Year: 2018

We have fielded some questions lately regarding a broker’s confirmation of sale and the Canadian confirmation of sale form required to import. Are they the same? What are the differences? How do you know when to use which one? This article intends to answer those questions and more.

It is important not to confuse a broker’s Confirmation of Sale, as defined in Section 11 of the DRC Trading Standards https://fvdrc.com/by-laws-and-operating-rules with a Canadian Food Inspection Agency (CFIA) Confirmation of Sale Form (COS Form) required to accompany imports into Canada. Since January 11, 2016, importers had an option to either manually submit a COS Form at time of entry or submit the same information electronically, in advance, through eManifest, the Pre-arrival Review System (PARS) or EDI.  When the new Safe Food for Canadian Regulations come into force on January 15, 2019, the CFIA COS Form will no longer be an option by CFIA.

Conversely, a produce broker, which is not the same as a customs broker, is a person or firm which negotiates transactions between buyer and seller, but is not otherwise a party to the transaction. A true broker is required to issue written or electronic confirmations showing all the contract terms that the buyer and seller have agreed to, as well as the identity of both seller and buyer. This document is often referred to as a “Broker’s Confirmation of Sale”.  These are the main functions a broker must perform:

• Help two or more parties form binding contracts through good faith negotiations;
• Communicate all terms to the parties;
• Create a confirmation of sale, including all essential details of the agreement; and,
• Deliver the confirmation of sale to all parties promptly.

Unless otherwise agreed and confirmed, the broker will be entitled to payment of brokerage fees from the party who hired the broker.

A broker’s confirmation of sale will continue to be a requirement by DRC from members who act as true produce brokers.

You spoke, we listened! Starting this month, we will list the new and terminated members as part of our Solutions blog. Additionally, our active members list updated weekly online will now include inactive members.

If you are selling produce in North America, we encourage you to visit our website on a regular basis to verify your trading partner is an active member in good standing.  In fact, we would recommend taking it a step further and calling our office to find out more.

Welcoming new members *

Canada

2 RAMIREZ IMPORTS LTD, Coquitlam, BC, Canada
2109350 ALBERTA LTD., Edmonton, AB, Canada
BARRIERE RIVER FARMS, Barriere, BC, Canada
BASICX CANADA INC., Etobicoke, ON, Canada
CANAMEX-CARBRA TRANSPORTATION SERVICES INC., Mississauga, ON, Canada
LES SERRES BIOLOGICO INC. (Faisait également affaire sous Sa, Ste-Sophie, QC, Canada
LES SERRES SAGAMI INC., Ste-Sophie, QC, Canada
MARINA EXPORT & IMPORT INC., Markham, ON, Canada
MASTR VEGGIES INC., Leamington, ON, Canada
ME GUSTA IMPORTS INC., London, ON, Canada
RIGHT PRICE PRODUCE LTD., Leduc, AB, Canada
ROCK SALT CANADA INC., Toronto, ON, Canada
ROKAN DISTRIBUTION LTD., Markham, ON, Canada
RT INTERNATIONAL (A d/b/a of 7804334 Canada Inc.), Hamilton, ON, Canada
T. E. PRODUCE IMPORT AND EXPORT LTD., Langley, BC, Canada
VORTEX PRODUCE / VX PRODUCE (A d/b/a of Fernando Ortiz), Toronto, ON, Canada

United States

CSS FARMS, LLC., Pasco, WA, United States
DON HEYL COMPANY, LLC., Sioux Falls, SD, United States
FRUITS TRESS INC., Hidalgo, TX, United States
SALIX FRUITS LLC, Tallahasse, FL, United States
TEX-MEX SALES, LLC., Weslaco, TX, United States

No longer active members*

SAVORY FOODS INC., North York, ON, Canada

*June 1st, 2018 to June 30th, 2018

On June 22, DRC participated in the CPMA SFCR Webinar Series.

