Moved the adoption of the report.

She said: Honourable senators, I have the honour to present the sixteenth report of the Standing Senate Committee on Banking, Commerce and the Economy, which deals with 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 heard from 18 witnesses over four meetings that also included clause-by-clause consideration. The committee received eight additional briefs over the duration of the study. Our committee heard from fruit and vegetable producers, agricultural organizations, bankruptcy and insolvency experts, research organizations and lawyers, including those practising commercial law who represent fruit and vegetable producers in the United States and who are familiar with the Perishable Agricultural Commodities Act, known as PACA, and the PACA Trust, the U.S. equivalent of Bill C-280.

We also heard from government officials from Agriculture and Agri-Food Canada and from Industry, Science and Economic Development Canada, from the deputy superintendent from the Office of the Superintendent of Bankruptcy as well as the Senate critic of the bill, Senator Cotter, and the House of Commons sponsor, Scot Davidson, Member of Parliament for York—Simcoe.

During clause-by-clause consideration, government representatives returned to answer questions from committee members. Throughout our meetings, there was some confusion about who would be covered by the legislation, about how supply chain in the sector is affected by bankruptcy and insolvency, about what protections farmers currently have and whether they are accessible and affordable and the history of the Canada-U.S. trade relationship on the issue of reciprocal protection for producers of perishable fruits and vegetables.

The committee heard some strong testimony from the many stakeholders on the importance of this legislation. Ron Lemaire, President of the Canadian Produce Marketing Association, said that the bankruptcy protection mechanism in this bill would create “. . . a critical fit-for-purpose tool for an industry that is unique and currently unprotected.”

The past president and CEO of the Fruit and Vegetable Dispute Resolution Corporation said this bill would open the door to reinstating financial protection for Canadian growers under the U.S. Perishable Agricultural Commodities Act. In 2014, the U.S. suspended Canadian fruit and vegetable growers’ access to the bankruptcy protection mechanisms under this act, leaving our Canadian growers powerless when dealing with insolvent payers in this key market.

Two amendments were proposed by Senator Varone. They were two pages in length, so I will not read them into the record here, but I encourage my colleagues to visit the minutes of the meeting and view the transcript of clause-by-clause consideration on Thursday, October 31, to really get the full picture.

Senator Varone’s reasons for the amendments, he said, were that they would make for a clearer, more unambiguous bill. However, other witnesses said just the opposite: that an amendment to this bill would both put its passage in jeopardy and could potentially diminish the reciprocity of mirroring legislation in the U.S.

Our colleagues in the House of Commons Standing Committee on Agriculture and Agri-Food wrote to us just this past week to appeal to us to pass this important bill unamended. However, both amendments were adopted with votes of seven yeas and four nays, and the report was adopted on division.

I hope that in the course of our debate here in the chamber we will seriously consider this as new information has come our way since we considered this bill at committee. As others speak to the bill, I will ask all senators to please pay close attention. Thank you very much.

Senator Wallin, will you accept a question?

Yes, I will.

Thank you, senator, for presenting an overview of the report and the amendment. I understand that the committee, as I think you mentioned, heard several different perspectives on whether amending the bill could compromise some of the objectives behind this legislation. In particular, Bill C-280 seeks to open the door to reinstating financial protections for Canadian growers under the United States’ Perishable Agricultural Commodities Act, or PACA. Those protections were suspended in 2014 due to a lack of reciprocal measures in Canada.

Can you elaborate further on the rationale from stakeholders who appeared before the committee as to why the legislation should move forward in its original form and if any specific risks were identified regarding this particular amendment with respect to our dealings with the United States?

Yes, and I encourage you to listen to others who have delved more deeply into this, but we heard very powerful arguments that when dealing with the U.S. in terms of negotiations over legislation on both sides and reciprocal legislation, it’s best to have as few impediments as possible.

This has been stated pretty clearly, I think. Certainly, people in the industry put it that way: that if we amended this bill, it would not only put its passage in jeopardy here in the chamber and in the other place, but it would actually impact and perhaps put in jeopardy the reciprocity of the legislation in the U.S. They have basically suggested that if we do this they will then reinstate what was in place earlier, before 2014 when they changed the rules, and that would offer protection to this very vulnerable group of perishable fruit and vegetable producers. It’s a very small group that really needs this particular help because of the perishable nature of their product. It’s not something you can freeze or put in the fridge, so they lose money. If there is no ability to protect them at all, it leaves them with no recourse at all and no financial benefit further down the road because the product is already gone.

Senator Wallin, will you accept another question?

Yes.

Senator Wallin, as chair of the committee, did I hear you correctly at the start of your committee report that witnesses have said this would be the exact system between Canada and the U.S. if this bill went through? What were the exact words that you used? Could you repeat them, please?

I’m sorry. I’m not clear on the question. What are you asking?

At the start of your report, Senator Wallin, you seemed to have indicated, without any kind of jurisdiction or proof — I was there as a member of the committee — that this bill was the exact mirror image of the Perishable Agricultural Commodities Act, PACA. Could you read that section again for us, please?

I think there was a reference in the language that they used regarding mirroring legislation in the U.S.

Could you say again what was in your speech, at the beginning, in regard to this issue?

Do you want me to read it again?

I want you to read the beginning, Senator Wallin.

I said:

I have the honour to present the sixteenth report of the Standing Senate Committee —

— et cetera.

We heard from 18 witnesses over four meetings . . . . The committee received eight . . . briefs . . . . Our committee heard from fruit and vegetable producers —

— et cetera — a long list of people who testified, including people who are familiar with PACA.

We also heard from government officials . . . the Senate critic . . . the House of Commons sponsor . . . .

. . . representatives returned to answer questions . . . . Throughout our meetings, there was some confusion about who would be covered by the legislation . . . and the history of the Canada-U.S. trade relationship on the issue of reciprocal protection for producers of perishable fruit and vegetables.

The committee heard some strong testimony from . . . . Ron Lemaire, President of the Canadian Produce Marketing Association —

— I’m kind of reading it all again —

— said that the bankruptcy protection mechanism in this bill would create a “. . . critical fit-for-purpose tool for an industry that is unique and currently unprotected.” . . .

