Canada has lost its preferential status to the U.S.'s Perishable Agricultural Commodities Act (PACA), putting parts of the produce industry at financial risk if they continue to trade with companies south of the border. 

Previously, Canadian exporters who shipped produce to the U.S. were protected through the PACA trust protection if a U.S. buyer refused or was unable to pay their bills.

However, the protection was not extended the other way round, and due to a limited and inadequate system in Canada, U.S. suppliers were said to have been losing US$10 million annually through Canadian buyer insolvency.

The Fresh Produce Alliance (FPA) said in a release the Canadian government would need to implement a comparable system to PACA in order to regain its status.

It said the loss of PACA would have 'significant consequences' for Canada's fresh fruit and vegetable industry, putting jobs, farms and other parts of the supply chain at risk, and ultimately leading to higher produce prices for Canadian consumers.

"Without PACA access, Canadian companies trying to recover unpaid bills will have to post double the value of what they are trying to recover as bond to make a claim," Canadian Produce Marketing Association president Ron Lemaire said.

"For example, a small producer owed $50,000 would have to post $100,000 cash to make a claim, effectively removing $150,000 from their cash flow/operating line for up to one year. Many cannot afford this will simply have to walk away, losing what is rightfully owed to them."

Canada-based Horticultural Council executive vice-president Anne Fowlie strongly criticized the Canadian government for failing to act, saying the FPA had repeatedly briefed various Ministers and MPs on the issue's importance.

"The government has not taken necessary mitigating action, despite warnings that the removal of PACA access was imminent without confirmation of a Canadian solution," she said.

The FPA news release also said political opposition parties were now taking notice of the issue, with some committing to fixing the issue should they take power after the next election.

Photo: www.shutterstock.com

www.freshfruitportal.com