Michael Jarvis (202) 720-8998Michael.Jarvis@ams.usda.gov
WASHINGTON, Aug. 24, 2010 – The U. S. Department of Agriculture (USDA) will be increasing the annual license fees under the Perishable Agricultural Commodities Act (PACA). The last time USDA raised the PACA license fees was in 1995. Significant cost cutting measures including increased use of automation, consolidation of offices and streamlined operations delayed the need for a fee increase prior to this.
Earlier this year, USDA sought comment from the fruit and vegetable industry and general public regarding this fee increase through notification in the Federal Register. Based on comments received, the PACA fees are being increased to the level necessary to allow the USDA to continue to provide a high level of service to the produce industry. The final rule will increase the base fee for a PACA License from $550 to $995. In addition, the fees charged for companies operating from multiple locations will be raised from $200 for each additional location in excess of nine, to $600 for each additional location starting from the first location. The maximum fee for a PACA licensee will increase from $4,000 to $8,000. The USDA expects this final rule will raise revenue to cover expenditures for the PACA program for another five years. The new PACA licensing fee is effective Oct. 1, 2010.
In general, any business that buys or sells more than 2,000 pounds of fresh or frozen fruits and vegetables in any given day is required to be licensed under the PACA. Wholesalers, processors, truckers, grocery wholesalers and food service firms fit into this category. Retailers are subject to a PACA license once the invoice costs of fresh and frozen fruits and vegetable purchases exceed $230,000 in a calendar year. While the PACA license fees provide the funding to operate the PACA program, the PACA license is the key to ensuring that traders meet their contractual obligations under the law. Fruit and vegetable buyers and sellers must abide by the fair trading practices established by the PACA or face possible suspension or revocation of their license.
USDA’s PACA Branch, which is part of the Agricultural Marketing Service (AMS), assists produce buyers and sellers with approximately 2,000 contract disputes each year. More than 91 percent of these disputes are resolved through a process designed to help the parties reach a prompt resolution of their dispute without the need for protracted legal proceedings. The value of the disputes turned over to the PACA Branch last year totaled $30 million. Additionally, the PACA Branch responds to thousands of requests for information from industry members and enforces the fair trade provisions of the law that prohibit unfair and fraudulent business practices in the produce industry.
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