In 2014, the U.S. suspended Canadian fruit and vegetable growers’ access to the bankruptcy protection mechanisms . . . leaving . . . growers powerless when dealing with insolvent payers in [the U.S.] market.

Two amendments were proposed by Senator Varone. . . .

. . . other witnesses said . . . the amendment to this bill would . . . put its passage in jeopardy and could potentially diminish the reciprocity of mirroring legislation in the U.S.

Our colleagues in the House of Commons Standing Committee on Agriculture and Agri-Food [appealed] to us just this past week —

— to pass the bill unamended.

And then I said that in the course of our debate here, I would ask people to seriously consider the other speeches that my colleagues on the committee will give.

Unless my hearing is not right, what you have just stated is not a mirror of what you said earlier. You said that this bill is the equivalent process to PACA in the U.S.

Senator Wallin, I will go through the blues and come back tomorrow on this issue, if I understood correctly.

I’ll reread the paragraph in its entirety:

The past president and CEO of the Fruit and Vegetable Dispute Resolution Corporation said this bill would open the door to reinstating financial protection for Canadian growers under the U.S. Perishable Agricultural Commodities Act —

— that they would reinstate that. We heard that testimony.

Back to what I read into the record:

In 2014, the U.S. suspended Canadian fruit and vegetable growers’ access to bankruptcy protection mechanisms under this act, leaving . . . growers powerless when dealing with insolvent payers in [the U.S.] market.

That’s word for word — verbatim — what I read into the record.

Thank you.

Honourable senators, I rise today to speak against this report of the Standing Committee on Banking, Commerce and the Economy. For reasons I will outline, I believe the amendments advanced by some members of the committee effectually undercut the central purposes of the bill.

Bill C-280, the financial protection for fresh fruit and vegetable farmers act, which passed third reading in the House of Commons unamended, with near-unanimous support among members of Parliament by a 320-to-1 margin, was brought forward with two fundamental objectives in mind.

The first of those objectives is to address deficiencies within Canada’s existing bankruptcy laws so as to ensure that Canadian produce sellers are given priority status during bankruptcy and insolvency proceedings. The Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act already include measures to give agricultural producers priority status during those proceedings in recognition of their importance in feeding Canadians.

However, the current super-priority and right-of-possession provisions for farmers within these acts that are intended to provide financial protection to agricultural growers are not adequate for fresh fruit and vegetable growers when their buyers become insolvent. Repossession is seldom possible, since fresh produce spoils quickly or is promptly sold to consumers or incorporated into or with other products. Additionally, the 15-day period set out in the Bankruptcy and Insolvency 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 consumers.

Because of this, Canadian produce farmers are faced with significant and sometimes insurmountable losses when a purchaser declares bankruptcy. They must line up with every other creditor to seek payment, and, all too often, produce sellers must walk away from the outstanding debt owed to them.

These bankruptcies have a cascading impact within the industry, putting farmers and other produce sellers into difficult situations and limiting their ability to grow, innovate and expand as they, by necessity, have become risk-averse for fear of losing their businesses, too, when a seller unexpectedly becomes insolvent or goes bankrupt.

Bill C-280 would address this deficiency and ensure that Canada’s produce sellers are on the same footing as other agricultural producers as creditors during bankruptcy proceedings by establishing a limited deemed trust for their industry. Some senators in the Banking Committee expressed concerns with the utilization of a deemed trust mechanism as the means to address the lack of financial protection for fresh fruit and vegetable growers.

The produce industry is unique in that it does not have additional assurances that are enjoyed by other agricultural industries. Most are covered by the existing provisions, but most others have additional protections, such as the supply-managed system for dairy and poultry, the securities held by the Canadian Grain Commission and other programs managed provincially.

Other financial projection models other than a limited deemed trust have been examined in the past by federal-provincial task forces, including insurance pools, clearing houses, factoring, mutual funds and other measures. None of these were deemed suitable for cost competitiveness, market impact, access for buyers and sellers or applicability to the realities of the Canada-U.S. cross-border trade.

This brings us to the second objective of Bill C-280: restoring Canadian growers’ preferential access to the United States Department of Agriculture’s Perishable Agricultural Commodities Act, known as PACA. This is a deemed trust and dispute-resolution mechanism used by our produce exporters; however, the U.S. rescinded Canadians’ access to PACA in 2014. While we do have a dispute-resolution system in place here in Canada, we have lacked any form of financial protections, such as a deemed trust. Since that reciprocal access was rescinded, Canadian produce exporters must now post a bond worth 200% of the value of their exported goods in order to access the Perishable Agricultural Commodities Act, or PACA, which is out of reach for most growers in this country. As a result, when a U.S. seller goes bankrupt, Canadian growers who export lose everything, even while their American counterparts do not.

Honourable senators, this brings us to the amendments brought forward by the Standing Committee on Banking, Commerce and the Economy, which stand to undermine the primary objectives of the bill. These amendments restrict access to the financial protection mechanism within the bill to farmers or dealers, who are those who purchase fruits and vegetables directly from a farmer in order to resell them. By limiting access to financial protection to only the first level of sale, these amendments fail to recognize that the entire supply chain and market are impacted by bankruptcy — from growers to distributors — and that the way in which fresh fruits and vegetables go from the field to the dinner table involves many different entities.

Farmers and growers do not generally sell directly to retail stores; there are others who do that. Packers, wholesalers and brokers act as critical intermediaries between growers and the food service, hospitality and retail industries. It is essential that they all receive the financial protection set out originally in Bill C-280 to ensure that the payments flow down the chain and, ultimately, to farmers. This was the first objective of the bill.

These amendments will also mean that Bill C-280 would no longer fulfill the criteria established by the United States in order to restore Canada’s preferential access to the protections offered by PACA.

The United States Department of Agriculture, or USDA, has been very clear about the conditions for restoring access to PACA for Canadian growers. In cross-partisan meetings in summer 2023 with senators and members of Parliament about Bill C-280, they affirmed that the remaining outstanding provision was:

. . . the creation of a deemed like trust system in Canada which would allow for comparable outcomes to the PACA Trust for all produce dealers.