The Safe Food for Canadians Regulations will come into effect on January 15, 2019 and while the regulations primarily address important food safety and traceability matters, there is a significant trade and commerce element of particular interest to the produce industry. Canadians who buy, sell or negotiate the sale or purchase of fresh fruits and vegetables inter-provincially, and internationally will be required to be a member in good standing of the Fruit and Vegetable Dispute Resolution Corporation, unless excepted from the regulations. The SFCR repeals the option of a choice between a CFIA Produce Licence and a DRC membership.

The presentation includes details on the requirements and the exceptions as well as information on the DRC initiative to Modernize the Canadian Grade Compendium for Fresh Fruit or Vegetables.

To access the recording click here:

https://www.youtube.com/watch?v=xCNQcZACSoM&feature=youtu.be

 

Imagine the following scenario: “You have been buying one load a week from shipper “X” for the past couple of months. Payment terms with the shipper are 10 days. The last load you received is in deteriorated condition. After claiming damages and salvaging the product your losses are beyond the invoiced price. You decide to deduct your losses from a previous shipment that arrived without issues. The shipper is not happy with that situation and demands payment in full for the uncontested load. What should you do?

It is not an uncommon practice in our industry that a buyer who has received product in deteriorated condition holds payment on previous or future invoices if there is reason to believe the loss is going to be above and beyond the invoiced price. It is a convenient method of settling claims for buyers and sellers. However, the parties are not always in agreement with settling the claim in that manner.

Technically speaking, when a situation like this arises, unless you have an agreement with the shipper or the transportation company, offsets are not allowed. Each transaction is its own contract and each contract must be addressed separately, especially when there is a dispute.

If your losses are beyond the invoice price and the other party refuses to pay, you can initiate a claim through DRC provided that the other party (shipper, transportation company, etc.) is a DRC member.

In this article Jennifer Morris, President of Two Roads Logistics writes about the Electronic Logging Devices requirement that came in effect on December 18, 2017.

What is an ELD?

Electronic Logging Devices (ELDs) synchronize with a vehicle engine to automatically record drive-time, for easier and more accurate Hours of Service recording/reporting. It also helps to streamline sharing and tracking of Hours of Services.

What is the ELD US Mandate?

In 2012, US Congress enacted MAP-21 Bill.  This Bill, which outlines the criteria for highway funding, included a provision requiring FMCSA (Federal Motor Carrier Safety Administration) to develop a rule mandating the use of electronic logging devices (ELDs).  In its simplest form, an ELD is used to electronically record a driver’s Record of Duty Status (RODS), which replaces the paper logbook where some drivers currently report their compliance with Hour of Service requirements. In effect Dec 18, 2017.

What does this look like in Canada?

Transport Canada is committed to balancing the best interests of Canadians and aligning with vehicle regulations in the United States.  By continuing to coordinate the Canadian and US logging device regulations, Canadian companies will be able to use the same logging devices in both countries and this will further support economic growth, trade and shipping between the countries.  Possible implementation has been suggested for late 2019.

Who does/will the rule apply to?

The ELD rule applies to most drivers who are currently required to maintain records of duty (per. part395,49CFR 395.8(a)).  It applies to commercial buses and trucks including Canadian and Mexican drivers in the USA. When Canada implements their mandate, it will be similar to the US standards.

Why is this being done?

The benefits are threefold: (i) ELD creates a safer work environment for drivers; (ii) it provides for more efficient communication between drivers and carrier staff; and, (iii) it facilitates information sharing with the Department of Transportation (US).

Will this affect capacity?

It is likely there will be a learning curve with adapting to the mandate.  This could cause some drivers to move less loads per week/month. This will put stress on capacity.

Will transit times change?

Hours of Service rules have not changed and are not going to change; however, ELDs will track all on-duty statuses.  Including; yard moves, safety checks, traffic issues and wait-times. Transit times will be longer than the currently perceived transit times.

Will rates change?

There is an investment in software and equipment as well as training and additional admin costs.  Also, with drivers closely managing their times at shippers and receivers, wait-time will have costs and consequences.

Author: Jennifer Morris, President, Two Roads Logistics

Stay tuned, in part 2 we will review the Agricultural exemption which addresses the hours of service at shipping point.

