Let’s say that a shipper’s produce arrives at contract destination and then the buyer immediately ships out a portion of that load to their customer before requesting a USDA or CFIA inspection. When the federal inspector arrives at the buyer’s facility, they inspect the remaining cartons of produce. How would the Perishable Agricultural Commodities Act (PACA) interpret the results of a USDA inspection secured on less than the entire number of cartons shipped?
The answer is found in precedent PACA decisions or case law which have also been adopted by The Fruit and Vegetable Dispute Resolution Corporation (DRC) as follows: When less than the entire load shipped is not available for inspection purposes, any of those unavailable (missing) cartons would have to be considered as having 0% quality and condition defects. Therefore, when determining a breach of contract, those cartons with 0% defects are averaged with the cartons that were inspected to obtain the accurate quality and condition checksum (totals).
The formula that you can use to determine the blended percentage average for the entire shipment of those cartons present at time of inspection and of those cartons missing are as follows:
- Total checksum (total) defects reflected on USDA or CFIA inspection is multiplied by the number of cartons available at time of inspection and is then divided by the total number of cartons actually shipped. (This will provide you the percent of scoreable defects)
Example: 900 cartons shipped and 500 cartons available at time of inspection, 400 missing cartons.
15% discolored areas
20% checksum (total)
20 (total defects) x 500 cartons available = 10,000
10,000 ÷ 900 cartons shipped = 11.11% calculated percent of scoreable defects
As noted from the above calculation, the 20% on the 500 cartons that were inspected is recalculated downward to the blended average of 11% when considering the 400 missing cartons with 0% and now the entire load meets contract by making Good Arrival Standards or Good Delivery.
The USDA certificate is an unbiased third-party evidence of the condition of the produce at contract destination and is considered prima facie evidence in a potential PACA proceeding, as well as in civil court. Remember, without a USDA or CFIA inspection there is no proof that the produce you shipped has any quality or condition defect. When you review a USDA or CFIA inspection, in addition to reviewing the pulp temperatures, also scrutinize the number of units (cartons or bags) still available at time of the USDA or CFIA inspection. Any shortfall of cartons inspected in order to establish a representative sampling requires the shipper to engage their buyer in a dialogue and make certain they look out for the best interests of their company as well as the fiduciary obligation to their growers.
I encourage Western Growers members to utilize our Trade Practices services to review and help you interpret any USDA or CFIA inspections by reaching out to Bryan Nickerson at 949.885.2392 or firstname.lastname@example.org.
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