Canada. I believe that you should be aware of this number.
Mr. Lemaire: Correct. Currently coming into the country, when we look at U.S. imports, it ranges between — going off the top of my head — $6 billion to $10 billion in that range.
Senator Ringuette: So it is about the same value of the total production of fruits and vegetables in Canada that are coming in from the U.S. So this legislation would, in fact, be very favourable to U.S. producers in comparison to what we would be shipping to the U.S. on a billion-dollar scale.
My question to you, before the chair cuts me off, is this: Why have these producers not taken access in order to guarantee 100% of payment for their products with Export Development Canada, which is the federal entity that supplies that payment insurance?
The Chair: Who is your question to, then? Mr. Lemaire?
Senator Ringuette: To whomever can supply an answer.
Mr. Lemaire: So the question was around leveraging the resources of Export Development Canada; was that the question?
Senator Ringuette: No. Export Development Canada provides payment insurance for any product that Canada sells to any foreign entity. Why has this particular fruit and vegetable sector not taken advantage of this 100% guaranteed system?
Mr. Lemaire: Unfortunately, I have been dealing with this topic since 1998 when I started in the fresh fruit and vegetable industry. I was part of the regulatory cooperation council review of this file — analysis that was done with the Government of Canada on a range of things, from factoring, to insurance, to a range of other tools that could potentially be suggested to use instead of a deemed trust framework that is being proposed.
Within that research, it was identified that a significant portion of the industry could not be insured relative to the way they operate and the cost of what that insurance is relative to the margins within which they function. Companies were making decisions to self-insure and take that risk, which is, again, detrimental to business on how we operate. Then it takes away from the investment in innovation, in capital improvements and a range of other elements in the business.
So when we did all this work, which is on file with the Government of Canada through Agriculture and Agri-Food Canada, it was identified, after looking at all the other tools — which, in some segments of the industry, are leveraged today; others are not — it creates those that have and those that have not.
This tool provides an equal playing field for all segments of our industry, from the greenhouse, to field vegetable growers and others. I will ask my colleagues if they want to add to that.
Mr. Mougeot: I could add that, in the U.S., Canadian producers still have access to the insolvency tool in the U.S., which has made —
Senator Ringuette: [Technical difficulties] insolvency tools in Canada.
Mr. Mougeot: Yes, but not on produce. It makes it very difficult on produce.
In the U.S., there is a super priority for produce. You go in during an insolvency, and first, they deal with the fresh produce accounts receivable and payable — they deal with that before they move into the general insolvency situation.
That means the need for expensive insurance — as Mr. Lemaire pointed out, it’s fairly expensive for our sector — means they will preferentially sell into the U.S. rather than sell domestically across the country, as Mr. Woods pointed. It becomes a preferential market.
Conversely, on the other side, when the U.S. exporters or producers ship into Canada, because of our lack of an insolvency tool — we have done some studies back during the RCC discussions, and we found there is a 10% to 15% premium to Canadians. So Canadian buyers are paying a 10% to 15% premium to cover those potential losses due to insolvency in Canada, because we don’t have that reciprocal tool here, so it does cost Canadians to a certain extent.
It does mean the U.S. becomes a preferential market for Canadian producers to export their produce rather than shipping their premium, top-quality produce within Canada, domestically.
Senator Martin: Thank you to our witnesses. Some of my questions were answered, including the impact this bill would have on rural farming communities, how many of them there are and such. So 75% are small businesses, so I’m really quite supportive of this bill based upon that alone.
Mr. Lemaire, I know you have mentioned the bill’s potential to strengthen Canada’s food security, and Mr. Bergamini, I believe that you talked about how the financial protection for growers under this bill ties into broader national concerns about food sovereignty and supply chain resilience. I’m curious about the impact on food security, food sovereignty and consumer prices. Would you elaborate further on those topics?
Mr. Bergamini: Thank you, senator.
I’ll preface my comments by addressing a question from Senator Bellemare. I grew up on a small vegetable farm in the Montérégie region of Quebec. I know firsthand the incredibly tight margins that small farmers experience. Thankfully, we did not experience this kind of catastrophic situation with our buyers, but I can tell you that, with the difficulties we experienced on a daily basis, this would have been absolutely catastrophic for my family. That’s the reality of so many farming communities, never mind for individual producers.
When you talk about food security and food sovereignty, we have to look at how our overall policy system strengthens the framework in which our food is produced in this country.
This may be viewed as a technical measure, but it is so important in terms of strengthening the security, and the very essence of resilience and viability of this important endeavour for our country.
With respect to the overall impact on food price and so on, my colleagues have spoken to that. It is a vertically integrated industry, so strengthening the protection of producers is going to have a beneficial impact up and down the food chain. Through this measure, which has been prosecuted for 40 years — let’s not forget this. These are not new issues or debates; they have been prosecuted for 40 years, and here we are, so close to the finish line. I am concerned, senators — and I say this very respectfully — that the perfect is indeed the enemy of the good. We have to be very pragmatic about where we are today, without getting into a larger political discussion. This might be the best opportunity that we have for bringing some additional security to family farms and communities right across this country.
Senator Varone: Thank you, witnesses, for being here. I’m very sympathetic to the plight of the farms.
I need you to take me to school with respect to the supply chain, because credit attenuation and credit default happen differently along that supply chain. Half of our family business is in the hospitality business, so we know about going to the food terminals and buying our produce, but we’re paying for it up front in cash. There are no other terms or credit in the food terminals.
So please bring me through your food chain. You mentioned three times that your credit at the farm level to the wholesalers or the packers is different than the credit lower down in the chain before it gets to the table. The last time I checked, you can’t walk out of Costco with fresh fruits and vegetables without paying for them. Same at Loblaws. Why is it different up the food chain?
Mr. Lemaire: Perhaps I can answer that.
Various components with the system are identified. Regarding consumer purchasing at Loblaws, Costco or any of our major retailers, they are purchasing a product. Currently, within the retail sector, they actually request to extend payment terms now, even beyond 60 days. Some of the supply community is accepting those terms. They are also looking at a model where there are some rebates if they have earlier payment terms based on that system. That’s the reality of what is happening today.
When you go from your food service outlet into the wholesale markets in Toronto, Montréal and Vancouver, and you’re purchasing on site, you’re buying product; you’re like the consumer in that you’re buying product to bring back to the operation.
If I’m a restaurant ordering product from Gordon Food Service, or GFS, or Sysco, it’s a different model. You’re putting out a purchase order, and you’re bringing products in. There is no simple answer saying every part of the supply chain operates with the exact same payment terms. If I’m a grower, and I sell my potatoes to another grower, and that grower consolidates and sells them to a wholesaler, right there, you’re adding sales through 30 days and up the ladder, 30 days. There is a potential lag of 45 days in the mix of payment through the hands of transition through the supply chain depending on what you’re selling and how you’re selling it.
If it was as simple as I grow my product, I sell it to one central framework, they get paid and that payment goes back 10 or 15 days within the cycle, we wouldn’t be here today. That would be a fluid system that would work, but that’s not how the produce industry functions because of the complexity of all the players, from grower right to food service, major retailers, independent retailers, wholesalers, brokers, jobbers and a range of other players that make sure Canadians can eat.
