Navigating the complex maze of trade issues between the U.S. and Canada is often frustrating, not to mention fraught with economic pitfalls for all parties concerned.
For California growers trying to export fresh fruit and vegetables north of the border, it’s a challenge of label adherence, the possible threat of being turned down at the border or the supermarket and numerous other compliance issues in order to meet Canadian regulatory and buyer requirements. It’s equally frustrating for Canadian buyers wanting to import and sell produce from the U.S.
In an effort to facilitate trade between the two countries, the Canadian Produce Marketing Association (CPMA) held a workshop this winter in Salinas, Calif., in conjunction with the Western Growers Association (WGA) and the Grower-Shipper Association of Central California. At issue is the need for harmonization of trade regulations among international segments of the produce industry.
“Salinas is the heart and soul of vegetable row crops,” said Dennis Donohue, Salinas mayor. Donohue is also president of Royal Rose, LLC and chairman of the Grower-Shipper Association of Central California. “If our agriculture doesn’t work well, Salinas doesn’t work well,” he said.
CPMA represents over 660 members who are responsible for approximately 90 percent of fresh fruit and vegetable sales in Canada, worth an estimated $8 billion (Canadian dollars) annually.
“Our goal is to facilitate trade so that it flows both ways with ease,” said Beth Pattillo, CPMA chair and grower/shipper with Kings Produce Limited, Nova Scotia, Canada.
Two years ago, California growers shipped $1.5 billion (Canadian dollars) worth of fresh produce into Canada, much of it from the Salinas Valley. Lettuce and spinach were the top U.S. produce exports into Canada, followed by strawberries, grapes, citrus, stone fruit and others. According to CPMA, three out of every four dollars spent by Canadian consumers on produce was spent on imported produce.
One of the major initiatives to improve trade regulations was the establishment of the Fruit and Vegetable Dispute Regulation Corporation (DRC) in 2000 as part of the North American Free Trade Agreement (NAFTA).
DRC is a private, non-profit organization comprised of produce and transportation companies from Canada, the U.S and Mexico. The objective is to provide more harmonized, fairer trade among the three countries by providing private commercial dispute resolution among members who trade fresh fruits and vegetables.
DRC was built on the existing principles of fair and ethical trading practices of the U.S. Perishable Agricultural Commodities Act (PACA), created in 1930 to promote fair trading practices in the U.S. fruit and vegetable industry.
Western Growers Association Executive Vice President Matt McInerney, Newport Beach, Calif., serves as DRC chairman. “Getting paid and solving disputes have often been significant obstacles for U.S. growers shipping to Canada,” he said. “While a single transaction may be of great value to a grower, going to a court of law in a foreign country and trying to litigate a transaction that’s worth $10,000 to $20,000 gets eaten up quickly by legal fees and other expenses.”
Before the DRC was established, it wasn’t uncommon for it to take 18 to 24 months to resolve disputes, McInerney said.
“If your buyer is not a member of the DRC, don’t sell to them,” McInerney said. “I can’t make it any clearer. If you’re not a DRC member, become one.”
The success of PACA is one reason for the DCR spin-off, according to McInerney. “More than a billion dollars has been returned to the produce industry through the PACA trust that would have otherwise been part of a general unsecured bankruptcy,” he said. “Normally, that would have meant zero to five cents on the dollar.”