Bill C-280, the Financial Protection for Fresh Fruit and Vegetable Farmers Act, received Royal Assent on December 12, 2024. This legislation establishes a deemed trust for perishable produce suppliers. Under the new trust, proceeds from the sale of produce remain the property of the seller, ensuring they have priority over other creditors in cases of buyer bankruptcy or default. This is meant to address key challenges in the produce sector, namely, high bankruptcy rates, extended payment terms, and the inability to recover perishable goods.
Critics have also raised concerns about disrupting the established creditor hierarchy, potential ripple effects within the insolvency system, and the administrative burden of implementing the new framework. While the long-term impact remains to be seen, the legislation marks a significant step toward strengthening protections for Canada’s produce sector.
The need for Bill C-280 was underscored by the January 2023 bankruptcy of Lakeside Produce in Leamington, Ontario. The large greenhouse operation reportedly owed $188 million to produce-sector stakeholders, including other growers, logistics providers, packaging firms, and brokers. There were an estimated 300 unsecured creditors and amongst them 17 produce companies holding a combined total of $1.7 million in claims.
One of the affected business owners wrote to MP Scot Davidson in support of Bill C-280, stating:
“The inadequate protection for suppliers of fresh fruits and vegetables has most recently resulted in my farming operations sustaining a loss of $907,840 due to the bankruptcy of Lakeside Produce. I have devoted my entire life to the produce business, but neither I nor anyone else in the fresh fruit and vegetable industry can continue to bear these kinds of risks.”
You can access the full text of Bill C-280 here. If you have questions about how this legislation may affect your agricultural or farming operation, the legal team at SV Law is available to provide guidance and support.
The content of this article is intended to provide a general guide to the subject matter and is not legal advice. Specialist advice should be sought regarding your specific circumstance.