I would ask Mr. Woods to add to that, from his experience.
Senator Varone: Just to elaborate, where in the chain does the credit default happen?
Mr. Woods: The credit default can happen at any level. Recently, we have seen it at the marketer or the consolidator level, but ultimately, there are fears from top to bottom because the margins are so tight. Realistically, we’re working with nothing, and it could happen at any time.
To elaborate on what Mr. Lemaire was saying, we’re seeing terms anywhere from 28 to 75 to 90 days.
The Chair: Okay.
Senator Yussuff: I have a couple of questions. First of all, thank you, witnesses, for being here.
The Chair: We’re just about out of time. Please condense.
Senator Yussuff: Do I get it a chance to ask my question? I’m going to do it in my own way. Otherwise, I could turn it over for you to ask the question.
The Chair: We’re just out of time. That’s all.
Senator Yussuff: That’s not my fault. I didn’t schedule the witness with a short time frame for them to be before the committee. I think I have the same privilege as other members of the committee to ask my question, a couple of questions, and I think it’s relevant to try to understand the problem.
Under the current bankruptcy legislation, there is a super priority provision. For agriculture products, fruits and vegetables, it’s the 15-day period, and of course, there is a 30‑day period. If we were to extend the 15-day period to 30 days, would that solve your problem under the current super priority provisions in the bankruptcy law?
Mr. Mougeot: I’ll answer that if that’s okay. To Senator Varone’s previous question, where is the risk usually happening? I mean we have not seen retail insolvencies and general big retail insolvencies in Canada. The middle portion of the market, between the producer and the retailer where there are the wholesalers and distributors, that’s the risky part.
If you look at the current provision, it speaks to the producer. Once the producer sells it off their property and sells it into a consolidator, that’s the only transaction they can have, so what happens then is the consolidator will sell it up the line to a distributor and wholesaler. It is the wholesalers and distributors that create the greatest risk for us. If one of them becomes insolvent, that producer may not be able to access the money directly from the consolidator. It will be up to the consolidator to get them. Under the current system, that consolidator, because they are not a producer, would not be able to go and get something.
This is not the experience in the U.S. If there is a break of a link in the chain anywhere along the line, that chain can be covered by this super priority. It still allows the money to continue to flow back down because the money can be gotten out of that broken link and still continue to pay down back to the producers.
Mr. Lemaire: Can I add quickly to that? Mr. Mougeot talked about major retail. We have to remember Target went bankrupt. When Target went down in Canada, Sobey’s was the supplier for Target, so they bought all the fresh produce and supplied them. If Sobey’s had not self-insured and paid our Canadian farmers who were owed millions, we would have seen the traumatic loss of the family farm across the country. It would have been dramatic.
We worked closely to ensure these farmers got paid. That can’t happen. We can’t rely on the goodwill of some of these major corporations to self-insure. That’s not the way we should be doing business when we have a structure to put in place to support the resiliency and stability of the market in the event of a bankruptcy.
Senator Yussuff: In 2020 when this issue was being discussed at the Agriculture and Forestry Committee, they did some preliminary investigation to understand how complex and challenging the problem is. Now, they estimated it to be 0.01%. Is there any evidence to suggest the problem was greater than what they provided as evidence? Is it bigger than that? Because again, we still haven’t been able to figure out how big the problem is we’re trying to solve.
Mr. Mougeot: The problem with the size of the numbers quoted in that study is the reporting capabilities and the ability to pull that information out of the statistics. Because of the level of granularity, it doesn’t break it down into fresh produce directly.
The other thing that happens is, as I mentioned in my opening remarks, the walk aways. People who walk away from their businesses. Because the producers and others are not secured creditors or have no access, there is no value in them putting somebody into bankruptcy because there won’t be any money left for them. To go through the cost and the process of that makes it difficult, so they let those walk aways just happen. Those aren’t reported as well. A lot of that happens.
I see that in our dispute resolution corporation. We terminate members for ceasing to operate their businesses on a regular basis. It’s just outstanding money left on the table that is not claimed and has no ability to be claimed because, as I said, the producers bring an insolvency motion forward and then the secured creditors come in and take a good chunk of it. There is nothing left by that time.
The Chair: I have to stop you there. Thank you very much to all of our witnesses. Again, I’m sorry for the short time, but we also have the sponsor of the bill with us today. We really appreciate you cramming in as much information as you did. Thank you.
Senators, we have the pleasure of welcoming two witnesses by video conference. We are beginning our discussions here with Miranda Killam, Deputy Superintendent, Office of the Superintendent of Bankruptcy Canada and Jean-Daniel Breton, Immediate Past Chair and Member of the Corporate Practice Committee, Canadian Association of Insolvency and Restructuring Professionals.
Welcome to you both by video conference today. Ms. Killam, the floor is yours.
Miranda Killam, Deputy Superintendent, Office of the Superintendent of Bankruptcy Canada: Thank you Madam Chair and distinguished members of the committee.
My name is Miranda Killam, and I am a deputy superintendent. I’m pleased to be here today on behalf of the Office of the Superintendent of Bankruptcy, or OSB, which operates at arm’s length from the Government of Canada in carrying out statutory oversight of Canada’s insolvency system.
The OSB licenses and regulates insolvency professionals, supervises stakeholder compliance with the insolvency process and ensures an efficient and effective regulatory framework.
I appreciate the opportunity to speak to the Committee today regarding Bill C-280, which would give fresh produce sellers a deemed trust for their unpaid claims in the event of the insolvency of a fresh produce buyer, meaning they would be paid ahead of the claims of all other creditors, no matter how large the supplier and how large the unpaid claim.
In order to ensure the integrity of the Canadian insolvency system and maintain the important elements of efficiency, certainty and predictability, any amendments should be carefully considered within the broader context. Creating piecemeal exceptions to the existing scheme of distribution, such as new priorities, super priorities or deemed trusts, can have ripple effects throughout the insolvency system.
As you know, Elisabeth Lang, the Superintendent of Bankruptcy, has raised operational concerns and potential unintended consequences which could arise if the bill is passed. I will summarize these concerns briefly.
First, as deemed trusts give an ownership interest in goods supplied or their sale proceeds until the debt is paid in full, they can have real negative impacts on credit cost and/or availability, and the recovery of other creditors. Bankruptcy is a zero-sum game, meaning the debtor does not have enough assets to pay all creditors. Policies, like Bill C-280’s deemed trust, which would result in some creditors being paid more, by definition, cause other creditors to lose more. This can impact credit as lenders take insolvency repayment expectations into account when deciding whether and on what terms to extend credit.
