Year: 2017

In the produce industry, providing an account of sales is the most common method to claim damages resulting from a breach of contract or product received in deteriorated condition. When a buyer chooses to claim damages and decides to submit an account of sales, it is best to be prepared to submit an itemized account of sales. This means including the date, amount and price for each sale made on the load in question less expenses such as freight, inspection(s), brokerage fee(s) and any additional expenses agreed to by the parties. An itemized account of sales not only shows net returns but helps to demonstrate if the product was moved promptly.

For clarification purposes, an itemized account of sales is only required in connection with consignment transactions. DRC strongly suggests that every buyer/receiver should be prepared to submit an itemized account of sales when claiming damages or when a problem arises.

If an account of sales is not available, be aware that there are other methods to determine fair value of the product. Sometimes this means reducing the invoice value by the percentage of defects on the federal inspection which may or may not be representative of actual losses.

DRC Trading Standards under section 6 indicate that “Sales Tickets/Invoices” shall be filed or stored for a period of two years. In the event that your client challenges the account of sales in an arbitration process, you may be required by the arbitrator to produce the “Sales Tickets”. The sales tickets and expenses should match the information in the itemized account of sales.

The best way to lay out the information is on a spread sheet and should include:

1. Date of receipt and date of each sale,
2. The quantities sold at each price, or other disposition of the produce and,
3. The expenses properly incurred.

For your reference, HERE is a sample template of an Itemized Account of Sales. For any question or clarification about account of sales, please contact the DRC Help Desk:

DRC Help Desk | 613-234-0982 | [email protected]

Luc Mougeot, DRC Vice-President, attended the 20th meeting of the CODEX Committee on Fresh Fruits and Vegetables held in Kampala, Uganda this past October.

DRC participates on the CODEX Committee on Fresh Fruits and Vegetables in order to ensure that standards being proposed or revised are written in a manner that is as consistent as possible with Canadian and U.S. standards. Ensuring consistency helps to minimize the impact on producers when they ship overseas.

“CODEX sets the high level international standards that we are supposed to work towards and look towards implementing when we make domestic revisions,” said Mr. Mougeot.

CODEX Alimentarius Commission is an international standard setting body for everything from health and safety to grade and commodity standards. CODEX standards are utilized by many countries that may not have their own domestic standards. While Canada and the U.S. have national domestic standards, CODEX standards can set the tone for future revisions to Canadian and U.S. standards. The other area they can impact is for shippers sending out of Canada to a country that doesn’t have national standards and that has adopted CODEX standards.

Most CODEX member countries that apply CODEX standards will use those grade standards on import controls. They may use them for domestic control and they may use them for export control for countries such as Canada. Other standard setting bodies include the Organization for Economic Co-operation and Development (OECD) and the United Nations Economic Commission for Europe (UNECE).

Sometimes DRC sees references to Cat 1, Class 1 on contracts without any reference to a standard body such as CODEX, OECD and UNECE. In the absence of recognized grade or reference to grade, we tend to fall back to domestic standards when applying inspections. If both parties have agreed to class and properly referenced appropriate standards, it is important to note that individuals using these categories may face challenges when it comes to an inspection and proving non-domestic standards apply.

“DRC has obtained official observer status with respect to CODEX and, as we move towards potentially taking over grade standards from CFIA, our participation will continue to enrich discussions and standard setting within CODEX,” concluded Mr. Mougeot. CFIA is the head of the official delegation and CFIA’s Kevin Smith is the representative and currently also serves as an ex-officio government representative on the DRC Board of Directors. The next meeting will occur in 2018 (date and location still TBD) and prior to the meeting, Mr. Smith will reach out Canadian industry sectors to establish industry positions on draft standards.

CODEX questions? Please contact the DRC Help Desk:

DRC Help Desk | 613-234-0982 | [email protected]

This three-part series on the importance of destination inspection services has included guest interviews with Tom Oliveri, Director of Trade Practices & Commodity Services at Western Growers and Jim Gordon, Operations Manager at Ippolito Produce. This third instalment provides DRC’s perspective shared by President and CEO, Fred Webber.

