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PACA, the First Line of Defense for the Produce Industry

In business, it’s important to trust . . . but also to verify.  Whether you want to buy or sell U.S. produce, it can sometimes be tricky deciding who to deal with and verifying their credentials. When it comes time to make a move, The U.S. Department of Agriculture’s Perishable Agricultural Commodities Act (PACA) division can help.

PACA facilitates fair trading practices in the marketing of fresh and frozen fruits and vegetables in interstate and foreign commerce thereby ensuring that dealers get what they pay for and also get paid for what they sell—even if customers go out of business, declare bankruptcy, or refuse to pay for produce received.

More than 14,500 trading firms and individuals licensed by USDA rely on the PACA division’s services and protection to efficiently operate their businesses.  Each year, the division receives about 1900 calls requesting help with problems unique to the industry such as interpretation of inspection certificates, advice on contract disputes and bankruptcy payments.  While small farmers who produce and sell their own fruits and vegetables are exempt from the law, they too can use PACA to resolve disputes or file formal complaints at minimal costs, potentially saving themselves thousands of dollars in legal fees.  USDA resolved nearly 2,000 PACA claims, involving $30 million, last year (FY 2010).

Companies applying for a PACA license are subjected to a thorough review process.  USDA investigates to determine if any individuals working for the company have had legal or financial problems in the past or have been subject to previous PACA complaints.

Two years ago there were about 90 disputed formal reparation cases (over $2.6 million in claims) sometimes waiting 18 months for legal clearance.  In August 2011, USDA dedicated three attorneys to handle PACA casework, greatly reducing processing times.  As a result of changes made to the workflow the backlog has nearly been eliminated.  Now, those prevailing in these cases can expect timely decisions on an order.

Confidence in business transactions—in both buying and selling—is crucial to any business.  USDA’s Agricultural Marketing Service (AMS) and the PACA division are committed to helping the produce industry build that trust and defend your businesses.

Visit PACA online or call the PACA national license center at 1-800-495-7222.  AMS publishes all PACA violations online on our news page or you can subscribe to email notifications, RSS feeds, or follow us on Twitter @USDA_AMS.

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