Perishable Agricultural Commodities Act
The Perishable Agricultural Commodities Act (PACA) is a federal law that regulates the produce industry and is enforced by the United State Department of Agriculture (USDA) through the PACA Branch, which has four main areas that govern fair dealing between produce buyers and sellers:
Licensing: Anyone who buys or sells large quantities of perishable produce must have a PACA license to operate.
The Trust: When a supplier sells to a buyer, the supplier becomes eligible to participate in the PACA trust. The trust provisions put sellers of fruits and vegetables in a priority status, ensuring they receive payment from the proceeds of their produce before any other creditor if statutory notice requirements are followed.
Contract Dispute Resolution: PACA provides a forum for buyers and sellers to settle commercial disputes outside of the civil court system. USDA handles disputes in two stages. Initially, there are informal proceedings which attempt to settle the case. If no settlement is achieved, formal proceedings may be initiated. Private civil enforcement is also another useful remedy.
Enforcement: PACA prohibits certain types of conduct by buyers and sellers. Prohibited conduct may include but is not limited to, failing to make prompt full payments for purchases, misbranding or mislabeling of produce, or making false and/or misleading statements in connection with produce transactions. Upon receiving notice of prohibited conduct, the PACA Branch can initiate an investigation of unfair trade practices. If a company is found to have violated the rules it can be fined or have its license suspended or revoked.
KSC attorneys are well equipped to meet the needs of clients in matters concerning PACA. Our team assists growers and distributors on various PACA issues including licensing procedures, drafting and negotiating contracts, contract dispute resolutions, trust enforcements, resolution of produce sales disputes, and defense of PACA disciplinary actions before the USDA.
KSC draws upon its collective agribusiness experience and legal expertise to deliver practical and result-oriented solutions. We understand the impact PACA can have on local famers and are committed to advising and advocating for our clients. We have decades of experience and the resources to effectively address the needs of the industry.