Wednesday, February 01, 2012 by Kathy Means
Extending financial protection for produce sellers
When perishable produce is delivered but not paid for, whether it’s slow pay, no pay, or insolvency/bankruptcy, the supplier ends up holding the bag – an empty bag. Suppliers to pay-challenged U.S. buyers can use protections under the Perishable Agricultural Commodities Act to move to the front of the line for payment. For some time, the industry has desired similar protections in Canada.
At the January 31 meeting on the U.S.–Canada Regulatory Cooperation Council (RCC), stakeholders from both sides of the border expressed support for protection in Canada. One of the RCC deliverable outcomes is to develop comparable approaches to financial risk mitigation to protect Canadian and U.S. fruit and vegetable suppliers from buyers that default on payment obligations. Canada has a consultant researching legal options, and the report is expected to be out at the end of March. It will examine relevant regulatory changes, infrastructure modifications, other feasible legal instruments, self-regulation, security/contribution based funds, and other options. Once the Canadian commissioning group reviews the study, it will be published more broadly, possibly by mid-summer.
A speaker at the stakeholder meeting noted that Canada is looking for the same results, not necessarily the same tools. Indeed Canada must work within its own legal and regulatory parameters. The industry has benefited greatly from the PACA trust and would welcome extended financial protection in Canada, provided that any solutions are affordable, efficient, and effective.