The Perishable Agricultural Commodities Act (PACA) was enacted in the 1930s at the request of fruit and vegetable growers to promote fair trade in the industry. It’s designed to protect business dealings in fresh and frozen products by establishing and enforcing fair business practices and helping resolve disputes. Some examples include: interpretation of inspection certificates, advice on contract disputes, and bankruptcy payments. The Act established a trust fund to compensate farmers in the event of loss of payment and many believe the trust fund entrance requirements do not reflect current purchase practices. Significant concern is the expansion in the types of purchases allowed in the trust fund.
Some farmers have raised concerns about the effectiveness of PACA in regard to recovery of payments from processors when there is a bankruptcy, as well as in modernizing the protections to address current “future payment” terms having very limited protection under PACA.
John Kran | 517-679-5336
MFB: #30 Payment Protection and Security for Growers
AFBF: #224 Marketing Philosophy, #416 Bonding and Bankruptcy, #460 Perishable Products
USDA PACA Website