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July 2, 2018

Kroger: Never negotiate away your PACA Trust Rights, regardless of the customer even for the invitation to participate in Kroger’s early payment program

Many of you may have received a letter from Kroger (click here), or you have no doubt read in the Western Growers Spotlight (click here) or other trade publications about Kroger’s attempt to brazenly extend payment terms on the backs of suppliers to 90 days.  Effective August 1, 2018, Kroger wants to raise capital on the balance sheets of their suppliers. Western Growers has received reports starting on June 29th that Kroger has, without consent, already provided shippers names to a 3rd party company to institute the suggested $0.72 % discount to get early payment.  Please respond if your company disagrees with this offer immediately and reiterate that your payment terms remain at 10 days PACA Prompt.

Under this proposal, not only will you lose the use of your money, you will also permanently forfeit the protection of the PACA Trust.  Remember in order to benefit from the PACA Trust, you must either invoice under the normal PACA pay terms of net 10 days, or extend pay terms up to 30 days with a written agreement.  Anything beyond 30 days automatically disqualifies you for the PACA Trust. It is important to always remember you will require documentation that your current trust terms apply and the 90 days are not accepted, as verbal conversation with your Kroger representative is insufficient.  You must have a written agreement to the specific contract terms and avoid allowing any contrary terms such as in a vendor agreement or an EDI confirmation that is inconsistent with your contract payment term understanding.

Remember, you never need PACA Trust…………….until you need PACA Trust.

Kroger is offering their suppliers with a shorter payment turnaround through a costly discount rate of 0.72%.  However, the additional price is the waiver of your PACA trust rights.

You should never agree to terms such as being forced on industry by Kroger, and never give up your PACA Trust rights by signing such an agreement.