Fruit and vegetable growers at risk

By Alvin Keenan and Greg Donald/Canadian Horticultural Council and P.E.I. Potato Board

Published on September 29, 2015

Right now the local fruit and vegetable season is well underway, and as we all know fresh produce is perishable. Delicious as it is at its peak, you have to eat fresh produce quickly.

As producers of fresh fruits and vegetables in P.E.I., we are acutely aware of the perishability and limited shelf life produce has when shipped to brokers, wholesalers and retailers.

Unfortunately, as is the case in business, sometimes buyers go bankrupt or refuse to pay. This might not be as much of a concern when we're talking about TVs or running shoes because those can be reclaimed. This is not the case for fresh produce. 

It is for this reason that financial protection is essential for fruit and vegetable growers. Once a shipment is gone, it's gone, and a buyer refusing to pay can have a huge financial impact on growers who, in Canada, have little recourse to reclaim the value of their produce.

U.S. growers have something called the Perishable Agricultural Commodities Act (PACA) Trust, which allows growers, (including Canadian growers) to reclaim the value of their produce should a buyer go bankrupt or refuse to pay, all at no cost to taxpayers.

Canada offers no similar protection to Canadian growers or U.S. exporters, and because of this, on Oct. 1, 2014, the U.S. Department of Agriculture revoked Canada's preferential status to the PACA suite of services so important to Canadian exporters.  So now we're vulnerable north and south of the border.

In order to file a formal complaint with the (U.S.) PACA we must now put up a bond of twice the value of our shipment.

As most fruit and vegetable growers in Canada operate on a smaller scale, many operators cannot afford the cost of the U.S. bonding system. Many Canadian exporters will just walk away, often from tens, if not hundreds of thousands of dollars of our produce receivables.

As you can imagine, the risk we're dealing with is real and it is constant. 

The lack of payment protection is the number one issue for Canada’s produce industry. With 40 per cent of Canadian produce being sent to the U.S., the impact of our industry’s loss of protection south of the border is perilous for many growers.

It is also an unnecessary trade irritant with our largest trading partner, which may make Canada a less appealing place to do business. 

Our industry has worked with renowned law professor Dr. Ron Cuming of the University of Saskatchewan to create a proposed legislation. This legislation is of no cost to government or taxpayers, but failure to act by our government has a tremendous cost to growers and consumers of produce in Canada.

Recently the NDP has shown leadership by making this issue part of their election platform. We are looking to all federal parties to make this a priority in the upcoming election. We want them to show the people who bring fruit and vegetables to Canadian families that protecting our businesses, and the root of the supply chain that brings produce to Canadians, is important.

It begins here at home – in Canada for Canadian fruit and vegetable farmers. It is time for the Government of Canada to act and implement a made in Canada solution, and in so doing, help us here at home and also ensure that our preferred status in accessing the U.S. PACA is restored. 

Produce sellers across Canada are watching their fruits and vegetables head to market without the financial tools that exist for other types of products.   This is the first growing season that Canadian produce sellers have been forced to operate under these new conditions. The full impact is yet unseen, but already growers are being affected.

Canada can’t afford to operate this way, and neither can we.

Alvin Keenan is co-owner of Rollo Bay Holdings and vice-president of the Canadian Horticultural Council. Greg Donald is general manager of the P.E.I. Potato Board.