Date: Aug 16, 2017

Whether you are new to the produce industry, or a seasoned veteran, it is as important to be informed on what defects are considered scorable in a “No Grade Sales Contract”, versus you guaranteeing a U.S. No. 1 arrival.

Let’s discuss the two types of defects sometimes listed on USDA or CFIA inspection. When reading the results of a USDA or CFIA inspection certificate, the inspector may list two types of defects: quality (permanent defects) and condition (defects that can continue to advance). Under the terms of a “no grade contract”, you should primarily focus on the condition defects. While quality defects can affect the merchantability of the product, it is condition factors which determines whether or not your shipment makes good delivery.

What is a quality defect?

A quality defect is permanent. Some examples include hollow stem in broccoli, seed stem in lettuce or celery, limb rubs on peaches or nectarines or misshapen in bell peppers.  A quality defect never advances, which means you would have the same amount of permanent defects at shipping point that you would have at destination.

What is a condition defect?

In contrast, condition defects progress with age, such as decay, bruising and discoloration of your product.  

The Perishable Agricultural Commodities Act (PACA) has developed guidelines in order to determine if a product sold on a “No Grade Contract” meets contract specifications as shown in the FOB Good Arrival Guidelines Table.

These guidelines interpret the maximum tolerances allowable for various fresh fruits and vegetables transported to locations that range from 1 to 5 days from the shipping point.

The tolerances shown on the table are based on the U.S. Grade Standards for those commodities that have standards and are based on judicial interpretations of the terms “FOB” and "suitable shipping condition" as defined in the PACA regulations. "Suitable Shipping Condition" means that the product meets contract terms at shipping point and will not deteriorate abnormally, provided that transit time and conditions are normal.  The information in the table can be used to determine whether the product meets contract at destination, before considering if transit and conditions were normal.

When reviewing a USDA inspection, if you would like clarification on the type of defects listed (quality or condition) or just want to discuss whether or not the product makes good delivery, please do not hesitate to contact me at 949-885-2269 or to discuss.

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