Canada’s fruit and vegetable exporters may lose payment default protection on sales to U.S. customers.
They hold the protection under the U.S. Perishable Agricultural Commodities Act, but competitors in the U.S. say that protection should be withdrawn unless and until Canada offers equivalent protection – i.e. top-priority status in the case of bankruptcy.
Recognizing that perishables can’t just be repossessed like other goods, the U.S. law gives suppliers of perishable produce “super priority,” even over secured creditors, to lay claim to a debtor’s assets directly related to sales of produce.
The Canadian coalition, dubbed the Fresh Produce Alliance, warned on Tuesday that “Canada’s special status may soon be revoked if the Canadian government does not implement a reciprocal payment protection program in Canada.”