Given these negative impacts, deemed trusts are usually reserved for compelling public policy interests in scenarios where a creditor cannot protect themselves through contractual provisions. A notable example is the deemed trust in favour of the Crown for employee tax deductions in an employer’s insolvency. Bill C-280’s deemed trust would pay fresh produce claims ahead of existing deemed trusts for Canada Revenue Agency, or CRA, that protect unremitted income tax, and Canada Pension Plan and Employment Insurance contributions for Canadian workers, resulting in a transfer from Canadian taxpayers to fresh produce sellers in an insolvency. Currently, no private commercial claim has a statutory deemed trust under the Bankruptcy and Insolvency Act, or BIA, or the Companies’ Creditors Arrangement Act.
The OSB is concerned about a departure from the fundamental insolvency principle that similarly situated creditors should receive similar treatment in insolvency proceedings. The insolvency system is a delicate balancing of interests, and Bill C-280 would tip that balance in favour of one commercial creditor claim at the expense of all others. While unpaid losses of insolvency are a reality in a credit-based market economy, special insolvency treatment for particular creditors must be supported by evidence that justifies the special circumstances of the creditor and demonstrates that market-based measures to reduce creditors’ insolvency risks would be ineffective. Data from the OSB suggests the fresh produce industry’s losses remain very small.
[Translation]
Secondly, Bill C-280 could increase the risk of “orphan” files in fresh produce insolvencies.
The deemed trust can only be enforced under the Bankruptcy and Insolvency Act in bankruptcies and receiverships administered by licensed insolvency trustees, or LITs.
If deemed trust claims in these cases could exceed the assets available to cover the LIT’s expenses and fees, LITs may not accept the file. If no LIT administers the filing and liquidates assets, creditors, including fresh produce sellers, will actually see reduced recoveries.
More “orphan” files in fresh produce insolvencies would result in assets not being realized, lost tax revenue and lost benefits for unpaid wages under the Wage Earner Protection Program.
[English]
Third and finally, the current coming-into-force clause, as worded, means that the Bill C-280 would apply to ongoing insolvency proceedings. In other words, an insolvency proceeding might begin with one set of rules that would change midway through the proceeding after Bill C-280 takes effect, disrupting existing business arrangements and undermining legal certainty and contractual arrangements. To maintain fairness and certainty, which is a cornerstone of an effective insolvency system, any amendments to Canadian insolvency laws should be drafted so that they apply only to filings initiated after the law takes effect.
Thank you, and I look forward to your questions.
The Chair: Thank you.
Mr. Breton, please go ahead.
Jean-Daniel Breton, Immediate Past Chair and Member of the Corporate Practice Committee, Canadian Association of Insolvency and Restructuring Professionals: Good afternoon, Madam Chair and distinguished members of the committee. The Canadian Association of Insolvency and Restructuring Professionals, or CAIRP, is a national organization that represents approximately 1,400 members and associates dedicated to commercial and consumer insolvency and restructuring work. The members of CAIRP act in a variety of roles in insolvency files in Canada, including as bankruptcy trustees, proposal trustees, receivers and court-appointed monitors.
By the nature of their work, licensed insolvency trustees do not represent any specific group or constituency but rather, as court officers, have a responsibility to administer mandates in accordance with the law in the best interest of all stakeholders.
The mission of CAIRP includes advocating for a fair, transparent and effective insolvency and restructuring system throughout Canada. Among other things, to fulfill this objective, CAIRP participates at the request of the government in consultations on proposed legislation or regulatory changes and intervenes in court cases, notably in 10 cases before the Supreme Court of Canada.
We have prepared a submission to this committee that outlines our views on Bill C-280. In short, we believe the bill is well intentioned but ill-advised, and is unlikely to achieve its stated objectives. On the contrary, we think the bill is likely to make the administration of insolvency estates more costly and less efficient.
Our submission lists and explains several issues that are problematic. The first is the lack of clarity regarding which creditor benefits from the protection. The speeches made in the House and in the Senate in connection with the bill, and indeed the title of the legislation itself, suggest that the protection is intended for produce farmers. The text of the bill is not clear on that issue, but rather suggests a wider group of suppliers.
Second, the Budget Implementation Act already provides protection measures that would cover a wide range of activities, including livestock raising; fruits, vegetable and grain crops; egg and dairy production; beekeeping; and fishing and aquaculture. So the protection already exists.
Third, the method used to create a protection scheme is a deemed trust. This is the same protection scheme as that used under the Income Tax Act and other taxation statutes for Crown claims. These deemed trusts were being challenged in court in the early 1980s and were still being litigated as recently as 2024. Based on jurisprudence from over more than 40 years of litigation, we believe that the deemed trust, as contemplated by the bill, would not likely be effective in protecting the suppliers’ claims.
Fourth, the bill creates a potential confusion in the priority scheme, resulting in a lack of predictability and transparency in the statute. Fifth, the bill does not have a transitional provision. Sixth, the bill is purportedly necessary to fix a reciprocity issue with the U.S., based on an assertion that the bill intends to mirror protection available under the U.S. Perishable Agricultural Commodities Act, or PACA. However, there are several key differences between the bill and PACA, such that there is no assurance that this bill would, in fact, achieve reciprocity.
Our submission also includes a general comment regarding the advisability of introducing modifications to the insolvency legislation on a piecemeal basis to accommodate the concerns of a particular constituent group. This issue has also been raised by the Superintendent of Bankruptcy in her submission on this bill, and we agree with that submission. We consider that when dealing with the allocation of finite resources, it is preferable to address these changes in a comprehensive review of the legislation when all of the stakeholders’ interests can be taken into consideration, together with interactions of the changes on each stakeholder.
As mentioned earlier, CAIRP is always willing to participate in such an exercise to keep our legislation fair and relevant.
Thank you for your attention.
The Chair: Thank you very much. We will begin our questioning now.
Senator Loffreda: Thank you to our panellists for being here.
Capital is an important resource in every industry. Based upon the government’s response to a 2020 House of Commons committee report, Bill C-280 will increase risks to lenders, making them less likely to extend credit to businesses involved in the sector. We have discussed that this bill adds to food security, but I would like your comments on that.
If there are capital constraints for the wholesalers or those at the tail end of the supply chain, the same businesses that we, the public, are buying from, how can it increase food security? Is it not food insecurity if they have that capital constraint and they can’t borrow? No business will strictly operate on their own cash resources.
I’ve been in the finance industry for over three decades, and we used to have grocery stores, for example, where we margined 50% of nonperishable inventory minus prior claims, and a deemed trust becomes a prior claim. Therefore, it limits the credit you can extend to the end business that the public is buying from.
Mr. Breton: Thank you for that question. I can try to answer it.
The issue of looking at how it will affect credit is a little bit like looking in a crystal ball; no one knows for sure how much and to what extent it will affect credit. It is certainly a fact of life that an increasing risk never comes without a cost. Whenever there’s a perceived increase in risk, there’s a cost associated with that.
It’s the same issue that was discussed in the previous panel regarding the credit terms. At the time that the protections in the BIA were designed, the accepted credit policies in the agricultural and the fresh produce industry was a very short payment term. I remember a time when the stated payment term was seven days and another time when it was 15 days. That is the basis under which those protections were introduced.
