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May 1, 2019

Export 101: HEED CAUTION with Non-Government (Private) Inspection and Survey Reports

“We are a shipper that exports product overseas and to Canada. We sometimes receive survey reports or inspections from the ocean carrier or other third party abroad.  Will these private inspections hold up in a PACA action?”

Third party surveys or non-government inspections must meet certain criteria in order to be considered as evidence of the condition and quality of the product at contract destination.  PACA would look for the following criteria in determining whether or not to accept a foreign survey as supporting evidence of the condition of the product upon arrival:

  1. An adequate sampling taken by the surveyor providing a snapshot of the entire load
  2. Documented pulp temperatures as well as percentages and a thorough explanation of USDA-recognized condition defects.

Note: Should the survey lack any one of these items, the survey may be ruled as inadequate evidence for the purpose of determining if the load meets contract terms and may result in the PACA rejecting the survey or non-government inspection report as suitable evidence in a PACA reparation proceeding.

In Canada, The Fruit & Vegetable Dispute Resolution Corporation (DRC) will not recognize private inspections when adjudicating DRC complaints unless both seller and buyer have agreed that a private inspection will be acceptable. Shippers should always insist on a Canadian Food Inspection Agency (CFIA) inspection when determining quality and condition of your product. Because of streamlined efficiencies, the CFIA has inspectors available to perform timely inspections in both the Toronto and Montreal markets. The CFIA has stringent performance measurements connected to turnaround time and written procedures to follow when performing and submitting a written summary of the inspection, thus making it unnecessary in almost all circumstances to seek a non-government inspection alternative.

Shippers should always determine the upside benefit, if any, of acquiescing to a non-government private inspection service in Canada.

So when you have an export shipment, in which you invoiced a PACA licensee and the buyer is submitting a foreign survey report, make sure the inspection document has the key provisions of pulp temperatures and sufficient sampling percentages for condition defects that are consistent with the USDA protocols. If the survey is missing any one of the mentioned requirements, the entire survey could be inadequate evidence in a PACA reparation proceeding. Additionally, non-government private inspections are only recognized in a DRC action when both parties mutually agree and is memorialized through a signed contract.

I encourage you to review all inspections closely and should you have any questions or concerns regarding USDA inspections, The Canadian Food and Inspection Agency, Survey Reports or private inspections please contact Western Growers Trade Practices Department’s Bryan Nickerson at [email protected] or office at 949-885-2392.

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