Author: DRC

The vast majority of problems brought to us by our members are resolved with a bit of sound advice or an exchange of information in our informal process. Some issues however, do proceed to the formal process where an arbitrator is required to issue a final decision.

The Formal Mediation and Arbitration Rules have remained largely unchanged for 17 years and we believe a review and update is timely. Members and our roster of independent arbitrators have indicated to us that the rules are a bit cumbersome and repetitive. We have therefore retained a leading Arbitration Law and process expert to revise those rules.

Currently there are three categories of arbitration in our rules:

Those less than $15,000

Those from $15000 to $50,000

Those over $50,000

The proposed revisions to the rules will remove repetitive language in the current version and highlight differences within the categories. Examples of highlights would include whether or not a hearing is required and timelines for responses. Several areas will also be clarified to make them easier to understand and follow.

Please note that the current rules remain in full force and no changes will be implemented until they have been presented and approved by the Board of Directors later this year. Should the revisions be approved, we will provide the membership with the changes, answer any questions, and share the date the changes will be implemented.

For now, there are no changes to the Formal Mediation and Arbitration Rules, and this note is merely advance notice that a review is underway and changes may be forthcoming.

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

Are you subject to the proposed CFIA regulatory requirement for a DRC membership? Is DRC membership right for you? Are you taking full advantage of all of your DRC member benefits? These are just a few of the questions you should be asking your DRC support team and we’re making it easy to do so.

DRC will be exhibiting at many regional meetings and will be available at trade shows.

This month look for us at the Ontario Fruit and Vegetable Convention, February 21-22, at the Scotiabank Convention Centre in Niagara Falls, Ontario.

Visit DRC at Booth #428 to learn about proposed regulatory requirements expected to come into force in 2018. DRC membership will be required to buy, sell, import or export fresh fruits and vegetables unless otherwise exempted as per the proposed regulations. This will result in a requirement for a mandatory membership in the DRC for some who were not previously subject to the requirements of the CFIA Licensing and Arbitration Regulations.

DRC team members will be on hand to discuss the full range of member benefits including: harmonized standards, procedures and services necessary to avoid and resolve commercial disputes in a timely and cost-effective manner. Make sure you’re taking full advantage of all the services and benefits DRC membership has to offer.

Contact the DRC Help Desk today to schedule an appointment during the convention or simply stop by Booth #428 to meet with a DRC team member:

DRC Help Desk | (+1) 613-234-0982 | [email protected]

Additional details about the convention can be found at: http://www.ofvc.ca/

A friendly reminder that a few of you have DRC membership fees that are past due. Failure to pay your annual membership dues may result in termination of your membership in accordance with the By-laws of the Corporation.

In order to stay in good standing, if you have yet to pay your yearly membership fees, please contact us asap at:

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

Q. I am a DRC member, what happens when I have a dispute with a company that is not a DRC member?

A: DRC members are expected to abide by certain rules and responsibilities and when a dispute occurs between members, we are here to help. Unless your trading partner is a DRC member, we may be limited in the assistance we can provide. Should a dispute occur between a DRC member and a non-member, we may be able to assist if the non-member signs a voluntary arbitration agreement that will bind them to a final decision by an arbitrator if necessary.

If the non-member signs the voluntary agreement, one of two steps needs to occur. The non-member needs to join DRC or, alternatively, pay a set fee. Once one of the two steps is completed, it is treated as if both parties are DRC members and the dispute process should move forward as normal.

In the absence of a signed voluntary arbitration agreement, because one party is not a DRC member, the option of litigation is a strong possibility. We would like to remind all DRC members to encourage trading partners to join DRC.

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

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

We were contacted recently by one of our members asking about DRC’s point of view regarding differences between a temperature recorder and a real time temperature recorder.  Real time temperature recorders are those which are GPS enabled and can be monitored remotely.  This technology has been available in our industry for a few years now and in our experience, a real time temperature recorder brings additional advantages over a regular temperature recorder. To mentioned a few:

• If a temperature recorder is lost, no data is available. For a real time temperature recorder, data is always available even when real time recorder is lost.
• Location of the load in transit.
• Alert system to indicate temperatures during transit have passed the set temperature range.
• Can avoid temperature impact on product while in transit.
• Anyone can have access to the data as long as certain information such as the serial number is provided.

Simultaneously, a real time temperature recorder also brings additional responsibilities to those who have access to the real time data. The real time data from these devices is considered evidence of the temperatures in transit, just like a tape or digital readout from a traditional temperature recorder. The main difference is, if you become aware of a temperature problem in transit and nothing is done about it, all those who had access could  take on liability for not taking steps to limit or stop  potential deterioration to the product.

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

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

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]