Of course, the necessity of the marketplace and the restrictions imposed by buyers who are powerful enough to dictate terms make it such that the suppliers now have to extend longer credit terms. That extension of longer credit terms comes at a cost, which is the risk of losing money through insolvency. In the same way, if the lenders perceive there’s an increased risk, it may come at an increased cost in terms of either a loss of credit facilities, credit availability or an increase in interest rates.
The Chair: Ms. Killam, I think you wanted to jump in?
Ms. Killam: If I may, thank you, Madam Chair. I note that lenders will take into consideration their increased risk if the balance is tilted in a particular party’s favour, which will increase the cost to all fresh produce purchasers and consumers, and that will trickle down to the consumers.
The measures proposed in the bill increase the risk for lenders because there’s the possibility of having another creditor with a deemed trust of an unknown amount that will be paid first. When the risks increase, lenders usually either refuse to lend money, require security or increase the interest rate. That is one of the reasons why deemed trusts are reserved for compelling public policy interests in a scenario where a creditor can’t protect themselves through contractual provisions. I do have more to say, but maybe I’ll save it for another question.
Senator C. Deacon: Thank you. I want to pick up on what you were speaking about the compelling public policy reasons. We saw in the pandemic how having our own capacity to create products in Canada, especially food, is pretty crucial when things go pear-shaped, as the British say.
I would just like to ask you about the work you’ve done in the past to help address this issue, especially as it relates to highly perishable products. You’ve got farmers who make their money in a very short period of time; their inputs go in over a long period of time, and their revenues come in a very short window. I would offer that exports in our agri-food sector is something the government has stated is a priority, but nobody has done anything to help address this trade imbalance to make it easier for our producers of perishables to do well.
In light of the compelling public policy priority of having our own domestic food production — which means farmers have to be profitable and they have to attract young people to take over from them — where do you think this fits? It’s something that Ottawa has been playing with for 40 years and not done anything about.
Ms. Killam: Thank you. The government, yes, has studied the general deemed trust issues extensively over the past 15 years. In consultation with industry between 2007 and 2009, there was a federal-provincial working group that studied payment practices in the fresh produce industry and concluded that the Perishable Agricultural Commodities Act, PACA, like deemed trust for fresh produce sellers, was not warranted. A deemed trust was not recommended. That vehicle was not recommended due to negative credit impacts and small bankruptcy losses. It was losses outside of insolvency due to nonpayment, slow payment, poor credit practices and quality disputes that were much higher.
Further to that, in 2014, the Canada-United States Regulatory Cooperation Council examined payment options for the fresh produce sector. The previous FPWG findings on low bankruptcy losses were confirmed. Market-based financial mitigation tools to reduce losses, such as insurance, bonding and factoring were recommended.
I can also note that in 2014, ISED launched a statutory review of Canada’s insolvency laws, and the consultation paper asked stakeholders to comment on stronger protections for fresh produce sellers. Submissions were received from both the fresh produce industry and other stakeholder groups on this question. While the fresh produce industry was in favour of the deemed trust, it was opposed by lenders and insolvency experts.
Senator C. Deacon: So the further you get away from the farm, the less interest there is. The fact of the matter is, farmers are saying this doesn’t increase their lending costs because they have a relationship with their lender, so they would have more of an idea. Anyway, thank you.
Senator Marshall: Thank you very much. I just want to continue on with the line of questioning that Senator Deacon was focusing on.
The two acts that are going to be amended if this bill goes through, how recently were they subject to a comprehensive review? I’m thinking in comparison, the Income Tax Act. There’s a lot of demand that the Income Tax Act be revised.
In terms of the legislation that would be amended with this bill when were they reviewed comprehensively last?
Ms. Killam: The last comprehensive legislative review was in 2009. There have been some minor amendments that have passed through other means like omnibus bills, but the most comprehensive one was last done in 2009.
Senator Marshall: That’s quite a while ago. You were saying in response to Senator Deacon that there was consideration of this issue, I think you said it was in 2014?
Ms. Killam: Correct. Yes. I have more history there, but I did stop. There has been more review of the bill with the Standing Senate Committee on Agriculture and Forestry.
Senator Marshall: There has been?
Ms. Killam: Yes.
Senator Marshall: So the 2014 review, while it wasn’t part of a comprehensive review, that was 10 years ago. The issue that it’s a one-off, the government introduces amendments to the Income Tax Act as a one-off all the time. This issue is a one-off, and that creates a problem. I don’t see that as being as problematic as you would see it. When is the next comprehensive review supposed to take place?
Ms. Killam: Currently, we are undergoing a regulatory review of a number of proposed amendments and hoping to get that through, but that takes time. Following that, the intent is to initiate discussions, have a policy table and discuss next steps to doing that. We’d like to do them more frequently than they happen, but that can take time.
If I may, could I react to one of your questions about the one‑offs? I just want to make a note to sort of elaborate on the comment of the piecemeal approach. The concern is that piecemeal legislation that creates exceptions to the insolvency scheme of distribution does really have ripple effects and it can incentivize other stakeholder groups to request further exceptions, and each time, that diminishes the delicate balance of interest and the returns to all of the creditors. I just wanted to make that note. Ideally, there would be a comprehensive review where we take into account, as we’ve noted, the impacts and the interactions with all of the stakeholders.
[Translation]
Senator Bellemare: I’m going to ask you both a question on the same subject. You say that this bill has a lot of flaws. If it’s true that it has a lot of flaws, why did the U.S. provide such protection for farmers in this sector?
Mr. Breton: I’ll start, if you don’t mind.
I’m not a specialist in American law. I’ve read the provisions of the American code that deal with protection for farmers. I’ve concluded that the protection is extremely different.
What the Perishable Agricultural Commodities Act, or PACA, introduces as protection is a true trust; that is, it creates an obligation for produce buyers to hold the proceeds of the sale in a trust account, and it is this account that is distributed.
The proposed protection does not provide for a true trust, but a deemed trust. Our experience shows that this will not be effective protection. The provision being considered is fairly equivalent to the provision that existed in the Income Tax Act in the 1990s.
This has been amended several times subsequently, because case law decisions over time have shown that these provisions were insufficient to create a trust or even a true deemed trust that would protect the creditor’s interests.
The provisions of U.S. law are not aimed at insolvency; they are aimed at ordinary transactions and provide a dispute resolution mechanism. For example, if goods are sent to a U.S. buyer and there is a dispute over the quality of the goods, there is a process under that law for resolving disputes. This process does not exist in the deemed trust being contemplated here. This is a deemed trust that would not depend on a commercial dispute, but strictly on the inability to pay that comes from the bankruptcy or receivership of the debtor company or buyer of the goods.
Senator Bellemare: Do you think the deemed trust is more or less effective than the American system?
Mr. Breton: In my opinion, in the way it is written, the deemed trust will be less efficient than the American system.
[English]
The Chair: Did you want to say something, Ms. Killam?
Ms. Killam: I’ll make one point. Like my colleague has said, this area is outside of my area of responsibility. I’m not an expert on American law, but I wanted to highlight one point that was made.
