Sell it or smell it. Rotten produce has no value. Assets disappear when produce is unsalable.
These common phrases illustrate why produce sellers need protection from slow-pay, no-pay, and insolvency from buyers. In the United States, that protection is derived from the PACA Trust, and extends to all companies that sell to PACA licensees (provided they follow the rules, including invoking trust protection). In Canada, no comparable protection exists, and we would like to see that change. I’ve been dealing with this issue throughout my 30+ years in the produce industry, and I was encouraged by the outcomes of a recent meeting of government and industry from both sides of the border.
Positive energy and real progress ruled the day at the July 18 Canada-United States Regulatory Cooperation Council’s (RCC) meeting to develop financial risk mitigation tools in Canada for the produce industry. Understanding that Canada has a different governance model that would not allow for a duplication of the PACA Trust that exists in the United States, the goal is to work within Canada’s system, including legislative and regulatory paths, to echo trust-type protections/tools.
This effort is every bit as important to U.S. companies as it is to Canadian firms. If successful (no – when successful), it will protect sellers, including those outside Canada, from buyer slow- and no-pay situations as well as bankruptcies by providing similar provisions and protections under Canadian law. This is a top priority for the U.S.-Canada Regulatory Cooperation Council (RCC), created by Canada and the United States more than a year ago. The RCC has several work groups, including the one addressing Financial Protection for Produce Sellers, through a work plan.
Kudos to co-chairs Bob Keeney of USDA’s Agricultural Marketing Service (PACA falls under AMS) and Susie Miller of Agriculture and Agri-Food Canada for their leadership and commitment to a swift resolution, as well as the sub-work groups on legal framework, data and analysis, payment security models, and licensing. The groups presented their findings at the July 18 meeting and will present preferred options and recommendations to both governments in advance of the next meeting, currently set for late September.
PMA has seen this as a critical need for some time and has worked with our friends through the North American Trade Committee to explore options and raise the volume on this issue. We were thrilled that this became a priority for the RCC and we’re committed to helping reach the goal. Once a preferred option is selected, we will work through the Canadian government on those necessary legislative and regulatory changes to put a system in place. This is hard work, but it is worthwhile work and will benefit PMA members on both sides of the border, facilitate produce trade between the U.S. and Canada, and strengthen the relationships between the two countries. I look forward to the September meeting and continued progress.
Let’s talk about this program in the Global Trade Community on PMA Xchange.