The importance of preserving your PACA rights

On Friday, the United Fresh Produce AssociationBB #:145458 sent out a notice to members reminding them to be careful not to waive their rights under the Perishable Agricultural Commodities Act Trust.

PACA allows produce sellers to have priority for repayment of debts in the event of a customer’s bankruptcy, and if a seller extends payment terms beyond the initial payment terms (30 days is the default number), they could forfeit those rights.

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Is this a new rule in the wild economic times of COVID-19? No, PACA hasn’t changed, and it could be more important than ever.

I talked with Doug Nelson from Blue Book’s Trading Assistance group in a video to gather further insight, such as how a produce seller can extend payment terms without risking its PACA trust rights.

The PACA Trust regulations say:
§ 46.46 Statutory trust
(e) Prompt payment and eligibility for trust benefits.
(3) If there is a default in payment as defined in § 46.46(a)(3), the seller, supplier, or agent who has met the eligibility requirements of paragraphs (e)(1) and (2) of this section will not forfeit eligibility under the trust by agreeing in any manner to a schedule for payment of the past due amount or by accepting a partial payment.

What that means to your company is up to you, but it’s critical to know your rights and options.