Even if the bill passed, the deemed trust would still not apply to solvent buyers as it does in the United States. The studies of the issue in Canada indicate most payment issues in the fresh fruits and vegetables sector are due to slow payments, partial payments or nonpayment among solvent buyers.
Senator Ringuette: I have two questions. Ms. Killam, thank you very much. In less than five minutes, you highlighted most of the slate of our concerns in regard to this bill.
My question is: All the different reports you referred to in your answer, could you supply them to the clerk of our committee so we could effectively look at them?
Ms. Killam: Yes, we can do that. Absolutely, yes.
Senator Ringuette: Mr. Breton, you said that this bill does not assure reciprocity. Would you elaborate on that?
Mr. Breton: As I said before in the answer to the previous question, PACA provides for a real trust. It requires funding to be allocated and set aside. Those are funds that are then used in the dispute resolution process. It’s not only strictly an issue of having funds available if there is an insolvency. That is one component that occurs if you have funds specifically allocated in a separate trust account that ensures payment in the case of insolvency. But their process also provides for a dispute resolution process if, for instance, there’s a question regarding the quality of the produce that was sent. If the grading was incorrect or is disputed, then there’s a process to determine exactly what the claim against the trust is and to resolve it.
That process does not exist in the deemed trust that is being contemplated in the Bill C-280. Therefore, we cannot know in advance whether that provision would be considered sufficient by the American authorities that are responsible for granting reciprocity to the Canadian farmers to ensure the Canadian farmers have access to U.S. protection.
Just to put things in context, in effect, what you are being asked to do through this bill is to write legislation to protect American farmers and write American legislation to protect Canadian farmers. That’s what you are being asked to do through this reciprocity argument.
Now, that argument is a valid one. Our similarly situated creditors should have the same types of protections, but that is not really an insolvency issue; it’s a foreign trade issue.
The Chair: Thank you very much for those comments.
Senator Varone: Thank you for your testimony. I found it to be so enlightening and on point.
The way I view this is that the issue there’s a variance of the credit attenuation along the supply chain. Over time, this has morphed into being the real crux of the issue. Having said that, I’m very concerned with fruits and vegetables being part of the family of deemed trusts or even in the category of a super priority.
Can you answer this question: Is there a security instrument that is not a deemed trust or a super priority that would be on par with secured creditors like banks?
Mr. Breton: Is the question addressed to me?
The Chair: Please direct your question.
Senator Varone: Sorry, either one.
The Chair: Mr. Breton, go ahead.
Mr. Breton: Yes, conceivably creditors could obtain conventional security to protect their claims, but practically speaking, that is very difficult to obtain when you have an imbalance in the power structure in the negotiation between a buyer and a seller.
Banks are able to negotiate security easily because it’s a precondition to obtaining credit. That is done very easily. Now, suppliers’ interest is more focused on selling their products than ensuring the payment is made. The concern is there — the payment still needs to be made — but their primary concern is making sales, increasing their sales and opening new markets. It would be difficult to negotiate these types of credit arrangements. They could have other methods through government guarantees, insurance and the collectivization of risks.
Ms. Killam: While it’s true that the fresh produce sector faces financial risks associated with nonpayment from sellers, studies of this issue, as I mentioned before, find that most of these risks stem from payment disputes, slow payment and partial payment, from solvent buyers. The statistics we have shown that losses from nonpayment due to buyer insolvency are very low and small compared to losses from these other sources.
It should be noted that Bill C-280 only applies if the buyer of the fresh produce is insolvent and would not mitigate the risks from the more substantial nonpayment issues faced by the industry.
Senator Martin: Ms. Killam, you just reiterated that the losses remain small or very low, but we also heard that the profit margin is extremely small and that losses are catastrophic for these farmers.
In the previous panel, we heard that the U.S. example demonstrates how the provisions in Bill C-280 could also be effective in Canada. I know you’ve expressed your concern about this bill, so my question is this: How does the current Bankruptcy and Insolvency Act fail to address the specific challenges faced by fresh produce sellers? We’re hearing that they’re in a dire situation. Without this bill, how are we addressing those concerns?
Ms. Killam: To pick up on your point about profit margins, it would be helpful to provide a bit of data — a few statistics — from our perspective. Our data suggests, as I’ve said before, that the fresh produce industry insolvency losses remain very small, fluctuating between 0.08% and 0.2% of industry sales in recent years. Looking at some of the historical data between 2017 and 2022, there were only 20 bankruptcies in fresh fruit and vegetable markets and 14 bankruptcies of fruit and vegetable wholesalers, for an average of 6.8 bankruptcies per year.
Over that year —
Senator Martin: I’m sorry to interrupt, but those percentages are still families and farmers. I know I’ve heard that it’s only a 1% impact on industries, but we’re talking about families. I know there are statistics, but we are talking about 140,000 farmers and the impacts on small businesses, which are 75% of that.
The numbers can say one thing, but the reality on the ground, as we heard from the previous panel, is that the impact is catastrophic. How are we addressing this without this law?
Ms. Killam: There are currently some protections in the Bankruptcy and Insolvency Act that my colleague mentioned. I understand that some of those protections include farmers. I’ve heard they may not be sufficient. I can go through what those are, if this were helpful — what the current protections in the act; would this be helpful?
Senator Martin: Yes.
Ms. Killam: There are current protections for this vulnerable group, and I understand that.
Currently, farmers, fishermen and aquaculturists benefit from protection. Specifically fresh produce sellers and other unpaid suppliers of goods can recover identifiable goods that are unsold within 30 days of delivery from a purchaser that has gone into bankruptcy or receivership.
Now, fresh produce farmers and growers also have a security.
What I would comment on here is that if these protections are deemed insufficient, I would submit they could be reviewed, but reviewed holistically and in consideration of other stakeholder views and interactions.
Senator Martin: While they are being reviewed, they are facing catastrophic impacts of loss. Thirty days is a long time. This tool has been prosecuted for 40 years, according to what we heard previously. I just don’t see that there is anything being done currently. It’s compelling to look at this law very carefully.
Senator Yussuff: Let me thank the two witnesses for being here. You are providing a great deal of context for us in considering this legislation — recognizing you’re both the experts we should rely upon to guide us in what we’re doing here.
The issue that concerns me the most is the unintended consequences — what impact this legislation might have. Ms. Killam, the point you made earlier that, in the context of unpaid remitted income tax, CPP payments and EI payments, if this bill were to be passed, essentially, in the context of how it’s structured, that would be displaced so workers and taxpayers will be on the hook to deal with that reality. I guess the same impact will be on the Wage Earner Protection Program, or WEPP, which normally has priority to make a claim once the government makes payments to workers who didn’t get their unremitted wages, severance pay or vacation pay.
Can you clarify that for me, please?
Ms. Killam: Yes, I can.
Under the current law, the claims of fresh produce sellers are unsecured, meaning they’re made on par with the claims of other similarly unsecured creditors, such as suppliers, contractors, unsecured lenders and some types of employee claims. If Bill C-280 passes, not only would deemed trust claimants be paid ahead of other unsecured creditors, but all other creditors, which includes the Canada Revenue Agency; deemed trust for employee withholdings; super priorities for unpaid wages; the super priority for unfunded pension liabilities in Bill C-228, which received Royal Assent in April 2023; as well as the limited super priority that exists now for all other farmers, fishers, aquaculturists and the suppliers and creditors of insolvent fresh produce sellers.
