Author: DRC

DRC’s membership is representative of the entire fruit and vegetable supply chain:

Distributor, Wholesaler                40%

Grower, Shipper                           32%

Broker                                            7%

Retailer                                          7%

Processor                                       6%

Transportation                                4%

Foodservice                                    2%

Commission Merchant                    2%

DRC global presence continues to grow: 17 countries and counting!

More than good business!

The decision to become a DRC member is a good business decision and an essential risk management tool. In fact, for Canadians subject to the Safe Food for Canadians Regulations, a DRC membership is far more than good business – it‘s the law.

Exporting to Canada?

Do you know someone who is, or is planning to export produce to Canada? DRC has developed a comprehensive Q&A for exporters designed at helping them navigate the Canadian marketplace.  A key piece of doing business with any Canadian is DRC membership.  In order to have access to DRC Trading Assistance, both parties must be members at the time of transaction.

Since DRC’s establishment as a North American business-to-business commercial dispute resolution body in 1999, DRC’s marketing efforts have been focused on participating in a range of industry-related events, trade shows and conventions in Canada, USA and Mexico. DRC is also promoting our suite of services in Central and South America by participating in webinars and seminars where we were invited by the countries’ Trade Offices or other organizations. As a result, membership in these areas has increased.

In recent years, DRC’s membership in Europe has expanded based on the offshore business with current DRC members. At the July 2018 Board of Directors meeting consideration was given to initiating DRC outreach in Europe. Jaime Bustamante, Trading Assistance Manager, recently attended Fruit Attraction in Madrid, Spain where he had the opportunity to meet with several companies who export to North America as well as a number of current European DRC members. He was impressed by the quality of the trade show and attendance as well as interest in DRC and its services.

This was DRC’s first visit to Europe as DRC looks to add further value for existing members as they trade with European firms. Look for us in the Canadian Pavilion at Fruit Logistica in February 2019 as we continue to explore and evaluate the opportunities for DRC and its membership.

Under the new Safe Food for Canadians Regulations, which come into force on January 15, 2019, most Canadian DRC members will need, as a minimum, a CFIA Food Safety Import and/or Export Licence. The most efficient way to get your Food Safety Licence is to create a My CFIA account.

The My CFIA service will deliver and coordinate the full range of operational administrative services required for domestic and imported food related to SFCR licensing. The process for creating an account and business profile is detailed and CFIA will require corporate type information such as articles of incorporation that someone in your QA/QC departments might not have at their fingertips.  You can find the list of required information on the CFIA website. As a result, we recommend having corporate records available beforehand and anticipate that it may take more time than you had planned to register.  Do not leave it to the last minute.

Although a licence cannot be ordered until January 15, members should create their My CFIA account now to avoid any technical issues or delays due to excessive traffic that could arise on the My CFIA website closer to the effective date. In a nutshell, setup your My CFIA account now, then come January 15^th login and add the licences you need to your CFIA account.

Some links of interest from the CFIA website:

• My CFIA enrollment
• The proposed regulations

The DRC Help Desk often receives calls from shippers asking if they can have the product back after the buyer has expressed discontent over its quality or condition upon arrival.  The simple answer to this question is no.

There is a very close relationship between risk, control, and title which is discussed further below.

Delivered* (destination transfer of risk)

On a Delivered transaction, the shipper maintains control of the product until arrival at final destination.   Prior to delivery, a call to the transportation company to have the product returned or redirected to an alternate receiver could be made. The risk of taking either of these actions without reasonable cause, is that the buyer may claim damages including the purchase of replacement product because the shipper did not fulfill the contract. However, once the buyer accepts the load, they are under no obligation to give it back.

FOB* (shipping point transfer of risk)

On an FOB transaction, the shipper loses control over the product and transit risk transfers to the buyer when the buyer’s transportation company picks up the load at the named origin and starts conveyance to the final destination. Therefore, the only ways the shipper can have the product back is if the buyer agrees to give it back or if the buyer rejects and follows the proper procedures to reject the load. Section 10 – Dealers Duties – of the DRC Trading Standards details the procedure to reject the load as long as the buyer has not committed an act of acceptance as indicated in Section 19.1.    it is important to note that the buyer, having assumed the transit risk at shipping point, may not make a proper rejection unless transit time and temperatures are normal.

*We have used the North American contract terms, not ICC Incoterms for this explanation.

Few things in the produce business stay the same. People, products, terms, and technology change constantly. During my 35-year career, one thing has stayed the same, though, and I call it the Silly Season.

As the holidays approach in North America, new faces appear in our industry anxious to capitalize on the demand for fresh fruits and vegetables. Most, of course, are legitimate people who see an opportunity to start and grow a business. Others, however, seek only to secure product, sell it quickly and then disappear as quickly as they arrived. Everyone is extra busy during the holiday season and these individuals count on your being busy to sneak through your screening process. While we cannot accomplish all that a credit application does, checking the DRC membership status may save you the time of having to review the entire application. This is especially true when you get a cold call from outside of your province.