Restricting these protections to only farmers and dealers means the bill would not be offering a comparable system like that which exists in the United States. In effect, these amendments would undoubtedly mean that PACA would not be reinstated for our Canadian exporters, continuing to expose our farmers to increased and needless risk.

In fact, in a letter to the Western Growers Association earlier this month, USDA Administrator Bruce Summers compared and contrasted the proposed amendments to Bill C-280 and that of the U.S. system, noting that the amendments are “significantly different” from the PACA statute.

I will add as well, honourable senators, that the committee was cautioned about the effect of these amendments on several occasions not only by industry representatives and trade experts, but by the government’s own officials who warned that the probability of restoring PACA would be diminished by the proposed amendments. A fundamental objective of this bill is to restore this reciprocity with the American system to ensure that our farmers have this crucial protection. The committee report now all but guarantees to negate that prospect.

I also wish to address other commentary from some senators regarding this bill, such as suggestions that farmers would have less access to credit if given priority creditor status under a deemed trust. This is simply unfounded. The U.S. PACA deemed trust has been in place for 40 years, resulting in a net positive for both growers and packers in the fresh produce industry as well as the bankers financing these sectors. This is because a 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 those calculations. By making payments more predictable throughout the value chain from farmer to 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, not harder.

With regard to the amendments, it is important to note that the prospect of narrowing the scope of applicability of the bill to the first level of sale, as these amendments propose, was considered in the other place. However, testimony and submissions noted that it was critical to protect all suppliers across the fresh produce supply chain in order to maintain the stability of the market, and that limiting the definition of “supplier” would hinder Canada’s ability to obtain the reinstatement of reciprocal protection for Canadian sellers. These committee amendments are not a novel consideration. They aren’t a revelation on the part of any senator. The scope of applicability was examined in the House and, for the reasons I’ve outlined, members ultimately declined to propose amendments. I’ll remind you the elected House sent us this bill by a margin of 320 to 1, with the Prime Minister and the entire cabinet voting for it.

Our fruit and vegetable farmers play an essential role in supplying our families and communities with nutritious produce, but they are currently doing so in a state of unique and increased risks due to the perishable nature of their product and the lack of reciprocity with the American system. Bill C-280 is simply giving our farmers and others down in the supply chain within fresh produce a fairer chance to be paid in the event of a buyer’s bankruptcy. There is no burden to the government and no burden to the taxpayer, but rather a transfer of costs from one stakeholder to another.

I believe that farmers should not bear this cost anymore, as this is impacting our country’s economy and our domestic food security. Lenders are far better placed to absorb the distributional impacts of a deemed trust than small farmers and growers and other produce sellers who are already being squeezed from all sides.

In closing, I urge honourable senators to reject this report. We have an obligation to ensure that Canada’s bankruptcy laws are fair and fit for purpose. Our country’s fresh fruit and vegetable farmers should have confidence that they will be paid for the food they grow just as the rest of the industry should be able to count on stability in their market without fear of insurmountable loss due to gaps in our bankruptcy laws.

That is the issue Bill C-280 proposes to address, and I submit that the amendments contained in the committee report — though perhaps well intended — in fact, counteract the primary objectives of the bill. The amended bill should be rejected, and the original bill should be adopted. Thank you.

Senator MacDonald, thank you for your speech. You mentioned that, for lenders, it should be easier to lend, not more difficult. Would you not agree that there is an increased risk because secured lenders may face higher risks as their claims will be subordinated? If their claims are subordinated, why would it be easier to lend?

Senator Loffreda, I guess this is the way I look at it. Of course there is risk down the chain, but if you look at the history of banking in this country and of the farming community in this country, I wonder how many farmers have lost their farms and gone bankrupt because of decisions made by the banks, and I wonder how many banks have gone out of business because of farmers. That’s the way I look at it.

The banks should be willing to participate in the risk of the supply chain, much more than the farmers can. That’s why I support this bill.

I agree. We’re all with our farmers. We have empathy and compassion for our farmers. They supply what is necessary for all of us. But when we look at banking, there is risk and return. The higher the risk, the higher the return. So if risk is increased — and many of our witnesses agreed that the risk to the banks will be increased because now they are subordinated — well, interest rates might be higher.

Are you not concerned that higher interest rates will result in more expensive fruits and vegetables for consumers? Will those costs be absorbed by the farmers or will they be passed on to the consumers? I’m just concerned about your statement that it will be easier to lend to the farmers. I’m not convinced, and I am certain it will not be easier to lend to the farmers. That I’m certain of.

Senator MacDonald, I just wanted to mention that your time is almost up.

Did you want more time to answer the question?

Yes.

Is leave granted?

Senator, if there is a concern about interest rates and an increase in costs, I think the farmers would have made that concern evident.

They haven’t. The question for us is very simple: Do we stand with the farmers, or do we stand with the banks?

Honourable senators, I rise today to urge you to reject the amendments put forth by the Standing Senate Committee on Banking, Commerce and the Economy.

As we have already heard today, these amendments seriously undermine the fundamental objectives of this important piece of legislation, which was passed with nearly unanimous support in the House of Commons.

I would like to quote from a letter sent by the Canadian Produce Marketing Association, or CPMA. The CPMA has been working diligently on behalf of the fresh produce industry across Canada. I am sure many of you have received similar letters; however, I would like to put these concerns on the record here in the chamber. I hope that my honourable colleagues will listen to these concerns and vote down the committee report.

Before I begin, I would like to mention that the letter was signed by the following organizations: the Canadian Federation of Agriculture, the Canadian Produce Marketing Association, Fruit and Vegetable Growers of Canada, Ontario Fruit & Vegetable Growers’ Association, Association des producteurs maraîchers du Québec, Association québécoise de la distribution de fruits et légumes, BC Blueberry Council, BC Fruit Growers’ Association, BC Greenhouse Growers’ Association, Fresh Vegetable Growers of Ontario, Holland Marsh Growers’ Association, Horticulture Nova Scotia, Keystone Agricultural Producers of Manitoba, Norfolk Fruit Growers’ Association, Ontario Apple Growers, Ontario Asparagus, Ontario Berries, Ontario Potato Board, Ontario Greenhouse Vegetable Growers, PEI Horticultural Association Inc., Prince Edward Island Potato Board, Potato Growers of Alberta, Potatoes New Brunswick, Les Producteurs de pommes du Québec, Les Producteurs de pommes de terre du Québec, Saskatchewan Vegetable Growers’ Association, and that is not the complete list of signatories.