Senator Yussuff: If I understand what you’re trying to tell us, we ought to take care and try to listen. As much as we’d like to solve the problem that is before us, we will do tremendous harm to the current arrangement of those we are also trying to protect, in the context of bankruptcy law. Am I accurate in my description?
Ms. Killam: Yes, I would agree with that.
In order to ensure the integrity of the whole Canadian system and maintain the elements of efficiency and predictability, any amendments need to be carefully considered within the broader context. Creating piecemeal exceptions to the existing scheme of distribution, like this deemed trust priority, have effects. They also incentivize other stakeholder groups to request further exceptions and each time, that diminishes the delicate balance of interests and returns to all creditors.
The Chair: Thank you very much, Ms. Killam and Mr. Breton, for your testimony today. We appreciate your comments and your insights. Thanks for joining us.
We will move now to our final panel. We have Member of Parliament Scot Davidson with us. He is the MP for York—Simcoe, and he is the sponsor of Bill C-280. Thank you so much for joining us today.
Scot Davidson, Member of Parliament, York—Simcoe, Ontario, sponsor of the bill, as an individual: Thank you, Madam Chair and senators here today. I thought we were going to have a 30-second break. I was going to give you all a Gwilly, the mascot of the town of Bradford West Gwillimbury, in the soup-and-salad-bowl of Canada, which I represent.
The Chair: We will have a ceremonial passing out of those a bit later.
Mr. Davidson: I think we should. It’s a big deal. Everyone would be excited in Bradford.
Thank you to members of the committee for my opportunity to finally appear before you as the sponsor of Bill C-280.
This bill seeks to establish a financial protection mechanism, a limited deemed trust to ensure that fresh fruits and vegetables producers are paid in the event of a purchaser bankruptcy.
As currently written, the Bankruptcy and Insolvency Act already acknowledges the importance of farming in Canada and the need to give farmers a greater position as a creditor during bankruptcy proceedings. The problem is that, in practice, the current super priority and right-of-possession provisions for farmers within the act are not adequate for the fresh fruit and vegetable growers when buyers become insolvent. Repossession is seldom possible, since fresh produce spoils quickly and is promptly sold to customers or incorporated into other products. Additionally, the 15-day period set out in the act is too short for a sector that typically has payment terms of 30 days or longer, well after a product has been sold, processed or eaten by customers.
Because of this, Canadian produce farmers are faced with significant and sometimes insurmountable losses when a purchaser declares bankruptcy. They must line up along with all the other creditors to seek payment. Many are forced to walk away from the outstanding debt owed to them. Such bankruptcies have a cascading impact within the industry, putting farmers and other producers into difficult situations when they are already dealing with today’s inflation, supply chain issues and other pressures that affect their tight profit margins.
Further impacting the fresh fruit and vegetable sector is their inability to access financial protections that exist in the United States without incurring significant financial costs. As a reminder for this committee, this was not always the case. Previously, Canada was the only country in the world that had preferential access to the dispute resolution mechanisms within the United States Perishable Agricultural Commodities Act, known in the industry as PACA. However, the United States revoked this access in October 2014 due to a lack of a reciprocal mechanism in Canada.
Now, Canadian sellers must post a significant bond worth double the value of their shipment just to initiate a claim through PACA. This severely puts our Canadian produce farmers, given the high volume of produce sold to the U.S., at a disadvantage. There is no doubt the fresh fruit and vegetable sector has a significant place within the Canadian economy. It generates $33 billion in additional sales, over $17.4 billion in added value and more than 249,000 full-time equivalent jobs for Canadians, paying over $9.8 billion in wages.
But we’re here today because the status quo just isn’t working. The unique characteristics of the fresh fruit and vegetable sector make it especially vulnerable to bankruptcies. The current provisions in our bankruptcy laws, recognizing the importance of farming, does not work for this industry. Parliament must act to address this situation through this bill. That’s why MPs have come with me to address this bill.
I would ask senators to consider the will of the House of Commons, the perspectives of the boots-on-the-ground industry and the need to support this sector’s role in our growing economy in protecting our country’s food security. I urge you all to support the bill in its current form, and I welcome any questions you may have today. Thanks for having me.
Senator Loffreda: MP Davidson, welcome to our committee, and congratulations on putting forward this bill and getting it through the House of Commons. We thank our farmers. We all have empathy and compassion, and we want our farmers to succeed, but there are some major concerns with this bill, and I’d like to share them with you.
We just heard from our previous panels, experts on insolvency and access to credit. It was expressed that most purchasers of fruits and vegetables are solvent buyers. Also, if I look at a response to a 2020 House of Commons Standing Committee on Agriculture and Agri-Food report that recommended that the federal government establish a statutory deemed trust for fruit and vegetable farmers, the government explained that the total losses to all creditors in the Canadian fresh produce sector had amounted to less than 0.1% of total sales in recent years.
In the same response — my final sentence to this question — the federal government explained its view that a statutory deemed trust would make it more difficult for creditors lending to produce buyers — buyers, not farmers. We’re all for the farmers. Produce buyers are those that the consumers buy from, the public buys from. It’s an increased risk for lenders to lend to the produce buyers. Therefore, it affects costs that may be passed on to the consumer. There are capital constraints and it affects credit.
Therefore, I’d like you to explain those concerns and maybe convince us senators here that there are concerns and risks that could be mitigated. Capital is a resource that is extremely important in every industry. We’re all for our farmers, but we don’t want the consumer penalized with a higher cost or less product because the purchaser cannot purchase those fruits and vegetables.
Mr. Davidson: Thank you, senator, for the question. I caught the tail end of, I believe, the government or whoever was giving testimony before me talking about solvent buyers. I think there is a current mechanism that actually exists right now called the DRC that she didn’t allude to, and that deals with some of the slow pays and other things.
Passing Bill C-280 will not affect access to credit for fruit and vegetable businesses. This deemed trust merely changes the creditor’s calculation of available collateral. Because of the deemed trust, the buyer has less available collateral and the seller more. Creditors can make appropriate lending decisions in light of these calculations.
By making payments more predictable throughout the value chain — from farmer to dealer, from dealer to retailer — a deemed trust makes it easier for lenders to predict the cash flows available to repay loans to every part of the value chain. Increased predictability makes lending easier, actually, not harder.
Third-party reviews in the U.S. determine that the PACA deemed trust in the U.S. resulted in a positive for growers, packers and consumers in the fresh produce industry. A deemed trust would result in those similar positive impacts.
Again, the current bankruptcy act actually spells out that they do — and I know everyone in this room is aware. Farmers have super priority. It is saying that. But the problem for fresh fruit and vegetable growers is it doesn’t work for them. This is what we’re dealing with. I’ve heard some testimony from the government about, “This is going to create a cascading effect.” There aren’t any other agriculture industries within Canada calling for this except for the fresh fruit and vegetable growers.