Applicants for DRC membership, members, responsibly connected individuals and employees must meet certain conditions in order to become a member and maintain membership in DRC.  When those conditions are not met, applicants and members may be required to post financial security.  Financial security is a sum of money held by DRC (for a defined period of time) as a promise to conduct business in accordance with our rules.  If the member violates a provision of the DRC by-laws and Operating Rules, like failing to pay an arbitration award, DRC may distribute the funds, as provided in the Security Agreement in place between the member and DRC.

DRC sometimes requires financial security for reasons such as: employing an individual who has previously been insolvent; being named in a court order; being expelled from DRC within the last five years; and the list continues.  Additionally, a member who would normally be expelled from DRC membership may avoid expulsion by posting financial security.

There are two types of financial security: (i) applicant / member; and, (ii) employee.  Applicant and member bonds** are required when the applicant or member is responsible for an act that would trigger our bonding policy (i.e. filing a proposal with creditors for cents on the dollar).  In the example, the amount of security required would start at fifty thousand dollars but could increase when considering aggravating and mitigating factors such as, the size of the business, the impact a potential insolvency may have on the industry, the type of operation, prior violations, the reason for seeking financial security, etc.

Members and applicants may also be required to post financial security when they employ an individual who does not meet the membership qualifications as defined in the DRC Operating Rules.  Unlike applicant and member bonds, employee bonds are set at a maximum of twenty-five or fifty thousand dollars, depending on the individual’s violation and their new role at the member company.

If a member has posted financial security, for any reason, and they fail to meet their debts as they come due or suspend the operations of a business with money owing, DRC will use that money to pay other members who submit a proof of claim.  We would caution, please do not extend additional credit based on the assumption a company has a bond posted, and therefore you will get paid either way.  Particularly in the case of an employee bond with a set maximum, it is not likely the financial security will cover all claims if the employer finds themselves in serious financial trouble.

For the list of members with financial security posted, log in to the members only section of our website, click on the “publications” tab and open “DRC Members Who Have Financial Security Posted.”

If you have any questions about our bonding policy please contact our office.

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

** for the purposes of this article, “bond” is used to refer to “financial security”

United Fresh Produce Association’s United FreshMKT

DRC will be exhibiting at the United Fresh Produce Association’s United FreshMKT this June 25-27, in Chicago, IL. Come say hi to Fred Webber, Luc Mougeot and Andrea Bernier at booth #1152.  We’ll be on hand to answer any questions you may have regarding the upcoming regulatory changes coming to Canada and the impacts on Canadians and non-Canadians alike.  Under the new regulations, more Canadian companies than ever will be required to have a DRC membership and we strongly encourage all members to verify that they are buying and selling only with fellow members.

Fred Webber, President & CEO, will be addressing several of the volunteer councils speaking to multiple committees updating them on the regulatory changes occurring in Canada. If you would like to learn more about how those changes may impact you, please contact our office.

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

CPMA Convention and Trade Show – SFCR & Grade Standards

April 24-26, 2018 DRC attended the CPMA Convention and Trade Show in Vancouver, BC.  Thank you to all of our members who stopped by our booth.  It was a pleasure seeing familiar faces and meeting new friends.

We were pleased with the informed discussions and engagement that took place in our booth around the upcoming Safe Food for Canadians Regulations.  Members and non-members a like dropped by to learn more about the trade and commerce aspects of the proposed Regulations and how the changes may affect them and their trading partners.

In addition to the SFCR discussions, there was keen interest in DRC’s latest project: harmonizing the Canadian and US grade standards.  As part of its long term strategic plan, the DRC has always envisioned a time when the Canadian grade standards for fresh fruit and vegetables would be housed within and maintained by the DRC. The passage of the new Safe Food Canadians Act and their soon to be implemented proposed Safe Food for Canadians Regulations present a new opportunity to incorporate the 2009 changes into the standards that are now part of a referenced document entitled Canadian Grade Compendium – Volume 2 Fresh Fruits and Vegetables.