Now, from the letter, I quote:

It is essential to underscore the pivotal role of Bill C-280, which seeks to establish financial protection for all produce sellers. Ensuring this protection would foster an environment of fairness and equity in the marketplace, promote stability within Canada’s supply chains and bolster the resilience of our agricultural sector.

Indeed, safeguarding every link in the supply chain, from growers to distributors, not only supports our domestic industry, but also encourages international commerce, enhancing Canada’s standing in the global market.

Under the original provisions of Bill C-280, all suppliers would benefit (or not) equally, and all suppliers would be given equal access to an insolvent company’s “trust assets” on a pro-rated basis.

The proposed amendments to Bill C-280 (contained in the committee report) would effectively limit access to protection to the first level of sale, which goes against the legislation’s aim to promote fair trade practices and enhance market stability across the fresh produce supply chain.

The letter continues:

Importantly, limiting the scope of protection under Bill C-280, as in the proposed amendments, would fail to create an equivalent protection to that provided to the industry in the United States under the Perishable Agricultural Commodities Act, known as PACA, and would therefore fall short of what is necessary to obtain the reinstatement of Canadian produce sellers’ preferential access to the U.S. dispute resolution mechanism for fresh fruit and vegetables under PACA —a core objective of the original legislation.

Preferential access to PACA, which Canadian produce sellers enjoyed until 2014, is an important financial tool to enable Canadian growers and shippers to export produce to our largest trading partner with assurances of fair treatment that will not financially cripple them in the event of a dispute with U.S. buyers.

U.S. Department of Agriculture officials have confirmed that a Canadian financial protection mechanism equivalent to PACA, which covers all suppliers along the chain, is the only remaining requirement for Canada to secure reinstatement of preferential access to PACA.

The original, unamended Bill C-280 would meet this criteria.

The amendments put forward by the Senate Banking Committee simply do not reflect the interconnectedness of the chain that ensures the supply of fresh fruit and vegetables from farm to table.

Contrary to popular belief, growers do not generally sell directly to retail stores.

Packers, wholesalers, brokers and others act as critical intermediaries between growers, retail, and foodservice, and it is essential that they receive the necessary protection to ensure that payments flow down the chain and, ultimately, to growers.

Colleagues, our producers across the country are strong supporters of the original Bill C-280 and urge all senators to reject the proposed amendments by the Banking Committee, pass the bill at report stage and send it to third reading without amendment.

It is important that we pass this bill into law as soon as possible. Amending the bill, as we have seen with other legislation that this chamber has amended — like Bill C-234 or even Bill C-275 — will inevitably stall the passage of the bill and likely result in it dying on the Order Paper.

Colleagues, our esteemed chamber is being seen in a negative light by the agriculture sector due to amendments being put forward for numerous pieces of legislation affecting the agricultural industry. This is very disheartening to those who work hard to represent the agricultural industry, and this should also concern all my honourable colleagues here in the Senate when we are being described — out there — as anti-agriculture.

I ask my colleagues as an agricultural senator and a lifelong “agvocate”: Please vote down this committee report. Please pass the bill unamended. Let’s get committee report stage and third reading completed as quickly as possible so the bill can receive Royal Assent before the Christmas break.

We all know the political climate these days. The industry has been waiting almost 10 years for this bill to pass. Let’s not make them wait any longer.

Thank you. Meegwetch.

Would Senator Black take a few questions?

No.

No? Thank you.

Honourable senators, I rise today on the traditional, unceded territory of the Algonquin Anishinaabe people, who have lived on this land since time immemorial.

I stand before you today to express my gratitude for this opportunity to discuss Bill C-280, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (deemed trust — perishable fruits and vegetables).

I would like to extend my sincere thanks to my colleagues from the Independent Senators Group — Senators Loffreda, Yussuff, McNair, Ringuette and Massicotte — for their unwavering support throughout the study of this crucial legislation. Additionally, I appreciate the contributions of Senator Fridhandler from the Progressive Senate Group and Senator Robinson from the Canadian Senators Group, both of whom brought valuable insight and wisdom to our discussions.

My engagement in the realm of bankruptcy law has been extensive, particularly through my experience collaborating with receivers to revive defaulted construction projects. It is from this vantage point that I have observed the significant authority wielded by trustees in bankruptcy and receivers. Often, this power is exercised at the expense of all stakeholders throughout the whole of the supply chain, wherein these financial agents assume the role of super-priority creditors, ranking above all others in the hierarchy of bankruptcy claims.

For the record, I am a homebuilder. I have spent four decades in that industry, and I am proud of it. I was never late in payment and never bankrupted. I protected my trades and worshipped them, as they are the lifeblood of the industry — even the plumbers.

But, senators, that is only part of my personal story. I continue to own a hospitality business as well that is equally as large and employs some 250 people. Large-format catering is our specialty, and, yes, I have on-point experience purchasing fresh fruit and vegetables from farmers in Ontario and from the Ontario Food Terminal. My interaction with the farmers and their dealers has a 50-year history, and it has been direct and respectful.

Upon my analysis of the original text of Bill C-280, it became apparent that the provisions were inadequately articulated. In fact, Bill C-280, as originally presented, is nothing more than a hologram, reminding me of the famous quote from Shakespeare’s Macbeth:

. . . full of sound and fury,

Signifying nothing.

Our farmers are in need of real protection, and this bill as originally worded will do nothing to protect them. In fact, even as amended, the bill requires Canadian industry to become more assertive in its makeup to begin to proactively protect itself from the bad actors.

The Americans got it right. They have a trust legislation, but it acts as a deterrent, not a weapon, and it is located judiciously within their bankruptcy hierarchy. The American industry is better equipped to deal with its bad actors all in an effort not to go to the courts in the first place.

