Today we are jumping into the world of food law and taking a look of what is know as PACA, or the Perishable Agricultural Commodities Act. If you’re in the produce business, you likely already know about PACA and if you do not, it’s imperative that you do. PACA is the federal law enacted by request of the fruit and vegetable industry to promote fair trade. PACA covers dealings in fresh and frozen fruits and vegetables by establishing and enforcing a standard of fair business practices. The Agricultural Marketing Service (AMS) is in charge if administering PACA and by working with the fruit and vegetable industry, facilitates fair trade through education, mediation, arbitration, licensing, and enforcement.
Licensing Under PACA
PACA requires that a producer have a PACA license to operate a frozen or fresh fruit and/or vegetable business. Who needs a PACA license? Good question. In general, this includes:
1) Any individual who buys or sells more than 2,000 pounds of fresh or frozen fruits and vegetables in any given day (to include wholesalers, processors, truckers, grocery wholesalers, and foodservice firms),
2) An individual who negotiates sales of fruits and vegetables on behalf of another (this could be a commission merchant, broker or a growers’ agent)
a. It’s important to note that a broker handling ONLY frozen fruits does not require a license until the invoice value exceeds $230,000 in a calendar year.
3) A person selling at retail once the invoice costs of fresh and frozen produce exceeds $230,000 in a calendar year.
The PACA license is the tool to ensuring that traders meet their contractual obligations and that all buyers and sellers (who deal in fruits/vegetables covered under PACA) abide by established PACA practices. License violators face possible suspension or revocation of their license. An individual who knowingly operates a business without a license may face a penalty of up to $1200 for each violation and up to $350 for each day the violation continues.
As of 2010, the base annual license fee is $995 plus a $600 additional fee for each additional business facility, not to exceed a total of $8,000. The application can be found here and mailed to the address at the top of the form. To determine if the frozen or fresh fruits and vegetables that you or your operation deals in require a PACA license, click here for a detailed list.