Shippers, Are You Fully Utilizing The Perishable Agricultural Commodities Act (PACA) and The Fruit and Vegetable Dispute Resolution Corporation (DRC)?
In my experience, shippers often underutilize the powerful protections, resources, and dispute forums provided by the two primary adjudication services: PACA and DRC. As the Commodity & Supply Chain Services Director for Western Growers, I handle daily calls from growers and shippers navigating disputes with buyers, both domestic and Canadian. These issues range from arrival problems and quality disputes to contractual issues, slow payments, and even bankruptcies. In nearly all these scenarios, PACA and the DRC offer defined regulations and a wealth of case precedents to address the situation effectively.
Domestic Disputes: Leveraging PACA
For domestic disputes, shippers may hesitate to turn to PACA out of concern for customer relationships. However, there are times when utilizing PACA is necessary. PACA helps resolve disputes fairly and equitably. While some customers may not be suitable for involving PACA, in other cases, it can be a crucial tool for protecting your business.
International Disputes: The Role of the DRC
The membership-based DRC, based in Ottawa, Canada, offers harmonized international standards and services to prevent commercial disputes with buyers outside of the U.S. and Canada. When disagreements occur, the DRC provides consultation, mediation, and arbitration services to resolve issues promptly and cost-effectively.
Understanding Jurisdiction: PACA vs. DRC
Nearly all fresh produce transactions between PACA licensees are subject to regulation, with a few exceptions. For instance, if a PACA licensee sells Chilean table grapes directly from Chile to a Pacific Rim country without the product entering the United States, PACA lacks jurisdiction. However, jurisdiction may fall under the DRC if both entities are current members of the DRC in good standing or if a DRC arbitration clause is stipulated in the contract. The vast majority of domestic transactions fall under PACA’s jurisdiction because most fresh produce is shipped with the expectation of interstate commerce. For example, if you ship from Salinas to Los Angeles, your buyer might redistribute the product out of state, thereby invoking PACA regulations. A 1996 PACA case clarified jurisdiction by ruling that as long as a seller can demonstrate that the commodity in question is regularly moved in interstate commerce and that the buyer’s business involves interstate commerce, PACA can assert jurisdiction.
The PACA Good Delivery Hotline and The DRC Help Desk: Two Key Resources
PACA offers a Good Delivery Hotline (800-495-7222) to help verify if your product meets contract specifications upon arrival. This service is available from 5:00 A.M. to 4:30 P.M. PT, providing guidance on domestic Good Delivery standards and contract compliance.
Similarly, the DRC offers a Help Desk (613-234-0982 x224), with services in English, French, and Spanish. The DRC Help Desk should be your “go-to” resource for timely and informed assistance on a wide range of international produce trade-related matters. This service is available between 4:30 A.M. and 2:00 P.M. PT, or by email at [email protected].
Both PACA and DRC are established to protect and assist you in resolving disputes. Neglecting to take advantage of these services can leave your business exposed. It is in your best interest to make use of the benefits that PACA and DRC offer to ensure your business is well-protected.
For Western Growers’ members, our Commodity & Supply Chain Services Department can assist in processing these types of activities on your behalf. We’re here to help manage contractual issues and ensure you’re fully supported. Don’t hesitate to reach out for assistance by contacting Bryan Nickerson at 949.885.4808 or [email protected].
