Produce growers demand payment protection against bankrupt clients
Farmers struggle to recoup payment from companies that went bankrupt
Farmers in the Windsor-Essex region are demanding more payment protection for fruit and vegetable producers, who are losing out on massive revenues when customers go out of business.
Those producers were joined by the region's chamber of commerce Tuesday, calling on the federal government to introduce a financial security program, similar to the one Canadian companies used to access in the U.S. This type of program would ensure growers get their money back if American customers go bankrupt and do not uphold contracts.
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Without new Canadian legislation, producers can still use the Perishable Agriculture Commodities Act in the U.S., but they have to put up double what they are owed as a bond in order to get their money.
"The produce industry does not have access to that type of money," said Ron Lemaire, the president of the Canadian Produce Marketing Association. "If I'm a grower in Windsor-Essex — and I'm trying to pay my employees, I'm trying to grow my business — and I'm not getting full payment for my product, I'm going out of business."
The growers used to have access to the American dispute resolution system for only $100, but that disappeared in 2014 when Canada refused to harmonize its bankruptcy laws with the U.S.
Devastating to the industry
Jim DiMenna, CEO of Red Sun Farms in Kingsville says he recently had to put up $200,000 to get back $100,000 in money owing when a customer went bankrupt. He says smaller farmers can't afford that and he says if this continues it can have a devastating effect on the local economy.
"He can't pay his creditors and then you have that domino effect which can be really devastating to a community or an industry," said DiMenna.
The types of businesses involved in the bankruptcies could include wholesalers or retail grocery stores.
Lemaire says a group of farmers in Ontario recently lost $1.4 million when a produce buyer in the states went bankrupt.
Essex MP Tracey Ramsey supports the push to have a protection program for growers. She tabled a motion in the House of Commons last year demanding the Liberal government make good on a promise to create a payment protection program in Canada.
"Here we are 22 months into the Liberal government, we still do not have (the Perishable Agriculture Commodities Act) back," said Ramsey.