IMPORTANT NOTICE TO CANADIAN MEMBERS: DRC membership does not exempt you from a CFIA Food Licence

The recent coming into force of Canada’s Safe Food for Canadians Regulations (SFCR) by CFIA has generated some calls and confusion about the need for a CFIA Food Licence if you have or are getting a DRC membership. Under the Safe Food for Canadians Act (SFCA) and Safe Food for Canadians Regulations (SFCR), many food businesses require a food licence to carry out activities with respect to food.

The SFCR specifies whether you need a licence based on the activities you conduct, and not based on the type of business.

Canada’s new SFCR has two components: Food Safety & Traceability, and Trade & Commerce.

A DRC Membership is required for buying, selling, conveying produce from one province to another or importing/exporting into/from Canada. This covers the Trade & Commerce components of the SFCR.

So, even if you have a DRC membership you may still need a CFIA Food Licence to cover the Food Safety & Traceability component. We are not experts on who needs a Food Licence and who does not. My CFIA can help you with that. However, as a minimum we can tell you that if you are importing fresh fruits and vegetables into Canada you will need a Food Licence. The CFIA has excellent tools to help you determine if you need a food licence.

If you need any help figuring things out or who to contact, call us at DRC. If we don’t have the answer, we can point you in the right direction.

Timely Request for an Inspection

An inspection report provides key information in establishing details in a dispute. The timeliness of the inspection is also key.

Q: We received a load of avocados and noticed some quality problems upon arrival. We called for a federal inspection and we were advised that no one was available to conduct the inspection either that day or the following day. We immediately advised the shipper of the situation and  asked  if a private inspection would be acceptable due to the circumstances. This was not acceptable to the shipper. We waited for the federal inspection, but we saw an opportunity to sell 30% of the product in the meantime. The results of the federal inspection indicated that the product failed to meet DRC Good Arrival Guidelines. We offered the shipper payment in full for the product not inspected and provided an account of sales for the product that failed to meet Good Arrival. The shipper is requesting payment in full for all product because the inspection was not performed in a timely manner. We don’t think we should be held responsible for failing to get a federal inspection performed in a timely manner when the federal inspection was requested in a timely manner.

A: Jaime Bustamante. This is a situation that commonly happens when product arrives early in the weekend (e.g. Friday evening or Saturday morning). There is no reason not to request a federal inspection over the weekend. Don’t wait until the next available working day to request the inspection. According to DRC’s Trading Standards, when receiving product in deteriorated condition, the receiver’s obligation is to request the inspection within 8 hours when the product arrives by truck or 24 hours when it arrives by rail or sea. However, DRC’s Trading Standards are silent regarding when the inspection must be performed because that is outside the control of the applicant. You were correct in calling the shipper to inquire if they would consent to a private inspection as provided in the DRC Good Inspection Guidelines when a federal inspection is not available. Even when the shipper refuses to agree to a private inspection, we recommend that you call for that private inspection to protect yourself. If the results of the private inspection are similar to the results of the federal inspection taken later, you will have more evidence in your favor when you talk with your client to amicably resolve the matter. It is important to remember that all parties have a responsibility to minimize losses. It is not in anyone’s best interest to leave the entire load unsold for an extended period of time while waiting for a federal inspection. Your offer to pay full price for 30% of the uninspected product is reasonable under these circumstances.

We understand the frustration of sometimes not getting a federal inspection performed within 24 hours, but you should also understand that the shipper cannot be held responsible for this situation either. On an FOB sale, the receiver is responsible for everything that happens to the product after the truck leaves the shipper’s dock, including not having an inspection performed in a timely manner.

Another important factor to determine liability, is the results of the inspection. Product inspected two or three days after arrival that barely fails to meet DRC Good Arrival Guidelines could have met Good Arrival if inspected two or three days earlier upon arrival.

DRC Trading Standards & General Rules of Conduct

We know how tedious it can be to read rules or industry guidelines. Sometimes, a company finds out about a certain rule or change of rule once they have failed to comply with a specific rule or requirement. Over the coming months we will summarize DRC’s Trading Standards through a series of articles based on the Table of Contents – from start to finish. But first, be reminded that DRC’s Trading Standards are the default rules when the terms of a transaction are not agreed upon.

DRC Trading Standards Section 1: General Rules of Conduct. This section establishes the expected behavior from DRC members in connection with any transaction whether your client or supplier is a member or not. This is a summary of the actions prohibited in connection to any transaction:

  • Unfair, unreasonable, discriminatory or deceptive practices are not allowed.
  • Reject or fail to deliver product without reasonable cause.
  • Failure of any carrier or transportation intermediary to pick-up or deliver in accordance with the terms of the contract without reasonable cause.
  • Discard, dump, or destroy product without reasonable cause.
  • Fraud or misleading statements in connection with any transaction. In addition, failing or refusing to truly and correctly account for product or, make full payment promptly.
  • Misrepresentation by any player in the industry regarding grade, quality, quantity, labeling, etc., of any commodity.
  • To issue any payment instrument without sufficient funds to allow that instrument to clear normal banking channels.

The DRC has created a Compliance Desk to attend to any of the above-noted behaviours. Members need to be aware that any one or more of these prohibited and unfair acts may also lead to membership disciplinary actions.

Stay tuned for upcoming Solutions Blog articles where we will be summarizing additional sections of the DRC Trading Standards.

New initiatives to support membership growth

Since the DRC opened for business nearly twenty years ago, members have been primarily North American-based, however, over time, membership has expanded to include 17 countries. Today DRC enjoys an increasing global presence and steps to further expand and grow membership.

A 2018 presence at Fruit Attraction in Spain and upcoming participation in the Canadian Pavilion at Fruit Logistica (Berlin) combined with new and refreshed outreach tools targeting non-Canadian prospective membership are being rolled out. Keeping Trade on Track and a comprehensive Exporting to Canada Q&A are now available. Keeping in mind that the best transactions are those to which both parties are DRC members we encourage you to share the information with non-DRC buyers.

Canadians subject to the Safe Food for Canadians Regulations (SFCR) are required by regulation to hold a DRC membership unless the person is expressly excepted by the regulation. Certain non-resident importers (NRIs) are also required to secure a DRC membership.

In addition to fulfilling a regulatory requirement for those subject to the SFCR, DRC membership is an important risk mitigation tool and provides specialized business-to-business commercial dispute resolution: protection and compliance.

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