Month: December 2018

A DRC membership is far more than good business and, in a few weeks, it becomes a regulatory requirement for anyone subject to the Safe Food for Canadians Regulations (SFCR).

Here are some important reminders:

When it comes to the SFCR, there are two important distinctions:

1. requirements related to food safety and traceability; and,
2. requirements related to trade and commerce.

Although much of the detail in the regulations concerns food safety and traceability, there is a very important trade and commerce requirement for buyers and sellers of fresh fruits and vegetables: Canadian buyers and sellers of fresh fruits and vegetables must be members of the Fruit and Vegetable Dispute Resolution Corporation (DRC), unless excepted. In other words, if you are subject to the requirement a DRC membership is your authority to trade produce.

While a DRC membership fulfills the SFCR regulatory requirement that provides authority to buy, sell or negotiate the sale or purchase of fruits and vegetables inter-provincially, intra-provincially and internationally, there is much more to it than that.

A DRC membership has always been a wise business decision, especially when it comes to risk management. Your DRC membership gives you an avenue to seek advice, interpret business and claims documents, mediate with your trading partner, and when necessary get a binding decision on a dispute that simply can’t be resolved informally. As a risk management tool it is important your trading partners be DRC members as well. Their membership ensures a common set of rules are in place when disputes occur. It also allows us to have done a background check and monitor any other issues which may be occurring. If they are avoiding the DRC membership, should you be asking yourself why?

Regardless of where you are buying or selling your produce, your best protection as a buyer or seller is a DRC membership, especially when both parties are members.

Canadian retailers are reminded to carefully consider and evaluate the regulatory requirement to hold a DRC membership. Under the SFCR, which comes into effect on January 15, 2019, it is prohibited for a person to

(a) sell any fresh fruits or vegetables that are to be exported or sent or conveyed from one province to another;

(b) purchase or negotiate the purchase on another person’s behalf of any fresh fruits or vegetables that are to be imported or sent or conveyed from one province to another;

(c) receive any fresh fruits or vegetables that have been imported or sent or conveyed from one province to another; or

(d) send or convey from one province to another or import or export any fresh fruits or vegetables.

There are exceptions to these prohibitions, some of which are noted below:

• any person who is a member in good standing of the Fruit and Vegetable Dispute Resolution Corporation
• a person who only sells fresh fruits or vegetables directly to consumers if that person paid less than $100,000 for the fresh fruits and vegetables that they sold to consumers within the previous 12 months

A number of retailer operations that have not been subject to the current requirement to hold either a CFIA Produce Licence or a DRC membership as authority to buy and sell fruit and vegetables will now be required to be a member of the DRC.

The requirement will be of particular interest to independent retail operations as well as a number of franchise operators.

To learn more, check out the DRC’s self-assessment for Retail

You may already be a Non-Resident Importer (NRI) shipping to Canada, thinking about becoming an NRI if you are shipping to Canada, or perhaps your customer wants you to be the importer of record for shipments going to them in Canada. No matter the circumstance, it is important to know that on January 15, 2019 the new Safe Food for Canadians Regulations (SFCR) come into effect and will impact the way NRIs currently export to Canada.

What does this mean from a DRC and SFCR perspective?

CFIA defines a non-resident importer as a person importing food into Canada whose fixed place of business is in a country other than Canada. Effective January 15, 2019 in order to be an NRI for fresh fruits and vegetables, CFIA will apply four main conditions when considering NRI status:

1. Food Safety: To be eligible to obtain a licence as an NRI under the SFCR, the NRI’s fixed place of business must be in a country that the CFIA has recognized as having a food safety system that provides at least the same level of protection as that of Canada’s. Currently, this includes commodities covered by USDA and CFIA Food Safety Systems Recognition (FSSR) Arrangement. As more food safety systems are evaluated, more countries may be added in the future.
2. Port of Entry (United States): Product must enter Canada directly through the US. In other words, the product must land and clear US customs before it can move into Canada. You cannot be a US NRI and ship the product from another country straight into Canada.
3. DRC Membership:  A DRC Membership is required for NRIs shipping fresh produce into Canada as the SFCR requires that anybody importing or moving fresh fruits and vegetables across provincial and/or international borders must be a DRC member in good standing. It is important to keep in mind that a SFCR licence and a DRC membership do not have the same intent. A SFCR licence intends to identify businesses and authorize those businesses to carry out licensable activities such as NRI. A DRC membership requires fair and ethical trading practices by minimizing trade irritants and facilitating effective trade dispute resolution.
4. CFIA Licence: Obtain a licence as an NRI from CFIA. To do so, set up a myCFIA account and complete the application for a license. We strongly recommend doing so prior to the January 15, 2019 implementation date in order to avoid any delays.

As always, if you still need help or want to explore other scenarios, please give us a call (+1 613-234-0982) or drop us a line at [email protected].

To view this information as a pdf file follow this link:  https://t8t979.p3cdn2.secureserver.net/wp-content/uploads/2018/12/DRC-SFCR-and-NRI-2019-January-1.pdf

DRC is a membership based organization whose core work is “business-to-business private commercial dispute resolution” between members and, if applicable, between a member and a non-member.  DRC’s jurisdiction to help parties resolve a dispute is automatic if both parties were members at the time of transaction.  If one or both were not a member when the dispute arose, it may be more difficult to DRC to assist you.  Simply put, as a DRC member, always make sure you deal only with other DRC members, so your access to fast, affordable dispute resolution services is not compromised.

DRC can resolve domestic (intra or interprovincial) disputes provided the companies are within Canada,           the United States or Mexico. In addition, DRC will resolve international disputes provided the dispute arises in relation to a transaction that has entered into commerce in Canada, the United States or Mexico.

DRC attempts to help its members regardless of whether the dispute is with another DRC member or a non-member. However, in disputes between a member and a non-member, an arbitration clause or a voluntary arbitration agreement is needed to be able to use DRC’s Dispute Resolution Rules as an effective and efficient alternative to the courts. That said, DRC’s recourse is limited when you deal with a non-member, therefore we strongly recommend you encourage your trading partners to join in order to avoid being left without recourse through DRC.

Disputes must be brought to DRC within nine (9) months from the date on which the dispute arose. Unresolved disputes that fall outside of nine months will be deemed to have been abandoned.

When a company has decided to join DRC, through their membership application process, it is important that the applicant lets DRC membership staff know if they have an ongoing or previous dispute. We want to make sure you join for the right reasons and not under the impression that our rules are retroactive. However, if you are involved in a straight no-pay with one of our members, you can report that matter to our Trading Assistance Office, and that issue will be investigated.