One of the most requested services asked of the DRC Trading Assistance Staff is to interpret the results of inspections held to document the quality and condition of produce on arrival. Whether the inquiry is about size, condition, colour, quality, temperature, ripeness or any number of potential issues, it is the inspection held at the buyer’s dock that is the cornerstone of resolving most disputes.

As the seller is hundreds, if not thousands, of miles away they cannot see the product. The seller relies on that inspection to tell them what the product looks like, give them a clear picture of the problem and an indication of what caused it.

The United States and Canada provide a dedicated fruit and vegetable inspection service. Inspectors working for these services receive ongoing training and are held accountable to providing inspections based on consistent terms and sampling procedures. These inspections are backed up by work notes and can be reviewed by supervisory personnel. There are also procedures for appeal inspections when either party believes there has been an error or the samples taken by the inspector do not reflect the real condition of the load.

DRC receives inquiries from firms regarding private (non Government) surveys. While some of these inquiries are specifically about the defects shown on the report, most of the inquiries focus on whether or not the parties agreed to use a private survey in lieu of a government inspection.

We acknowledge there may be good reason to use private companies even when a government inspection is available.  However, the fact that we continue to receive calls objecting to private surveys is evidence that a better understanding of responsibilities is needed.

A party claiming an agreement to use an alternate service was established has the burden of proving such an agreement was reached. We frequently advise members that this means it was discussed, understood, and agreed (DUA) that a private survey would be called rather than a government one.

From DRC’s perspective, private surveys, like internal quality control reports, are often used by firms who deal regularly and have established a trust relationship. For those firms trading infrequently, especially if it is a first time transaction, we rarely see that an “agreement” was reached before a private survey was requested or performed. If the use of a private survey was not discussed, understood, and agreed to, the survey may be of no value.

In the US and Canada a federal inspection is the default requirement and the DRC Good Inspection Guidelines specify that these Federal Inspection services are to be used unless they are not available.  

You’ve just become a new member of DRC and you’re sitting there pondering your obligations and wondering what responsibilities you now have to shoulder. Well let us help you with that. Here are the two most important things to note:

1. You must follow DRC Trading Standards and DRC Transportation standards unless you have mutually agreed upon other terms.
2. See number one (and read on to learn where to find them).

How do you ensure you are following DRC Trading Standards and Transportation Standards? Well, you may recall receiving a handy By-Laws and Operating Rules manual that outlines your obligations and responsibilities. The standards are also available for your convenience online under section 4 of our bylaws and operating rules at: https://fvdrc.com/by-laws-and-operating-rules/.

A lot of people come to us not understanding that DRC membership provides rights and responsibilities to which you are bound and by which you must abide. Among those responsibilities are a set of default trading standards and guidelines. You can make a deal with your trading partner but when a problem occurs certain standards apply, for example:

• When a load arrives you have a responsibility to report a problem in a timely manner (see our previous post on timely notice of a problem) and then either accept the shipment or make a proper rejection
• You must know when to call for an inspection
• There are specifics  around accounting for distressed or consigned product

Understanding when there is a problem and dealing with it in the right way is key. Failure to act on these issues when they arise will most likely result in lost money and equally important, the potential loss of a good relationship with your client/supplier. Not notifying the shipper of a problem, not getting an inspection, and not doing your accounting properly, are just a few examples of not following proper procedure and may impact your ability to claim damages.

As an FOB shipper, your main responsibility is to ship product in suitable shipping condition. You must assure that at shipping point the product is loaded in such a way that it will meet the mutually agreed upon quality and condition requirements or DRC Good Arrival Guidelines at destination, assuming transit time and temperatures are normal.

As a transportation company, you have to ensure you pick up the product in a timely manner, that the truck is in sound condition, and that transit time and temperatures are followed according to the contract (BOL), among other responsibilities.