My initial interpretations led many, including myself, to believe that the intention was to elevate farmers of fresh fruit and vegetables to the status of deemed trust creditor within the Canadian bankruptcy framework. It is crucial to clarify that the deemed trust status in Canada holds significant weight and has been historically reserved for Canadian employees and their deductions that fund the Canada Pension Plan, or CPP, and unemployment insurance. Any diminishment of this status would constitute a grave injustice to all workers of all sectors across our nation. It is vital that we approach any amendments involving the deemed trust category with the utmost caution.

Upon closer examination, I realized that the language of Bill C-280 failed to provide the elevation it sought. The exact language states that the assets are “deemed to be held in trust” and diverges considerably from the definitive declaration of establishing a deemed trust.

In contrasting our laws with those of our American counterparts, we find some similarities within the bankruptcy hierarchy. The United States possesses a super-priority classification reserved for trustees and receivers of bankruptcy. However, it lacks a designated deemed trust category as established in Canada. This category is uniquely attributed to Canadian bankruptcy law, and, as stated before, it serves to protect all employees in Canada. Americans do deploy trusts within its bankruptcy hierarchy, but they do so through a different classification as a secured creditor. It affords their farmers measured protections, placing them in an advantageous position vis-à-vis other creditors.

It has become clear to me that Bill C-280 necessitates two distinct amendments.

First, the definition of “supplier” must be refined to accurately encompass farmers and primary dealers whose interests are at stake in the event of a bankruptcy. Without this definition of “supplier,” all in the supply chain — including Loblaws, Sobeys and Costco — who do not need protection will be afforded undue protection at the cost of our workers.

Second, we must evaluate the positioning of farmers within the bankruptcy protection hierarchy, ensuring that they receive comparable treatment to their U.S. counterparts. That means protecting our farmers as secured creditors on par with the Americans but leaving the unique deemed trust category intact. It was with this logic in mind that I proposed two amendments to the bill, both of which have successfully passed with a vote of 7 to 4.

These amendments to Bill C-280 represent an encouraging step toward achieving true reciprocity with the United States. However, we must acknowledge that these improvements alone are insufficient to carry farmers across the finish line of reciprocity.

As originally written, Bill C-280 fails our farmers. As amended, we begin to repair what is required by legislation to protect our farmers. Successive governments have failed to provide a road map for our farmers not just through bankruptcy legislation but also through more effective legislation that will codify real protection for our farmers.

To explain, we need to further explore the foundational aspects of this issue. The United States operates under the Perishable Agricultural Commodities Act, or PACA, which is legislation that adeptly governs the marketing of fresh and frozen produce, enacted to promote fair trading practices and to protect the rights of shippers, sellers and buyers alike. Canada has no matching legislation. PACA’s counterpart in Canada is the Canadian Produce Marketing Association, or CPMA. The differences in the scope and enforcement of these organizations could not be more pronounced.

PACA, which is administered by the U.S. Department of Agriculture, establishes a framework, introduces licensing for dealers and brokers and allows for the filing of claims for unpaid transactions. Furthermore, it includes provisions that ensure sellers are promptly compensated, thus providing robust financial protections — all of which is meant to keep farmers out of bankruptcy court in the first place. In stark contrast, the CPMA’s operations are primarily focused on advocacy, lacking the same level of legal protection afforded by PACA.

Today, you have heard from senators advocating for the approval of an unamended Bill C-280 and claiming that it would put Canadian farmers on equal footing with the U.S. in the event of bankruptcy or insolvency within the supply chain.

Well, senators, it’s not that easy. The differences between the Canadian and American protection are alarming. PACA members are required to be licensed. Membership in the CPMA is voluntary. PACA members pay a fee. Their fees help with restitution during bankruptcies and insolvencies and often lead to settlements out of court. CPMA members pay no fee. PACA members are licensed and vetted. Members need to pay their bills in 10 to 20 days. Late payment is reprimanded. Later-paying members do not exist because they are expelled. That is their licensing format.

Within the CPMA, none of this exists in Canada. In fact, we heard testimony that credit attenuation, or the credit terms, often hits 90 to 120 days. Our farmers need real protection, not the illusion of protection. For reciprocity to be woven into the fabric of trade relations between Canada and the United States, Canada must address the inherent shortcomings within its structural framework. The CPMA requires a re-evaluation to reflect a licensing body rather than a voluntary membership organization. Enhancing regulatory standards, addressing credit attenuation and developing self-regulation mechanisms will be imperative for a successful reciprocal arrangement with the U.S.

In conclusion, the amended Bill C-280 provides a just and measured protection for our farmers, but I respectfully assert that genuine progress toward reciprocity between our two nations now hinges on an overhaul of the CPMA and its approach to the agricultural sector challenges. Only by addressing these critical concerns will the U.S. Department of Agriculture consider an agreement for reciprocity with Canada.

Together, it is our duty to ensure that the voices of our farmers are heard, their interests are protected and a structural framework is established that recognizes their vital contributions to our economy. The amendment to Bill C-280 begins this process, but much more work needs to be done.

Thank you. Meegwetch.

Thank you very much, Senator Varone, for your strong speech. As somebody who didn’t attend the committee meetings, and as I’m trying to make sense of the arguments here, I just want to make sure that I heard you right. I think your position is that there would be no reciprocity. We heard from others that the original bill had some indication that it would be acceptable for reciprocity.

I heard you say, I think, that it’s not the case. Could you clarify that, please?

Thank you.

The reciprocity regime in the U.S. hinges upon the way PACA administers itself and the way it licenses its dealers, its farmers and those who buy the produce. They are mandated to pay quickly. They don’t go to court in bankruptcy. Theirs is almost like an estoppel in law where it’s the shield and not the sword that counts.

As far as I’m concerned, we’re doing this backwards in Canada. For us to truly engage in reciprocity, we need to fix the CPMA and its legal framework and then apply a bankruptcy protection thereafter. The whole notion that bankruptcy will solve everything is an illusion; it will not.

Again, as it stands right now, when we export to the United States, those exports are not protected by PACA. When American growers export to Canada, they are protected by PACA, I guess, but I don’t know.

I’m concerned about the export that is going that way. We must be somewhat vulnerable to non-PACA dealers who are buying our produce because they know that they’re not subject to the licensing and all of the other things that you talked about.

