Recently, I have been receiving telephone inquiries from members seeking guidance in interpreting USDA inspection certificates taken at contract destination. The question and interpretation involves the use of commonly used industry terms such as “Choice” and “U.S. No. 2”.
It is always important that you understand how you describe and sell your produce at shipping point. Are you using a commonly used trade term or a recognized U.S. grade standard? Using bell peppers as an example, did the contract call for you to supply “Choice” or “U.S. No. 2” bell peppers?
If the bell peppers were sold as a “Choice”, you have an obligation to meet good delivery (see previous blog on good delivery) under an FOB no grade contract. Since “Choice” is not defined by the USDA as a recognized grade standard, for transit from the west coast to the east coast, under an FOB no grade contract, the seller would be allowed no more than 15 % condition (not quality) defects at destination, of which not more than 8% could be serious damage, and of that 8% serious, not more than 4% can be decay.
"US No. 2"
Alternatively, if the bell peppers were sold as a U.S. No. 2, you only tabulate the condition factors in the serious column on the USDA inspection when calculating good delivery; therefore you would be allowed 15% serious damage not to exceed 4% decay within the total 15%. To be clear, in the case of U.S. No.2, the normal damage column (non-serious) would not be utilized toward the calculation for good delivery, only the percentages shown in the serious column is what you would consider. It is critical that you inform your buyer under a U.S. No 2 sales contract to inspect to U.S. No. 2 standards, and not the usual U.S. No 1 standards.
Always remember, it is imperative that when negotiating a sales contract, be transparent and disclose to all parties the terms of sale (FOB, no grade, FOB, U.S. No. 2) as in this aforementioned example above. Also, while some commodities have developed industry accepted slang terms, which may have been used for decades in the industry, those slang terms are technically not defined by the USDA. However, most all commodities have U.S. Number 2 grade Standards which are defined by the USDA. If you want to be compliant, know what is defined and what is not.
I am cognizant that the nuances of USDA standards and different sales contract terms can be complex, but that is why Western Growers has this service for members, so please contact me at 949 885-2269 when I can help.