One of the most confusing things about PACA is the acronym itself. PACA is the acronym for the Perishable Agricultural Commodities Act of 1930. The Act and its regulations are enforced by a branch of the United States Department of Agriculture (USDA), Ag Marketing Service (AMS).
The PACA Division is the name given to the part of the USDA-AMS charged with implementing and enforcing the licensing, dispute resolution, and disciplinary provisions of the Act.
Many also refer to the portion of the Perishable Agricultural Commodities Act of 1930 which created the statutory deemed trust as PACA. This is particularly confusing as the Act contains the deemed trust provisions, but the PACA Division personnel are not involved with filing claims or enforcement of the deemed trust. Filing under the trust provision is done by claimants and enforced through the US District Courts.
How can you use PACA as part of your operations?
- Make sure the party you are doing business with in the US has a valid PACA License. If they do not, they are likely not operating legally, and you should ask them why they are not licensed.
- If you encounter a problem, call the appropriate regional PACA office (https://www.ams.usda.gov/rules-regulations/paca/contacts) and ask for help. They can help with many questions including contract, inspection, and trading rights and responsibilities. They will not contact your trading partner unless you ask them to.
- If you cannot resolve the issue following your initial call to PACA Office contact them again and ask for instructions on filing an informal complaint. The initial complaint will cost $100. As a member of the DRC, you can also contact our help desk and we can assist you with the process.
- If the initial informal complaint does not resolve the issue, PACA will advise you on filing a formal complaint which will result in a binding decision and award. It will cost $500 to file a formal complaint and you will be asked to post security equal to twice the amount of your claim (a $20,000 complaint would require a $40,000 security). Contact PACA if you need bonding service provider information for foreign nationals. The security is in place to cover a potential counter complaint by the US buyer. The security will be returned to you if there is no successful counter complaint.
- If the buyer becomes insolvent you can participate in the PACA (Perishable Agricultural Commodities Act) deemed trust. Unless you are a PACA licensee you may NOT use the statutory wording on invoices and billing statements. All others must send their customer a specific notice referred to as “Intent to Preserve Trust Benefits” within 30 days of when payment was due. Failure to take this step means you will have no rights under the trust provisions of the Act. See this link (https://www.ams.usda.gov/rules-regulations/paca/paca-trust) for more information about preserving your trust privileges.
Questions? PACA Division personnel can help and your DRC Trading Assistance Team is available to help navigate through PACA, no matter which part of PACA you have questions about.