One of the benefits of DRC membership is that you can call the DRC Help Desk with any questions. Our team is here to assist you and our services are available in English, French and Spanish. Prior to a transaction, we can help you do your due diligence and understanding contract terms. During or after a transaction, DRC can help with inspections, reporting damages, proper accounting or any other questions you may have.

For more information please call or email the DRC Help Desk at:

DRC Help Desk | 613-234-0982 | [email protected]

We were recently contacted by a grower/shipper who sold blueberries to a buyer in North America on an FOB basis. The grower/shipper claimed that pulp temperatures at loading were fine and the driver signed the BOL clean. When the load arrived at destination, the buyer reported that the product was not in good condition and was pulping warm. A federal inspection was requested and confirmed the blueberries were warm and the product did not make good arrival according to DRC Trading standards. The transportation company did not accept the claim arguing the product was loaded warm and the grower/shipper wanted our advice.

In order to evaluate the file and help the parties involved in the transaction determine liability, our Trading Assistance Help Desk requested the following information: Bill of lading (BOL), loading checklist, the temperature recorder readout, the reefer unit download and the federal inspection:

1. BOL: The BOL showed the temperature to be maintain during transit was 33F on continuous mode and pulp temperatures at loading were 34F. It also showed the driver signed the BOL without any notations.
2. Loading checklist: In this particular case, a loading checklist was available and it showed that the driver of the truck signed the loading checklist which indicated pulp temperatures were between 33F-34F.
3. The temperature recorder readout: This document showed that the product was subject to warmer than desired temperatures during the trip.
4. Reefer unit download: The reefer download indicated the reefer was set at 33F continuous and the truck was properly precooled. However, after a few hours in route, a big discrepancy between the supply air column and the return air column started to show. The supply air column indicated the discharged air temperatures ranged from 11°F to 58° The return air column remained constantly close to 36F which was unusual.
5. Federal inspection: A federal inspection was requested in a timely manner and the report indicated that in fact pulp temperatures were above normal range (temp) and the product was received in deteriorated condition.

Taking into consideration the above information submitted, we were able to assist our member in establishing that based on the evidence this was a transportation claim. The evidence pointed towards product being loaded at the right temperature with undesirable temperatures developing during transit. The inspection confirmed warmer than desired temperatures upon arrival and high percentage of deterioration on the product.  In addition, the temperature discrepancy in the reefer unit download’s supply air column suggested that there could have been a problem with the reefer unit or improper circulation in the trailer.

It is the parties’ responsibility to follow certain procedures to protect themselves when shipping, hauling, or receiving product. Documenting and maintaining the cold chain is one of the most important parts of the transaction.

Regarding temperatures, the following is a brief summary of the responsibilities each party has in a transaction.

On an FOB transaction the shipper is responsible for maintaining accurate records on how the product was handled prior to loading and during loading of the truck. The shipper needs to make sure to document all temperature instructions and location of the temperature recording devices. The shipper should also check that the reefer unit is set at the correct temperature and mode (continuous or stop/start).

The responsibilities of the receiver include: pulp the product upon arrival prior to unloading the truck and, if there was an indication of undesirable temperatures, collect temperature recorders and document where the recording devices were found. The receiver must also indicate on the BOL(s) the reasons for receiving the product under protest and request the reefer unit’s download. Finally, if the shipper places one or more temperature recording devices on the load, and no recorders are found upon arrival, the receiver must document the missing recorder(s) on arrival, and must resolve the issue with the carrier.

As a carrier, your responsibilities include ensuring you have and follow all the information, instructions and requirements provided by the shipper/receiver. The driver should be allowed to pulp temperatures before loading the truck. If the driver cannot verify pulp temperatures, the receiver should be contacted for instructions.

The driver must comply with all temperature instructions and document the location of temperature recording devices as well as verify that the load count matches the manifest. If the count cannot be verified, the original BOL should be marked “shippers load and count.” Ensure that the driver sets the reefer unit at the correct temperature and mode according to the BOL. If there are discrepancies between instructions to the carrier and the BOL regarding temperature setting, on an FOB transaction contact the buyer, on a “Delivered” transaction contact the seller.

