PACA Regulations Defends Traders of Agricultural Products

The Perishable Agricultural Products Act (PACA) was enacted at the request of the fruit and vegetable industry to promote fair trade in the industry.

Over the past three years, the Department of Agriculture (USDA) has resolved approximately 3,400 PACA claims involving more than $58 million.

More than 8,500 people received help with problems valued at approximately $151 million.

The Agricultural Marketing Service (AMS) is responsible for administering the law and offers various related services for the agricultural products industry.

One of the main objectives of the PACA program is to ensure that traders of fresh and frozen fruits and vegetables are paid for what they sold, even when their customers close their doors, declare bankruptcy, or simply refuse to pay for the fruits and vegetables received.

PACA Regulations

In order to operate in the agricultural products industry, the Department of Agriculture only requires obtaining the PACA license, although state, provincial and local governments may require other licenses.

PACA prohibits certain types of conduct by buyers and sellers of fruits and vegetables. Examples of unfair business practices include not making full payment immediately for the purchase of products, labeling or incorrect labeling of products, making false or misleading statements in relation to product transactions and hiring people under employment restrictions that they were connected responsibly with a company that violated the law.

Any interested person may submit a written notice of any alleged PACA violation by any commission agent, merchant or intermediary. The AMS PACA Division must receive written notification before initiating an investigation into unfair trade practices.

When a company licensed by PACA fails to pay compensation, the Department of Agriculture (USDA) automatically suspends its license and is prohibited from operating in the agricultural products industry until the compensation is paid in full. While the license is suspended, the company’s officers also have restrictions and cannot be employed or affiliated with any other PACA licensed company without the prior consent of the Secretary of Agriculture.

The affected party can also bring a civil action in a District Court so that the USDA compensation order can be resolved by a court decision. If the judgment is not complied with, the Court may impose more sanctions on the company, which could include an embargo of assets.

For more information about PACA, visit the Department of Agriculture website.