As springtime approaches and the growing season kicks off, conducting a bit of housekeeping now can be indispensable in protecting your business down the road. Factors to consider include:
- All PACA license information should be up-to-date. This will only take minutes but can prevent a plethora of problems.
- All invoices should contain the exact statutory language required to preserve your rights as a beneficiary of the statutory trust. The exact language is as follows:
“The perishable agricultural commodities listed on this invoice are sold subject to the statutory trust authorized by section 5(c) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499e(c)). The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
- S.C. § 499e(c)(4).
When reviewing your invoices, ensure that you are taking advantage of additional terms for attorney fees and interest at 18% per annum. These additional terms have been embraced as costs owed in connection with a PACA trust claim and are regularly awarded in litigation. Middle Mountain Land & Produce, Inc. Sound Commodities, Inc., 307 F.3d 1220 (9th Cir. 2002). Take a peek at your payment terms as well and confirm that they are within the allowable range under PACA. Under the USDA rules for PACA, prompt payment is ten days after the buyer’s receipt of the produce and cannot exceed 30 days.
It is important that your paperwork is in order to safeguard your rights under PACA to ensure that you can recover in the event litigation is necessary or if the buyer files for bankruptcy.
This article appears in the March 2023 issue of the Ohio Produce Growers & Marketers Association newsletter.