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February 12, 2020

FOB shippers are NOT required to request a Federal Inspection

In today’s produce culture, it may seem and be proven that the pendulum is swinging more in the retailers favor than it is with keeping an equitable, harmonious playing field for both sellers and buyers of fresh/frozen commodities. That does not mean retailers, food service, wholesalers and other buyers have carte blanche to reject product that they or their in-house QC/QA team deem as “poor quality” or “not acceptable”. A rightful rejection or shipper’s breach of contract can only be verified by a federal (USDA for domestic or CFIA for Canada) inspection.

As an FOB shipper, when should you request a federal inspection? It’s debatable, but the answer is NEVER! The only thing that should be requested from shipper to buyer is payment of the FOB invoice in full. The burden is always on the buyer to prove the produce it purchased failed to meet contract specifications (Good Arrival Guidelines) upon arrival. In the eyes of PACA, which is the U.S. government agency that has jurisdiction over interstate and foreign commerce, they will only consider a federal inspection when dealing with a seller and buyer dispute. Therefore, you as the shipper would never want to request that your buyer have the product inspected. Rather, let your buyer make its own decision on whether or not to get the product inspected upon arrival.

However, as the shipper, if you need to pursue a truck claim because of your established relationship with the buyer, you must always obtain a USDA/CFIA inspection to prove that the transportation actually caused damaged to the product. This would come into play only when you do not want to enforce your FOB contract with your buyer for whatever justifiable reason.

In the case of an unwarranted rejection made without the benefit of a USDA inspection by the buyer, make sure you request and have the product inspected when you move it to show evidence that the product met contract specifications. When making that request with the USDA inspection office, make sure it is always an unrestricted and timely inspection, which means the inspector can obtain samples from any section of the lot.

Do you have any questions, comments or concerns, or would you like guidance on any disputes? Please feel free to contact Western Growers Trade Practices Department’s Bryan Nickerson at [email protected] or 949-885-2392.