Again, if we have an indication that this original bill would qualify for reciprocity, there are two things that I think will happen. First, our producers will be protected through the PACA system. Second, American farmers and dealers will presumably be protected through this bill because it doesn’t talk about the U.S. or Canada but about suppliers and buyers.

Would I be right to say that the credit crunch would come for Canadians at the grocery retailer, where this deemed trust would happen, and at the restaurants in Canada that buy fresh fruit and vegetables in the wintertime from United States suppliers? It would be the bank’s responsibility, then, to focus on those particular end users who are using U.S. products in Canada. That’s where there would be the credit issue that Senator Loffreda talked about. There would be that issue of credit accessibility, but what we get in return is protection for our own farmers. I don’t know that you answered clearly whether this particular bill that you heard during your time in committee would, unamended, provide the reciprocity.

It’s an interesting point you make, but the only people who have said that this will help with the U.S. are the Canadians, not the Americans themselves. It’s a complicated dilemma in terms of how Canadian farmers sell. Canadian farmers produce $3 billion a year. Of that, $1.5 billion is for Canadian consumption and $1.5 billion is for U.S. consumption because of the manner in which our growing seasons operate. We don’t have a California that can grow 12 months of the year. We import $6 billion of produce, and the reciprocity, just that so that we’re clear —

Senator Varone, I’m sorry but your time is up. Are you asking for more time to answer the question?

I would like more time, thank you.

Is leave granted?

The reciprocity that we’re talking about is that in order to protect $1.5 billion of Canadian sales to the U.S., we’re protecting $6 billion of sales of U.S. farmers into Canada.

Leave was granted to answer the question, so I will go to Senator C. Deacon.

Honourable senators, I think you know what I’m going to talk about: the sixteenth report of the Banking Committee. It was presented here in the chamber on Tuesday, November 5. In related news, later that day, the American people decided to re-elect President Donald Trump.

I am rising to speak against the adoption of this report and its amendments, especially in the context of promises that we can expect to be delivered during the next Trump presidency.

When renegotiating NAFTA during his first term, President Trump focused on one particular irritant involving Canadian agriculture: dairy. This time, he promised to immediately impose tariffs on all imports into the U.S., and his “America First” administration will review the Canada-United States-Mexico Agreement, or CUSMA, no later than 2026. I doubt anyone wants to increase the number of irritants on his list.

However, the United States Department of Agriculture, or USDA, has long been irritated with the fact that Canada has never fulfilled its commitment to implement the legislative change included in Bill C-280. An unamended Bill C-280 removes that irritant.

Equally important, passing an unamended Bill C-280 would mean farmers of perishable produce no longer have to maintain the extra working capital buffer to protect against non-payment when exporting to the United States.

Instead, they will be able to take advantage of expanded market opportunities and invest in productivity-enhancing innovations and climate resiliency. All of this improves Canada’s food security. To earn your support in rejecting this report, I want to provide you with background to the USDA’s Perishable Agricultural Commodities Act. I think you have heard a lot, but I wish to provide a bit more. I want to expand on the USDA’s response to the amendments proposed in this report, and last, provide some insight into the opportunities that will be lost if this chamber decides to amend Bill C-280.

Starting in 1937, Canadian growers of perishable produce were the only farmers in the world to benefit from preferential access to the U.S. market and confidence that they would receive payment for their goods. Starting in 1984, this preferential access was granted to Canada under PACA.

PACA allows the fresh produce industry to quickly resolve instances of non-payment. This is the formal dispute resolution system — from producers through the supply chain to retailers — and it demonstrates the value that the United States places on the perishable commodities sector.

In 1984, the U.S. formally provided reciprocity with Canada on the understanding that we would eventually implement an equivalent insolvency protection mechanism for produce farmers. We never did, and consequently, on October 1, 2014, the USDA lost their patience and terminated Canada’s reciprocity. This administrative decision removed Canadian farmers’ privileged access to the U.S. market, and this privilege can be restored administratively if we pass Bill C-280 unamended.

Achieving reciprocity under PACA is the central goal of Bill C-280.

Senator Cotter spoke to this bill in the chamber in June, as a friendly critic, and also in our committee in September. He informed us that a group of senators and MPs visited the U.S. Department of Agriculture officials responsible for managing PACA in Washington last Spring. Those representatives voiced support for the legislative amendments included in Bill C-280 and believed they would justify the administrative change necessary to restore PACA reciprocity.

I will quote our honourable colleague:

The way it was described to me as I was listening was that it didn’t even seem to require a regulation but an administrative act from some senior administrator.

Bill C-280 in its original form was sufficient to achieve reciprocity for the USDA; however, the proposed amendments included in the Banking Committee report risk jeopardizing this goal.

In a letter dated November 7, just two days after the Banking Committee report was presented in this chamber, a USDA representative — the one responsible for administering PACA — sent a letter addressing questions from a U.S. produce association about the proposed amendments. I shared that letter when I received it with members of the Banking Committee.

The USDA representative stated that the amendments to Bill C-280 would limit the scope of protections compared to those under PACA and likely would not meet the conditions necessary to provide reciprocity.

This reinforced the position of a U.S. lawyer who appeared at committee on October 31. He indicated that amendments that “change who has the right to seek the remedies. . . .” in his opinion “. . . would be fatal to having reciprocity.” This means Canada would lose the very benefit it’s trying to obtain.

Colleagues, I believe the amendments proposed by Senator Varone in the Banking Committee are, without a doubt, well intentioned. I have no doubt he proposed these amendments with the objective of better aligning the bill with PACA, but it is clear that the USDA and an American legal expert with 40 years of experience regarding PACA both disagree with Senator Varone’s position.

Additionally, we know that any amendment at this stage of the process, in this Parliament in particular, will effectively kill the bill. I don’t think that this is something that Senator Varone and most others on the Banking Committee are seeking to do.

For me, that is more than enough to ask for this chamber to reject the sixteenth report from the Banking Committee and its proposed amendments to Bill C-280.

Colleagues, I would now like to speak about the opportunities that an unamended Bill C-280 would create.