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

Let’s assume that you received product in a deteriorated condition, you requested a federal inspection and the results of the inspection report support a breach of contract. You sell what you can after the product continues to deteriorate quickly but unfortunately there are some cartons left that cannot longer be sold.  If you still have more than 5% of the product left, in accordance with section 9 of the DRC Trading Standards before dumping or donating, make sure you take the following steps:

1. Communicate with your trading partner. Find out if he requires evidence that the product left has no commercial value or if they just need a dumping certificate. If you had a phone conversation with your trading partner, make sure you send a quick email confirming the details of the conversation.
2. If you are not able to reach your trading partner it is your responsibility to show that the product that you will be dumping or donating has no commercial value. Your next step would be to call for a follow-up government inspection which would show the advanced deterioration of the product which would make it no longer marketable. The results of the follow-up government inspection should show that the product no longer has any commercial value.
3. Request a dump/disposal/donation inspection. The CFIA and the USDA inspection services can provide a Notice or Inspection Certificate showing the amount of product dumped or donated in their presence. This document does not confirm the product has no commercial value.

Following the above steps will help avoid a dispute over dumping product received in deteriorated condition and in the event that you are involved in a dispute, these steps will provide the necessary supporting documents for your actions.

Please remember we are here to support and assist our members. Contact the DRC Help Desk with any questions or concerns at:

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

This is the final article in our three-part series “How to Read a CFIA Inspection Certificate”.

This time we will provide a description of the remarks and the certification section.

Generally, the first thing you will notice on the remarks section will be if there were any digital pictures taken or attached to the inspection report, followed by a description of the containers and packaging. It will also indicate what Canadian or US Grade Standard has been used as a reference standard to inspect the load. Different from a USDA inspection report, CFIA inspectors will not indicate if the product fails to meet a grade standard. A CFIA inspector will proceed to detain a load if it fails to meet the minimum Canadian Grade Standard on account of permanent/quality defects.

Next, the inspector will include the applicant’s purchase order (PO) or the invoice number, the lot numbers if available, and any other remarks requested by the applicant. Finally, if a temperature inspection is requested and performed at the same time as a condition inspection, the inspector will use the remarks section to provide details of the load’s pulp temperatures. As mentioned in our first article of this series, transportation information, if available, may be found here.

The last part of the certificate is the “Certification” where you will find if the inspection has been requested for temperature, weight, size, condition, condition and grade, count, or any other type of request from the applicant.

It is very important the applicant requests the proper inspection. Make sure you fill out the request for an inspection form in detail, specifying what you would like the inspector to address in the inspection report.  Communication between the seller and buyer prior to requesting the inspection is recommended.

We hope this series has been informative and useful for you and your team.  If you have any questions, please do not hesitate to contact our DRC Help Desk by email or by phone:

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

Members have nine months from when the dispute arose to file a notice of dispute with us.  Unfortunately, it is not uncommon to receive calls about claims that are beyond the nine-month deadline or are quickly approaching it. Having dealt with thousands of calls over the years, we get it, sometimes things can get away from us, especially if we get busy and most other business is going well.

However, the nine-month limitation of claims must be taken seriously as it prevents you to use any other recourse outside of DRC to resolve your dispute.  DRC Mediation and Arbitration Rules, Article 4,  states, “…the Claim is notified to the Corporation by way of a Notice of Dispute within nine (9) months of when the Claim arose or within nine (9) months of when the claimant ought reasonably to have known of its existence.”

The wording “ought reasonably to have known” is intended to address indirect situations where notice of a problem was not explicitly communicated by one party to another.  An example would be when a cheque is returned for not sufficient funds.

Keep in mind that according to our rules, “Failure to file the claim with the Corporation (DRC) within this time shall be deemed and abandonment of the Claim and prevent recovery against another member.” In other words, you may have lost an opportunity to potentially recover some funds.

Our advice is to flag these accounts at the 6 month mark (or sooner) to prevent you from accidentally getting close to the 9 month deadline.  Give our Help Desk a call, and check the DRC website to verify your buyers and suppliers are active members. To help make it easier for our members to monitor the DRC standing of their trading partners, in the coming months DRC will be publishing changes to membership statuses.