Senator Loffreda: [Technical difficulties] — create a prior claim, and the prior claim does limit capital to the purchaser of the fruits and vegetables. I’ve spent 35 years, most of those years in lending, and I can tell you the hours I put in, and it’s more than 50. Trust me, it will limit capital to the purchasers. I think the government is correct in making that statement. It is a risk. It is a concern. It should be mitigated, and I’m willing to listen to your remarks about how those concerns could be mitigated. But it’s not debatable. It will increase costs, and it will limit capital to the purchasers from the farmers of the fruits and vegetables.
Mr. Davidson: Well, I think banks currently manage the risk, and they can manage the risk with this.
Senator Loffreda: They’re the best managers in the world. I know that. I come from that industry.
Mr. Davidson: That’s it. For people concerned about it being high credit now for fresh fruit and vegetable farmers, I don’t think that’s the case. I don’t think we’re going to see that. Based on the evidence out of the U.S., I don’t think we’re going to see that.
Senator Loffreda: Allow me to disagree, but congratulations on putting it forward.
Mr. Davidson: Thank you.
Senator C. Deacon: Agriculture exports is something we value as a country, Mr. Davidson. As I see it, this is something that reduces the risk of exporting globally where we can get a premium price for products. To manage that risk, to me, is something that would be very important to farmers. It’s also a compelling public policy priority to make sure our producers are profitable.
I keep hearing from people who are not involved in farming of the effects of this. If you could just run through the costs and benefits as you see them today, because they seem significant from where I’m sitting, as somebody who has been an entrepreneur and has faced the sorts of risks that this manages.
Mr. Davidson: Well, Bill C-280 is a net benefit for all Canadians. It benefits farmers, who have a fair chance of being paid. It benefits Canadian dealers and retailers, who would no longer be second choice to the American market. It will approve the availability price and quality of fresh fruit and vegetable products. Of course, all of this brings benefits to Canadian consumers. It improves our domestic food security that is so critical for Canadians.
It could be true that banks and similar creditors bear the cost of Bill C-280 since it claims they will be given lower priority, but this is not an increased cost to government or Canadian society. It’s rather a transfer of costs from one stakeholder to another.
I believe that farmers should not bear this cost anymore. It’s actually impacting our country’s economy and our domestic food security when it comes to fresh fruits and vegetables. Lenders are far better placed to absorb the distributional impacts of a deemed trust than smaller farmers and growers who are already, as we all know at this table, being squeezed from all sides. I do not believe this will impact access to credit.
The Chair: Thank you very much.
[Translation]
Senator Bellemare: Welcome to our committee, Mr. Davidson. My question is complex, because the problem is complex. If I understand your bill correctly, it’s designed to ensure, through a trust, that Canadian farmers will have protection in the United States. This bill will protect farmers against bankruptcy by Canadian buyers. That is a very rough summary.
First, will Bill C-280 affect only export and import relationships, or will it also have an impact on Canadian farmers who sell in Canada? Will they be protected in this way?
Secondly, we’ve heard quite a bit of criticism from the bankruptcy trustee and financial community. You’ve said that they’re going to foot more of the bill for this protection. Rather than a trust, why didn’t you propose a system exactly like the American PACA for Canada?
[English]
Mr. Davidson: Thank you, senator, for those questions. I can tell you that I’m not an expert. I’m a boots-on-the ground member of Parliament, and we have technical and industry people here. What I can tell you is the consultation that was done with drafting this bill, number one, was extensive and done by some of Canada’s foremost people in this sector and on bankruptcy law.
In 2012, there was a federal-provincial-territorial task force. Agriculture and Agri-Food Canada commissioned a report examining suitability of various protections and models for the fresh produce industry. They looked at securities. They looked at insurance pools. They looked at mutual funds. They looked at clearinghouses and many other factoring models. None of these models that were looked at in 2012 were deemed suitable. They were insufficient for cost competitiveness, market impact — applicability to Canada-U.S. cross-border trade was one problem — and accessibility to both buyers and sellers.
It’s important when drafting a private member’s bill to respect, as you know, senator, provincial jurisdiction as well. This bill is needed by our fresh fruit and vegetable growers right across Canada, from Leamington to Bradford West Gwillimbury to Quebec to British Columbia. This industry has been calling on this because the current provisions that are in the bankruptcy law now are not working.
We heard representatives from the government ask if there will be a review. “There might be a review. The review will take 10 years.” We have been hearing this for years. Senators, I think you can appreciate, given where Canada is, given the economy, the struggles that farmers face, the risks that they have, especially the fresh fruit and vegetable growers. To senators here, who may be thinking that other industries within the agriculture business are all going to come — no, because they have things. Quebec, supply management, number one. Grain is protected. Some people might ask about beef. “What about beef?” Beef is sold at auction. They’re issued a cheque right away. It is sold to a slaughterhouse. It’s cash on the barrelhead.
The fresh fruit and vegetable sector is a very important and unique sector in Canada. That’s why this sector has been calling for this.
Senator Yussuff: Mr. Davidson, thank you for being here. I recognize that you live in an area of the country where you see reality, and I’m sure people talk to you even when you go to a restaurant, never mind just going to visit a farm. You’re constantly hearing what the problems are.
I recognize you’re trying to solve a problem in the context of what the bill is attempting to do. Equal to that, we also heard from the bankruptcy and insolvency deputy commissioner, and certainly from trustee organizations, that there are some inherent challenges in regard to the bill that you are proposing.
Let me ask you something specifically. I’ve heard the points you’ve made. You said that bankers currently recognize the plight of farmers because there is super priority built into the legislation already. You’ve said that part of the reason the current super priority protection does not work is related to goods delivered within 15 days because of the bankruptcy when credit terms are more like 30 days and, in some cases, even longer than that.
Wouldn’t it be more equitable on other unsecured creditors but agriculture and fish producers to amend the super priority to reflect credit-related fresh produce, for example, increasing the period from 15 days to either 30 or 45 days as a way to capture the challenges and the problems you’ve identified in regard to payment schemes that are not consistent with how fresh food producers are getting paid when delivering their product in the country? We don’t want, on one hand, to create a situation where we displace others and create harm in the current system arrangement we currently have.
Mr. Davidson: That was a great question, senator. You’re going to get a Gwilly right now, only because you’re sitting close to me.
Thank you for the question. Two points on this. As an MP, the best part of being an MP is actually getting out in the community and getting out on the farms. Senator, I represent the soup and salad bowl of Canada, the Holland Marsh. We provide 80% of the fresh fruits and vegetables that are consumed in Ontario, for example. It’s that rich black soil you see coming up Highway 400. I’d love to have you all come and see it.
Senator Yussuff: I drive it quite regularly.
Mr. Davidson: Then you know exactly where it is. Stop in sometime. The important thing about that, if you’re out and about talking to our small farmers, terms have actually increased from 30 days to 45 days and now it’s 60 days. Everyone is telling me, “Scot, we’re getting grinded.”
