Canada claims progress on produce financial protection
October 07, 2014 | 06:07 AM
The Canadian government has made progress in developing a system to protect U.S. suppliers of fresh produce to Canada if a buyer fails to pay for a shipment or declares bankruptcy, and the U.S. government’s recent decision to require Canadian entities to present a surety bond in the case of a complaint is “contrary to the spirit” of an agreement to resolve the issue, a Canadian Embassy spokeswoman told The Hagstrom Report on Monday.
Under the Agriculture Department’s Perishable Agricultural Commodities Act (PACA) program, the United States has a trust protection program that puts shippers of fresh produce in a priority position if a company goes into bankruptcy.
Even though it has not had the same system, Canada has enjoyed the same status in the United States because in 2011 under the Canada-U.S. Regulatory Cooperation Council (RCC), Canada pledged to implement a similar program to protect U.S. companies that export to Canada.
But the Agriculture Department’s Agricultural Marketing Service has determined that Canada has not lived up to that pledge, and the USDA recently revoked Canada’s special status.
A Canadian Embassy spokeswoman said “Canada amended the Safe Foods for Canadians Act (SFCA) so that it provided authority for regulations requiring membership in a third-party, single-dispute resolution body for fresh produce buyers and sellers who trade inter-provincially or internationally.”
“The amendment benefits fresh produce sellers operating in Canada through the provision of a single unified set of trading rules that includes the governance of slow, partial and/or no-pay by buyers,” she said. “This also reduces the majority of non-payment issues faced by fresh produce sellers and is a critical step towards comparability with the U.S. PACA system.”
The spokeswoman also noted, “Additional options to develop comparable outcomes for financial risk mitigation for fresh produce sellers are under consideration by the GoC [government of Canada], including a review of Canada’s insolvency laws.”
“The change to Canada’s treatment under PACA is contrary to the spirit of the text agreed upon between the U.S. and Canada regarding the Regulatory Cooperation Council (RCC) Forward Plan released on August 29, 2014, which states that Canada and U.S. will continue to examine financial protection measures collaboratively outside of the RCC,” she said.
Under the Agriculture Department’s Perishable Agricultural Commodities Act (PACA) program, the United States has a trust protection program that puts shippers of fresh produce in a priority position if a company goes into bankruptcy.
Even though it has not had the same system, Canada has enjoyed the same status in the United States because in 2011 under the Canada-U.S. Regulatory Cooperation Council (RCC), Canada pledged to implement a similar program to protect U.S. companies that export to Canada.
But the Agriculture Department’s Agricultural Marketing Service has determined that Canada has not lived up to that pledge, and the USDA recently revoked Canada’s special status.
A Canadian Embassy spokeswoman said “Canada amended the Safe Foods for Canadians Act (SFCA) so that it provided authority for regulations requiring membership in a third-party, single-dispute resolution body for fresh produce buyers and sellers who trade inter-provincially or internationally.”
“The amendment benefits fresh produce sellers operating in Canada through the provision of a single unified set of trading rules that includes the governance of slow, partial and/or no-pay by buyers,” she said. “This also reduces the majority of non-payment issues faced by fresh produce sellers and is a critical step towards comparability with the U.S. PACA system.”
The spokeswoman also noted, “Additional options to develop comparable outcomes for financial risk mitigation for fresh produce sellers are under consideration by the GoC [government of Canada], including a review of Canada’s insolvency laws.”
“The change to Canada’s treatment under PACA is contrary to the spirit of the text agreed upon between the U.S. and Canada regarding the Regulatory Cooperation Council (RCC) Forward Plan released on August 29, 2014, which states that Canada and U.S. will continue to examine financial protection measures collaboratively outside of the RCC,” she said.
