Jimmie Turner (202) 720-8998jimmie.turner@ams.usda.gov
WASHINGTON, July 1, 2010 – The U.S. Department of Agriculture seeks comments on a proposed rule regarding trust protection and post-default payment agreements under the Perishable Agricultural Commodities Act (PACA).
USDA’s Agricultural Marketing Service has issued the proposal in response to concerns raised by the produce industry. 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.
While the regulations clearly define the maximum allowable payment terms of 30 days for pre-transaction agreements, payment terms in post-default agreements are not mentioned. The proposed rule revises the PACA regulations to provide greater direction to the industry on how trust rights may be preserved in post-default situations.
Specifically, if there is a default in payment as defined in the regulations, the amendment would allow a seller, supplier or agent who has met the eligibility requirements to enter into a written scheduled payment agreement of the past due amount while maintaining its trust eligibility.
The proposed rule was published in the June 8, 2010, Federal Register.
Comments, which must be received by August 9, 2010, may be e-mailed to: http://www.regulations.gov.
PACA establishes a code of good business conduct for the produce industry. Under this act, all interstate traders in fresh and frozen fruits and vegetables must be licensed by USDA, which is authorized to suspend or revoke a trader’s license for violating the act.
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