Kroger sent out a letter to shippers recently announcing their new August 1, 2018 standardized payment terms of Net 90 days. Accepting these new payment terms directly conflict with protection rights under the PACA Trust. Agreeing to any extension beyond 30 days permanently waives your PACA trust protection.

Under PACA, to be eligible for trust benefits, you must use prompt payment, which means payment terms of “PACA Prompt” or “Net 10 days”. Sellers can only extend those terms to a maximum of 30 days.  Anything beyond the 30 days will automatically invalidate your protection and rights to the trust provisions. When Congress enacted the trust provisions, it recognized the uniqueness of the produce industry and the importance of protecting sellers of fresh produce. 

The produce industry supply chain has benefitted from the trust provision since 1984. Any shipper’s best business practices mandate that you not waive trust rights, regardless of who may be requesting the waiver.  Also, if you have outside growers, you will remain liable to them for any non-payment. Based on those aforementioned reasons, it is recommended that you contact Kroger about your concern with the new 90 day payment policy.  

Please contact Matt McInerney at (949) 885-2263 or Ken Gilliland at (949) 885-2267 with any questions.