The effects during and following the COVID pandemic demonstrated the paramount importance of food security. Even well before COVID, the Barton Report on the future of agriculture in Canada suggested that we modernize regulations and taxes to promote investment and innovation, enable growth opportunities in the sector and promote value-added agriculture in Canada.

Our own Standing Senate Committee on Agriculture and Forestry report on value-added agriculture, released in June 2019, included data showing that the Netherlands produces 72 times more in export value per arable acre of land than Canada. Their collective efforts come from a determination to never again face the food insecurity that devastated their population during World War II. Too often, Canada, conversely, sells our agricultural products before we maximize their value, undermining the profitability and sustainability of our industry.

Increasing business investment in our agricultural sector is critical to changing this reality.

Adding to the risks are increasingly fearsome climate events. They alone are an excellent reason to prioritize efforts that will increase the resilience of Canada’s domestic food production, especially using no-cost, market-based methods like those enabled by Bill C-280. Consider the $1 billion in losses caused three years ago when the atmospheric river of rain and catastrophic flooding devastated the Lower Mainland’s Sumas Prairie, the heartland of B.C.’s agriculture industry.

Certainty of access to markets and payment, like that included in Bill C-280, enables increases in business investment, and business investment increases innovation and productivity. Let me give you a Canadian example of this sort of innovation, which we need to prioritize.

About 15 years ago, technological advances reached a point where controlled environment agriculture could be economically viable. This is otherwise known as “indoor farming” or “vertical farming,” where LED lighting and robotics can disrupt traditional agriculture by being far more environmentally friendly, of higher quality and practised right next to large markets.

In July 2018, Senator Coyle and I toured TruLeaf, a company developing such a facility in Truro, Nova Scotia. In March 2019, our entire Agricultural Committee visited the company’s first major production facility in Guelph, Ontario. Control of the company had shifted to McCain by that point, and the name changed to GoodLeaf. Tens of millions of dollars were invested to build additional facilities in Calgary and Montreal.

Traditionally, over 90% of leafy greens purchased by Canadian consumers are grown in California or Arizona and travel an average of 4,000 kilometres to us by truck. Substantial business investment is needed to build local production that enables fresh produce to be delivered directly from the farm to the retailer on the day it’s harvested, 365 days a year. These facilities now provide year-round employment. They use 95% less water than traditional farming and have no need for pesticides or herbicides, no chemical runoff and produce 39 times more produce per square foot compared to traditional farming. The food is fresher and more nutritious.

When Senator Coyle and I visited the company’s first site in 2018, she was on the Arctic Committee. Since then, a similar project has been developed in Gjoa Haven, Nunavut, with the support of the Arctic Research Foundation.

An article in The Globe and Mail quoted the project manager:

“I can’t believe this was just a seed,” she says, recalling how it felt to harvest the healthy romaine. “It was so amazing. Oh my God, it was just amazing. And tasting it, it was so fresh.”

That’s in our Arctic when we invest in innovation in our agriculture.

This is the sort of innovation that we need to promote in Canada. The best way to achieve this is for our food producers to have access to robust markets and reliable payments. As a believer in the value of competition, I think that should be achievable without having to sell one’s company to an industry giant.

Now let’s look at the business challenges facing Canadian producers of perishable fruits and vegetables when they do not have access to PACA.

When he testified at the Banking Committee, Quinton Woods, the operations manager at Gwillimdale Farms, recounted a significant financial loss in 2014 due to non-payment from a U.S. customer:

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 . . .

They were out net US$300,000 by that point. Continuing, he said:

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.

American producers have no such domestic risk of loss, but Canadian growers do. This puts Canada’s growers at a major disadvantage because 40% of Canada’s fruits and vegetables are exported to the United States. Without reciprocity under PACA, they must continue to post a double bond, meaning 200% of their invoiced amount must be put up when trying to recover from an insolvency from an American buyer. This erodes their ability to invest in their businesses.

The U.S. has indicated it is willing to get rid of this double bond requirement if Canada were to adopt a PACA-like trust mechanism. The text of the bill as passed in the House aimed to achieve that reciprocity. And yet we stand here today with proposed amendments that fall short of this threshold according to U.S. experts.

In committee, some believe that Bill C-280 would increase the cost of borrowing for those along the supply chain. Three different witnesses responded to this concern, with one noting that this concern was also raised in the United States in the 1980s. All stated that PACA actually stabilized lending because lenders know that the produce seller, grower, packer and shipper are all secured and see it as a safe, stable supply chain. Additionally, as noted by one farmer at the committee, members of the three largest associations asked for these legislative changes to Bill C-280, so any concerns about lending cost increases would have been self-addressed.

Another question focused on why the perishable produce sector should preferentially benefit from this legislative change, especially in this environment. My response is that if any sector could achieve similar reciprocity with our largest trading partner on this issue, then it should without a doubt be considered.

Colleagues, I hope you see why it is critical that we vote against the report and pass Bill C-280 unamended. These increasingly uncertain times mean we must find ways to align with U.S. trade policy in a resilient manner that is parallel to CUSMA. Bill C-280 is a no-cost way to support bilateral policy alignment that is needed by the producers of Canadian food.

A wise farmer once told me that the two biggest risks facing farmers are weather and politicians. Colleagues, let’s prove him wrong. Thank you.

Senator Deacon, would you take a question?

Certainly.

Would you not agree, as experienced as you are, we have something in Canada — answering Senator Tannas’s inquiry — called EDC insurance, through which exporters can insure their accounts receivable at a nominal cost of 1%, depending on the risk? Why would EDC insurance not be a simpler solution for the farmers exporting to the U.S. — 40%, as you mentioned? We heard testimony from experts during committee that lending would be more difficult. I will share that during my upcoming speech. There is an increased risk for lenders. There are re-evaluations of credit policies in play and a potential reduction in credit availability. Why would EDC insurance not be a simpler solution?

You said that if it creates a precedent, you hope that every industry would have this precedent. Well, if every industry —

Senator Loffreda, time for debate has expired. Senator Deacon, are you asking for more time to answer the question?

Yes.

Is leave granted?

Please answer the question, Senator Deacon.

