WASHINGTON, DC - The U.S. Department of Agriculture (USDA) recently imposed sanctions on three produce businesses for failing to meet their contractual obligations to the sellers of produce they purchased from. The California-, Minnesota-, and Texas-based businesses failed to pay reparations amounting to $103,862, issued under the Perishable Agricultural Commodities Act (PACA). This will result in the suspension of their PACA licenses and barring the principal operators of the businesses from engaging in PACA-licensed business or other activities without approval from the USDA.

Direct from the USDA Agricultural Marketing Service:

The following businesses and individuals are currently restricted from operating in the produce industry:

• Orion Pacific International Inc., operating out of Walnut Creek, California, for failing to pay an $85,112 award in favor of a California seller. As of the issuance date of the reparation order, Rick Rider was listed as the Officer, Director, and Major Stockholder of the business.
• El Chinelo Produce Inc., operating out of Minneapolis, Minnesota, for failing to pay a $12,232 award in favor of a Texas seller. As of the issuance date of the reparation order, Virginia Sanchez Gomez and Stephany Duran Sanchez were listed as the Officers, Directors, and/or Major Stockholders of the business.
• C-Max Produce LLC, operating out of McAllen, Texas, for failing to pay a $6,518 award in favor of a Texas seller. As of the issuance date of the reparation order, Jose A. Malpica was listed as a member of the business.

PACA provides an administrative forum to handle disputes involving produce transactions; this may result in the USDA’s issuance of a reparation order that requires damages to be paid by those not meeting their contractual obligations in buying and selling fresh and frozen fruits and vegetables. The USDA is required to suspend the license or impose sanctions on an unlicensed business that fails to pay PACA reparations awarded against it as well as impose restrictions against those principals determined to be responsibly connected to the business when the order is issued. Those individuals, including sole proprietors, partners, members, managers, officers, directors, or major stockholders, may not be employed by or affiliated with any PACA licensee without USDA approval.

The PACA Division, which is in the Fair Trade Practices Program in the Agricultural Marketing Service, regulates fair trading practices of produce businesses that are operating subject to PACA, including buyers, sellers, commission merchants, dealers, and brokers within the fruit and vegetable industry.

In the past three years, the USDA resolved approximately 3,500 PACA claims involving more than $58 million. PACA staff also assisted more than 7,800 callers with issues valued at approximately $148 million. These are just two examples of how the USDA continues to support the fruit and vegetable industry.

For further information, contacts, and to read the press release in its entirety, please click the link here.

USDA's Agricultural Marketing Service