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December 9, 2020

Top 6 USDA Inspection Clues

A USDA Inspection Certificate is the primary document that certifies the quality and condition of the produce shipped and will definitively establish either compliance or a breach of contract. The USDA certificate is an unbiased third party governmental official determination of the produce at contract destination and is considered prima facie evidence in a potential PACA proceeding, as well as in civil court. Below are the top 6 clues to look out for when reviewing a USDA Inspection Certificate:

Clue #1

Look for the refrigerated trailer still being loaded or the warehouse designation of where the produce item has been inspected. For instance, the USDA inspection states whether or not the product is currently on the refrigerated trailer as ‘LOADED’ or has been ‘UNLOADED’, which will help you determine if the product has therefore accepted by the customer. The inspection will also record the trailer license number or provide a lot ID number. If identified by a lot ID number there is a good chance the truck has already been released by the buyer, therefore, constituting acceptance of the product. In this case the buyer no longer has the right to reject the shipment. However, the buyer may still have a right to claim a breach of contract.

Clue #2

The USDA inspection will reflect when requested by the applicant and will also indicate when the inspection was started and completed. These start and end times are critical in determining whether an inspection was secured in a timely manner.

Clue #3

The inspection certificate will also indicate the physical location (City and State) where the inspection was actually performed. If the physical location reflected on the USDA certificate is different from the negotiated and agreed upon contract destination, then the shipment has been diverted in-transit without your consent. Diversion constitutes acceptance meaning that the buyer has given up its right to reject the product. The buyer may still have a right to claim a breach of contract dependent on several criteria.

Clue #4

Another clue given on the USDA inspection certificate is the number of units (cartons or bags) still available at time of inspection. As a shipper, you should always review that inspection certificate for the number of units (cartons or bags) reported by the USDA versus the actual number shipped. This information is particularly important when calculating PACA Good Delivery and determining if your produce met contract specifications under the terms of the sales contract upon arrival.

Clue #5

Another important piece of information given by the USDA inspector is the description of the brand/label on the master shipping container. The USDA inspector will report the brand/label as well as any other pertinent information on the master shipping container. Always make sure that the brand/label and any lot identification being reported coincide with what you actually shipped.

Clue #6

Finally, the pulp temperatures are very critical to impacting condition defects. The reported pulp temperatures will impact condition defects and therefore your compliance with the sales contract. If temperatures are higher than requested on the bill of lading, it may provide you the best evidence as to how your produce was transported or handled at destination. Remember that just because a USDA inspection reflects that the produce “fails to grade U.S. No. 1 account of condition” does not mean that the shipper breached the contract, as most sales are negotiated as an FOB no-grade contract. The terms of sale (FOB or Delivered) will determine fulfillment of the contract, not simply the inspection certificate statement about meeting or failing U.S. No. 1.

By becoming familiar with these clues and the other various components that make up a USDA inspection certificate, it will be instrumental in determining compliance of your product with the negotiated sales contract.

Western Growers regular members can utilize my services to review and help interpret federal inspections by emailing me at [email protected] or calling me direct at (949) 885-2392.