The U. S. Department of Agriculture today issued a final rule regarding trust protection and post-default agreements under the Perishable Agricultural Commodities Act (PACA). The final rule, issued by USDA’s Agricultural Marketing Service (AMS), amends the PACA regulations to provide greater direction to the industry on how trust rights may be preserved in post-default situations.
PACA imposes a statutory trust on certain assets of persons or entities subject to the act that have not paid for perishable agricultural commodities. Trust-eligible produce transactions must meet certain criteria under PACA. As a result of the PACA Trust provisions, unpaid sellers have recovered hundreds of millions of dollars that most likely would not otherwise have been collected.
Specifically, under the amendment, if there is a default in payment as defined in the regulations, a seller, supplier or agent who has met the eligibility requirement can accept partial payment or agree to enter into a scheduled payment agreement of the past due amount while maintaining its trust eligibility.
“This rule will help maintain fair trading practices within the fruit and vegetable industry,” said AMS Administrator Rayne Pegg.
The final rule will be published in the April 12, 2011, Federal Register.
PACA establishes a code of good business conduct for the produce industry. The USDA is authorized to suspend or revoke a company’s license for violations of the act. AMS provides oversight of all PACA related actions.
In fiscal year 2010, USDA resolved nearly 2,000 claims, involving $30 million, filed under the PACA.
For further information, contact Phyllis Hall, Director, Trade Practices Section, at (202) 720-6873, by fax at (202) 720-8868, or by email at [email protected] .