There are only three legitimate reasons why a Canadian firm (buyer or seller) would NOT be LEGALLY REQUIRED to be a DRC member to buy or sell a load of produce:

1. They grew the products themselves.
2. Both of the businesses (i.e. buyer and seller) are in the same Canadian province.
3. They are a retailer buying less than $100,000 a year in produce from all sources.

Both buyer and seller should be checking out their potential trading partner. For sellers, getting paid is obviously important. For buyers, the seller’s DRC membership helps ensure the product they are buying is not stolen, obtained fraudulently or otherwise compromised.

Always ask if they are a member of the DRC. It only takes a minute to go to our website and check the active member list, which is updated every Friday, and then call our office if you require additional information. Verifying DRC membership is your first line of defense against becoming a victim of the Silly Season.

Fred Webber,

President & CEO

A friendly reminder that annual invoices will be mailed to most members on November 15th.

If your company information has changed in the past 12 months, including your responsibly connected individuals, please download the  Membership Records Update Form and submit it to DRC prior to November 1st, 2018.

Please note some members may have a different invoicing date depending on when they joined DRC. A quick check of your records by phone or email will confirm your invoice anniversary date.

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

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

In last month’s edition of Solutions we informed readers of our upcoming “Dispute Resolution Rules”.  As noted in the article, please be reminded that:

• All Statements of Claim received prior to the coming into force date of November 01, 2018 will follow the Mediation and Arbitration Rules.
• All Statements of Claim submitted after November 01, 2018 will be subject to the new Dispute Resolution Rules.

We recommend that you become familiar with these rules and contact our Trading Assistance team if you have any questions.

DISPUTE RESOLUTION RULES  

Effective January 15, 2019

Canadians who buy and sell

fresh fruit and vegetables must

be members of the

Dispute Resolution Corporation (DRC)

Important Considerations for Suppliers to Canada

The following points are key considerations for persons selling produce to Canada:

• The consignee is subject to the Safe Food for Canadians Regulations (SFCR) and must be a DRC member. In other words, all buyers in Canada must be a DRC member. The DRC member list available online is updated weekly
• If your buyer is not a DRC member, the buyer is not operating in conformance with the SFCR and your load will be refused entry at the border.
• The loss of DRC membership impacts a Canadian buyer in the same manner the loss of a PACA licence impacts a US buyer.
• Canada, like the US, has a government inspection services. Use of that service is the default requirement under DRC Good Inspection Guidelines to determine product quality and condition upon arrival. A number of private inspection firms are operating in Canada. Should you agree to use one of these private companies, you should be aware of the potential challenges and implications of that choice.
• All DRC members agree to meet their obligations as they come due; all suppliers may come to DRC for assistance to resolve slow pay or no pay shipments.
• If the buyer is able to show evidence of a valid dispute (inspection, credit memo, etc.) the DRC only has jurisdiction to help resolve the dispute if both parties were members of the DRC at the time the dispute arises.
• A Canadian Food Inspection Agency (CFIA) food safety licence is not proof of a DRC membership (always check the list of members on our website).
• CFIA SFCR food safety/traceability requirements (i.e.: Food Safety licence) and trade/commerce requirements (i.e.: DRC membership) are separate and distinct requirements within the SFCR. Persons must determine if they are subject to either one of, or both of the regulatory requirements.

In May 2017, DRC’s Solutions Blog included an article identifying the differences between North American Trade Terms and International Commercial Terms (INCOTERMS). In this edition, we will review how DRC Good Arrival Guidelines (Good Arrival) and INCOTERMS are connected.

Good Arrival is a combination of PACA 5 Day FOB Good Delivery Guidelines, CFIA Canadian Destination Tolerances and Suitable Shipping Condition Guidelines which establish the maximum percentage of defects allowed at destination for FOB shipping point transactions. Good Arrival assumes sales are FOB shipping point with regard to risk, regardless of how freight is billed.

Section 20, Trade Terms of the DRC Trading Standards states that INCOTERMS such as CPT, CIP, CFR, and CIF are all deemed to be the same as FOB except that the seller assumes the costs associated with the named INCOTERM. However, the risk of transit remains with the buyer.

Therefore, unless there is an agreement for a specific and defined grade standard, such as US #1, Canada #1, or Class I (also known as CAT I in the Spanish and French versions of the CODEX Standards), all transactions between DRC members will default to FOB No Grade Good Arrival. This means that the third or fourth column of DRC Good Arrival Guidelines containing the maximum percentage of defects per commodity will apply.

The Safe Food for Canadians Regulations require that Canadians who buy and sell fresh fruits and vegetables be members of the DRC. This is effective January 15, 2019.

As we transition to this role, updates to the “Agreements and Consents” clauses of the DRC member application as well as the DRC Privacy Policy are being implemented available here https://fvdrc.com/by-laws-and-operating-rules/

To ensure all members are aware of and agree to the new “Consent to Disclosure of Agreement and other Information”, every member will be required to complete their Membership Information Update Form. Members are encouraged to download the form and submit it to DRC at their earliest convenience. Please ensure the individual signing the consent is a responsibly connected individual, as defined on the form.