Do you have a question you would like to see answered in our next Solutions Blog? Email the Help Desk with the subject line Q and A’s: [email protected]

A friendly reminder that annual invoices will be mailed, emailed and/or faxed to most members on November 15th.

Should there be any changes to your company or responsibly connected parties please call us as soon as possible or request an update to your records in the members-only portal online. The web portal can be accessed at: mywww.fvdrc.com.

Please note some members may have a different invoicing date depending on when they joined DRC. A quick check of your records online will confirm your invoice anniversary date. Please also review that all company info is accurate and up to date.

For more information please call or email the DRC Help Desk at:

DRC Help Desk | 613-234-0982 | [email protected]

DRC offers benefits to members including education, mediation, arbitration and networking. We help DRC members resolve disputes in a fast and fair manner. While many Canadian  firms will be required to be members under the current and the proposed Safe Food for Canadians Regulations (SFCR), anyone buying or selling produce in, from or into the North American marketplace can be a member with the same rights and responsibilities.

Help us spread the word about the services DRC provides. We are asking our members to be DRC ambassadors and encourage you to ask your trading partners to also become DRC members. Get the most of your membership and be sure you and your trading partners are playing by the same rules. If you are dealing with a non-member, we may be limited in the assistance we can provide in the case of a dispute.

Produce is traded all over the world; do your part to help ensure we are all dealing with the same rule book. Become a DRC Ambassador today. It’s simple, all you have to do is ask your trading partners to join DRC.

Need to find out more about the benefits we offer? Visit our website or call the DRC Help Desk for more information.

DRC Help Desk | 613-234-0982 | [email protected]

DRC had the pleasure of chatting with Jim Gordon from Ippolito Produce Ltd. located at the Ontario Food Terminal to get a Canadian perspective on federal inspections.

Mr. Gordon has been in the industry for about 45 years, spending approximately half that time in a wholesale environment in operations management at the food terminal. The other half was spent working for retail chains in merchandising and marketing of produce. Mr. Gordon is currently with Ippolito Produce Ltd. at the Ontario Food Terminal a food terminal wholesaler and is the Manager of Operations responsible for selling and everything that happens on the floor, how customers are treated, product coming into and out of the terminal and all the administration with the employees.

Mr. Gordon began with an overview of past issues that led to today’s landscape. He noted that it is important to understand that prior to the Destination Inspection Service  (DIS) coming into being, the inspection service provided by CFIA was deemed lacking from an industry perspective.

“The preface is that destination inspections are there to facilitate trade and assist in dispute management between shippers and receivers across international boundaries. Having a credible and valid inspection service was critical for the industry to continue with international trade, specifically across the Canada/U.S. border. The state of the inspection service at that time was not assisting either shippers or receivers in dealing with their disputes and then settling their disagreements,” noted Mr. Gordon.

Industry came together to explore alternative options for providing a timely and credible inspection service that would facilitate this kind of activity. Industry representatives from Canada, the U.S., Mexico and more were involved. One message that was loud and clear was the desire for the involvement of the Canadian Government under the purview of the Canadian Food Inspection Agency (CFIA). Many models were explored at the time with industry and government landing on developing a business-like service model providing timely and credible inspection service to facilitate dispute resolution for international trade. The Destination Inspection Service (DIS) was born. “Here we are all these years later and it’s working quite well,” stated Mr. Gordon. “We’re hearing that from both sides of the industry and from both sides of the border and that’s a good thing,” he continued.

“When industry started talking with CFIA and building the model it needed to be a cost recovery model. The industry needed to pay the expense to run the model within the Agency,” he noted. As rates went up to assure cost recovery, Mr. Gordon noted that they did see numbers of inspections going down which was financially detrimental to the new model.