First of all, my comment would be to amend, let’s say, the act, number one. Let’s say it would take two years to get agreement in this room about whether it should be 30 or 45 days, and in the meantime, as the world changes, we’re already at 60. By the time there was a reaction to that, I think time is of the essence here. We have in front of us a solid bill that farmers need.
Again, if I may talk about the fresh fruit and vegetable sector, we have canoe-sized celery in York—Simcoe, the size of paddles. But this produce doesn’t have a shelf life like most other ag commodities, for example, grain.
Grain, as we know, is protected by the grain board. If you want to talk about eggs and poultry and supply management, every other sector has that. This is the only sector within the Canadian agriculture sector which has absolutely no protection. It’s probably one of the most important sectors.
I don’t wear glasses. I think that’s because of all the carrots I eat in my town of Bradford West Gwillimbury, but that’s how important it is.
Senator Yussuff: I’m trying to understand and, at the same time, hear what the officials who administer the bankruptcy legislation currently and the trustees are telling us, which is to find the balance. I think the perfect good is to ensure that nobody is harmed in the context of what fresh producers are facing. I do believe there are challenges in the legislation as currently drafted, and I’m trying to figure out how to solve the problem, and not to pass a law that will create unintended consequences that could do more harm than good, and to recognize we want to solve the problem.
Mr. Davidson: Thank you, senator. As I stated at the beginning of this, Dr. Ronald Cummings is Canada’s leading bankruptcy scholar who drafted this piece with us when I did consultation. Again, Fred Webber, the former head of the DRC, member of the U.S. Department of Agriculture and PACA branch was most helpful on this.
Again, with the previous witnesses who were on, they misled things a little bit by not bringing up, for example, the DRC. Our fresh fruit and vegetable growers, I think you heard from the DRC earlier that they do take advantage of it.
This is a solid bill. This is a bill that was passed in the other place, as everyone likes to say, and we would like to see this come into law.
Senator Varone: Thank you, MP, for being here. I drive through the Holland Marsh every weekend on the way up to the cottage. I see it in the fall, summer, spring and winter. It is one of the most lovely places in Ontario.
Being part of a trade in the home building industry, I was always confronted with the statement, “you’re paid when we’re paid.” That was the mantra of most general contractors. Unless I get paid, you don’t get paid. That all changed when the shortage of trades became the reality in the construction industry. They self-policed because the credit arrangements were different; they just changed.
How would you counter the criticism that through the credit creep, this is a homemade issue among your members? When I say that, we’ve heard testimony that the credit extended by farmers has gone from 7 days to 14 days to 30 days, now to 60 days. You have bullies in your industry in the supply chain that grinds the daylights out of the farmers. How do you change that?
Mr. Davidson: How do we change that right now? This is, as all you senators know, a very competitive global world. Canadians and the government’s top priority right now should be food security.
Senator, if I may tell a quick story. I would always ask the question, “How did this come to fruition with you, Scot?” It was during something that we don’t like to talk about now, but it was during COVID. I had a farmer come up to me when I was out and about, and I said, “How’s everything going this spring?”
It was during COVID. That’s when the world was falling apart. We didn’t know if there would be bank failures or big company failures.
He came up to me and said, “I don’t think I’m going to plant my fields this year.”
I asked, “Really?”
“No. I’m going to be honest. It’s going to cost me a couple million dollars to plant my fields, and I can just sit at home and just pay the taxes. I might wait this one out.”
I said, “Hold on a second, why would you do that?”
He said, “I’m so worried about getting paid. This farm has been in the family for 200 years, and it’s going to cost me a couple million dollars and all our sweat and work. If I sell this fresh produce and I don’t get paid, I’m going to lose the farm.” He said to me, “I’m not looking for a handout from the government here. I’m just looking to be assured that I get paid for my product.”
I sat there and said as an MP, “First of all, this proves how important food security is.” I said, “Please don’t do that because we’re going to see prices drive up. We’re going to have supply issues at the grocery store.”
This is one sector. I would say it’s a unique sector. It’s quite a bit different than the home-building sector. Again, we see it in the super priority in the Bankruptcy and Insolvency Act that it actually identifies farmers as being special because they have super priority, but for fresh fruit and vegetable growers, this part of the act isn’t working for them.
This is one small amendment that we can actually change. You all here in this room have the power to enact this with the will of the House of Commons and actually protect food security for farmers right across this great country.
The Chair: Thank you very much.
Senator Martin: First of all, thank you so much. I think it was very important to hear from you directly. You’ve already answered some of my other questions, but in your opening remarks, you mentioned October 2014 when there was a revocation of access for Canadian farmers because of the lack of reciprocity in Canada for U.S. producers.
In terms of PACA, will the passage of your bill address that issue? Will it make our producers more competitive in the U.S. and elsewhere?
Mr. Davidson: Thank you for the question, senator. That’s how much work I put into this bill. We actually went to Washington. It was very well received.
They actually said to me, “You guys are a little bit behind here. When are you going to get PACA done for the goodness of both countries?”
The United States, whether we like it or not, is our neighbour, a great neighbour, and our largest trading partner. The interaction between our farmers in cross-border trade is so important to this country.
I said, “What is it going to take so we can have reciprocity? How is it going to work with the United States?”
They said, “I’d be proud to stand with you should you enact this bill. It will take a matter of weeks to have this reciprocity done.”
Again, we have had one farm in my riding at your testimony before. They’re having to post bonds twice the amount. It just becomes so unaffordable now given the tight margins, and our farmers face all the risk and all those other things.
The Chair: Just to pick up quickly on something you said. Producers sell into the U.S. market because they have better protection there, and if there were better protection here, we might be able to prioritize selling to our own country.
Mr. Davidson: This whole bill is about giving farmers the confidence that they’re going to get paid. In the United States, with PACA, the data shows it actually increased the output of farms.
We’re blessed here in Canada with the most arable land. I know we certainly are in York—Simcoe with the Holland Marsh. Again, all senators are welcome to visit. That’s why this bill is so important, and I encourage you all to pass this bill as soon as possible.
Senator Bellemare: Due to bankruptcy problems that the farmers are experiencing, have they been growing in the past years?
Mr. Davidson: From the farmers that I’ve talked to — again, there was a massive bankruptcy that just happened in Leamington. I’ll call Leamington the home of the tomato, another fresh fruit and vegetable product.
It’s a lot of smaller operations, smaller family farms. This is the very fabric of Canada. That’s why this is so important.
The Chair: Thank you very much, Scot Davidson, MP for York—Simcoe, the centre of the fruit and vegetable world and the sponsor of Bill C-280.
I do want to give you 30 seconds to hand out your gifts to all members. First I will thank you very much for coming and joining us today. I thank all senators for their participation.
What is it that you’re handing out exactly, Mr. Davidson? What is the mascot for?
Mr. Davidson: This is the mascot for Bradford West Gwillimbury. They make thousands a year, and they sell them at Carrot Fest, just so everyone knows. It all goes back to the Ronald McDonald House.
The Chair: Excellent. Thank you very much.
(The committee adjourned.)