Fresno, Calfornia – In an about-face, Kroger has rescinded their new ’90-Day’ terms policy for PACA Trust fresh produce suppliers set to start on August 1. Produce industry shippers, packers, suppliers and the associations that represent them and relieved. Datatech had reported on the new policy by Kroger two weeks ago, you can read our initial story here.
Datatech had learned from industry analysts that this effort could have been essentially a PACA busting effort on Kroger’s part. They said it may have been the beginning of a troubling trend by other produce buyers to get out from under the Perishable Agricultural Commodities Act established in 1984. PACA gives federal trust protection to produce sellers which essentially gives the industry the protection from buyers that in the event of a buyer’s bankruptcy their debt to the produce seller cannot be discharged.
In a response letter from Kroger to the United States Department of Agriculture PACA Division Director, Judity Wey Rudman, the retailer announced that fresh produce suppliers are not required to take part in the ‘Net 90-Day’ terms program.
Western Growers Senior Executive Vice President Matt McInerney was pleased with the push-back effort’s success, “Western Growers is gratified and appreciative that Kroger, after listening to their suppliers, has agreed to rescind the implementation of the announced 90-day policy. We also want to acknowledge the associations across the country who unified together and provided the business rationale for why the announced policy would not be in the best interest of farmers and sellers of fruits and vegetables. Finally, we want to acknowledge USDA/PACA for taking an active outreach role with Kroger which resulted in the letter rescinding the policy. As we continuously articulated, PACA trust rights are never negotiable.”
In the response letter to Rudman, Kroger stated they were not out to bust PACA, “Our produce suppliers received a letter outlining our recently-modernized payment terms and supply chain finance opportunity. We’ve shared with individual produce suppliers that we will respect existing contractual and legal mandates including PACA. We never intended for PACA-eligible produce suppliers to waive their PACA Trust rights. For those PACA-eligible produce suppliers who are interested, we will continue to negotiate for payment terms that are permitted within their PACA Trust rights.”
So ends an episode that truly had many in the fresh produce growing and shipping industry worried that their rights under PACA were being attacked.
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