Thank you, senators. I’ve used EDC insurance in business. It’s a fantastic tool for high-margin exports. For exports with tight margins and timelines, you need a preventive tool. You need to be part of a tool like PACA. It’s not the same business at all, and I really respect what our perishable produce exporters are dealing with. It’s very different than what I dealt with in selling high-margin technical equipment around the world. It’s an entirely different business altogether. I think that’s where EDC is most suited and most helpful. I haven’t found one perishable produce manufacturer who feels they can afford to use the tool of EDC. It’s not designed for their business.

It has been around for a while.

Senator Plett, would you take a question?

Thank you for taking my question, and thank you for your speech.

It is not about defending bankers or lawyers. It is about defending the economy, it is about what is best for Canadians and it is about being relevant, not irrelevant. This is why I raise these important issues.

While we strongly support protecting farmers and ensuring they are paid for their hard work, does this bill not set a dangerous precedent that could lead to other industries seeking similar protections? If all lenders were subordinated to every industry in this way, would this not erode the value of receivables as collateral and ultimately hinder the ability of lenders to extend credit across the economy?

We have also heard compelling testimony against the bill. We have heard it, and I will be raising these important concerns in my upcoming speech. But it is about protecting the economy.

As Senator Deacon says, every industry gets a precedent, and if lenders get subordinated to every industry and every receivable, there will be no receivables to lend against anymore. Yes, as they say, it’s not always about money, but everything needs money.

My question is this: Every other industry will ask for a similar precedent, and then there will be no receivables to lend against because the lenders will be subordinated to every single industry. Who is next? We’re giving priorities to the farmers.

We love the farmers. Don’t get me wrong. We’re not against them. We’re giving priorities to the farmers. Well, aren’t you concerned there are other people in line that will ask for the same precedent?

You —

Yes.

You misunderstood me. It’s not about the banks making more money. The banks are among the strongest banks in the world; I’m not concerned about them. Actually, the Budget Implementation Act, 2024, No. 1 that I sponsored would tax the banks 15% and cost them billions of dollars, so it’s not about the banks or protecting them. I’ve always made that clear. It’s about protecting the economy.

Every bill has consequences. When my lenders used to come, I used to tell them that we’ll live with this for a long time. We’re going to live with this bill for a long time. This has consequences. There are impacts on the economy. Are you not concerned that creating precedents will hinder access to credit? Yes, the banks will still make money, but this will hinder access to credit in other industries, which will have a huge impact on the economy.

Senator Plett, will you take another question?

Senator Plett, fair disclosure, my opinion is not decided yet, but I will decide soon what I will do. I came here to the Senate because it is a house of sober second thought. I have been active in politics for many years, so I have a lot of respect for people in the other place, the House of Commons. Make no mistake about that.

However, I tried to follow your logic. If we are a chamber of sober second thought, does that mean that we have to refrain from amending any bill from the House of Commons? Is it because we don’t respect them? Bill C-282 is coming. What is your guidance? If we want to do our job of sober second thought, should we refrain from making any amendments to any bill from the House of Commons? Could you help me?

Senator Plett, I listened to your lectures very intently, as usual. How do you square the arguments that we hear today with your caucus’s successful efforts to block votes on 15 private bills in 2019? Which Senator Plett should I believe? Which one should I deem trustworthy — the one in 2019 who killed all private bills or the one today who says all private bills should pass?

I am pleased to remind Senator Plett that in June 2019 we killed 15 private bills that came from the House of Commons, including many that were adopted unanimously, including one on judicial education proposed by his former interim leader the Honourable Rona Ambrose. You refused consent. You called for bells. You moved the adjournment of bills and, in the end, 15 private bills died on the Order Paper. Yet, today, you say that all private bills should be adopted.

Do I understand that we will adopt the whistleblower bill in the coming days because, finally, the House of Commons was unanimous on it? Will you speak to it and ensure that it can move along with all the other bills from the House of Commons that have been waiting to be considered?

Will you take a question, Senator Plett? I want to read something to you, just a phrase that I found on the website of the Senate. It reads, “Created to counterbalance representation by population in the House of Commons . . . .” It goes on to talk about the Senate evolving from defending regional interests to giving voice, and so on. Do you believe in the first part of that sentence? Is it our role to counterbalance the representation by population in the House of Commons?

Do you have an issue with what’s written on our website about our roles, where we are described as being in place to counterbalance the House of Commons, the house that represents the population?

Senator Plett, the part about counterbalancing the House of Commons, does that have to do with the fact that in the House of Commons if every single MP from Ontario and Quebec voted for something and everyone else voted against it, the measure would pass? In the Senate, that is not the case. If every single member from Ontario and Quebec voted for something and every single senator from outside those two provinces voted against it, it would be defeated.

Yet, here we have senators from Toronto, Montreal and from the places for which we’re talking about the counterbalancing. Isn’t that actually supposed to protect areas like Atlantic Canada and the West?

Would Senator Plett take another question from me?

Thank you for taking a question.

Are you not concerned that the existing bankruptcy laws will disrupt the creditor hierarchies? I will clarify.

Critics argue that implementing a deemed trust could disrupt the established order of creditor claims, potentially disadvantaging other creditors in bankruptcy proceedings, which means that farmers will go first now.

What about the truckers, for example? What about the hard workers who package the vegetables? If they’re behind the claims farmers will be making, there won’t be enough money for them in a bankruptcy. By the way, bankruptcies are nominal in the farming industry: less than 1%.

Are you not concerned that there will be an impact on the overall economy if there are bankruptcies of small- to medium-sized businesses that won’t be paid because farmers will be paid before everybody else at this point in time?

It’s always about the economy, it’s not about bankers. The BIA that I sponsored is proof of that by taxing the banks at 15%. They were omnibus bills, and not all the big-ticket items were in the BIA. The deficits are not as large as you anticipate them to be in the BIA.

I gave you many parts to that question and some were easier to answer than others.

I’ll question you directly on that. You’re telling me that whatever the House of Commons brings forward here I must yield and vote for? Are we being relevant?

At this point, I feel this bill — the way it has been amended — is a better bill than the original one. If it is the original bill, I’ll say it here: I’ll vote against it. I’ll do that not because of the banks but because of the economy.

Are you saying to me that I should yield to everything that comes from the House of Commons and vote for it?