March 26, 2020

WG Addresses PACA Concerns with USDA

On Wednesday, WG President & CEO Dave Puglia sent a letter to Secretary Sonny Perdue requesting that USDA take action to guarantee the payment of all legitimate PACA trust claims, to the extent these claims are not satisfied by the available PACA trust assets. In other words, USDA would cover the difference between what the buyer can pay and the seller is owed. 

Puglia notes that the COVID-19 pandemic has caused severe disruptions in the food and agriculture industry, in particular in the foodservice sector, and many of our members are already facing repeated requests from their buyers for payment extensions beyond the standard 30 days. (WG cautioned its members against waiving their PACA trust rights in Tuesday’s Spotlight edition.)

As our members know, the Perishable Agricultural Commodities Act (PACA) is one of the most important federal regulations protecting growers and shippers. The PACA trust provisions put sellers of fresh and frozen vegetables in a priority status in the event their buyers become insolvent or file for bankruptcy protection. However, the seller currently has little recourse for action if the buyer does not have the PACA trust assets to fully repay their contractual obligations.

The remedy provided in the letter states: “In the event a legitimate claim has gone through the process but remains unsatisfied, USDA would shore up any shortfall of PACA trust assets to meet 100% the amount of qualified receivables that are due to the claimant.”

We will keep our members informed of any USDA response.

Click here the full letter to Secretary Perdue.