“CFIA has been very good in continuing to fund the DIS model and keep it going. As we started to analyze where the inspections were being driven to, we found that the higher costs caused industry to look at other alternatives,” continued Mr. Gordon. A number of inspections were driven to private services. In longer term relationships where there was an element of trust involved, companies were relying on in-house inspections. Many of the inspectors on the Canadian side of the border were being trained by the Ontario Produce Marketing Association (OPMA) in proper inspection of goods, proper documentation of the inspection and how to determine the numbers and terms that are generally used in the industry so that all would understand what reports were stating.

“A number of trading relationships thought the increased expense was too great in many cases and they started accepting in-house inspections,” stated Mr. Gordon. “I think over the course of time it actually improved many trading relationships. It had an affect we didn’t expect to see,” he continued. Mr. Gordon stated that this change continues to be felt today as numbers of inspections done by DIS today are down from numbers in the first few years of their existence.

When a contract is agreed to between two parties, condition of goods is part of that contract. If there is no specific grade spoken to in the contract of sale, the expectation is, on arrival at the destination site, the goods will meet good delivery standards. In the receiver’s mind if those goods fail to meet good delivery, there’s a dispute mechanism that goes into place in determining if they fail and, if so, to what degree the goods fail delivery standards. A third party inspection is a critical element in making that determination.

“An unbiased third party is important. If an inspector is working for the shipper or for the receiver they are going to lean one way or the other,” stated Mr. Gordon. “In the case of DIS they are totally non-biased and do not work for either party. They are purely looking at the goods and whether or not they meet the delivery standard,” he continued. This results in a determination as to whether or not the receiver is paying in full or whether there is some sort of arrangement made between the two parties.

Mr. Gordon believes that government provided inspectors have a level of training and additional support such as online databases, online support, and access to other resources, be it printed or human resources that would be hard to match by private inspection service providers. “Private inspectors likely don’t have the same level of resources available to them,” said Mr. Gordon. Impartiality, not working for one side or the other, is another advantage to federal inspections as well as appeal mechanism that are in place with federal inspections.

“On the terminal, the use of federal inspections by larger wholesalers is usually on those transactions when they don’t have long term relationships,” he continued. “The shipper seeing the product in good condition with their own eyes while loading the truck is likely going to want some evidence if there are claimed issues at arrival,” concluded Mr. Gordon.

DUA is an acronym you’ll want to remember. It is good business practice to ensure DUA is applied to all details and transactions in any agreement or use of non-federal inspections. If you are unclear on the details or terms, in the case that something goes wrong during a transaction, you may have agreed to something that might limit your rights. Remember a little DUA goes a long way in preventing unanticipated consequences. Be sure to add DUA protocols to your dealings:

1. Discussed: Talk through all the details of the transaction with the other party. Take written notes to capture your discussions.
2. Understood: Be aware of the intended meaning of all the specifics and terms of the transaction. Ask a lot of questions if you are not clear on the meaning of a term.
3. Agreed: Both parties need to accept the terms of the transaction, any changes, inspections, etc.

You should ensure DUA applies on any and all agreements. It is crucial when there are unusual trade terms or varying trade standards being used. One should be particularly diligent with transactions outside of North America, where term acronyms may mean very different things. Any and all unusual agreements such as private inspections and restrictive contract terms like FOBAF (Acceptance Final) need to be Discussed, Understood & Agreed Upon.

When in doubt, DUA.

For more information please call or email the DRC Help Desk at:
DRC Help Desk | 613-234-0982 | [email protected]

A friendly reminder that it’s that time of year, membership invoices will be sent out on November 15th. Please ensure your DRC records are accurate and up to date. To do so in advance or anytime you have changes, please go to our new members-only web portal: mywww.fvdrc.com.

Our new members-only area allows you to search our directory, view and request updates to your account information online. You should have already received an e-mail with your username and temporary password. If you have not received this information please contact the DRC Help Desk for assistance.

Please note some members may have a different invoicing date depending on when they joined DRC. A quick check of your records online will confirm your invoice anniversary date and that all company info is accurate and up to date. Please remember to advise us as soon as possible should there be any changes to your principles.

For more information please call or email the DRC Help Desk at:

DRC Help Desk | 613-234-0982 | [email protected]