Year: 2018

A DRC membership is far more than good business and, in a few weeks, it becomes a regulatory requirement for anyone subject to the Safe Food for Canadians Regulations (SFCR).

Here are some important reminders:

When it comes to the SFCR, there are two important distinctions:

1. requirements related to food safety and traceability; and,
2. requirements related to trade and commerce.

Although much of the detail in the regulations concerns food safety and traceability, there is a very important trade and commerce requirement for buyers and sellers of fresh fruits and vegetables: Canadian buyers and sellers of fresh fruits and vegetables must be members of the Fruit and Vegetable Dispute Resolution Corporation (DRC), unless excepted. In other words, if you are subject to the requirement a DRC membership is your authority to trade produce.

While a DRC membership fulfills the SFCR regulatory requirement that provides authority to buy, sell or negotiate the sale or purchase of fruits and vegetables inter-provincially, intra-provincially and internationally, there is much more to it than that.

A DRC membership has always been a wise business decision, especially when it comes to risk management. Your DRC membership gives you an avenue to seek advice, interpret business and claims documents, mediate with your trading partner, and when necessary get a binding decision on a dispute that simply can’t be resolved informally. As a risk management tool it is important your trading partners be DRC members as well. Their membership ensures a common set of rules are in place when disputes occur. It also allows us to have done a background check and monitor any other issues which may be occurring. If they are avoiding the DRC membership, should you be asking yourself why?

Regardless of where you are buying or selling your produce, your best protection as a buyer or seller is a DRC membership, especially when both parties are members.

Canadian retailers are reminded to carefully consider and evaluate the regulatory requirement to hold a DRC membership. Under the SFCR, which comes into effect on January 15, 2019, it is prohibited for a person to

(a) sell any fresh fruits or vegetables that are to be exported or sent or conveyed from one province to another;

(b) purchase or negotiate the purchase on another person’s behalf of any fresh fruits or vegetables that are to be imported or sent or conveyed from one province to another;

(c) receive any fresh fruits or vegetables that have been imported or sent or conveyed from one province to another; or

(d) send or convey from one province to another or import or export any fresh fruits or vegetables.

There are exceptions to these prohibitions, some of which are noted below:

• any person who is a member in good standing of the Fruit and Vegetable Dispute Resolution Corporation
• a person who only sells fresh fruits or vegetables directly to consumers if that person paid less than $100,000 for the fresh fruits and vegetables that they sold to consumers within the previous 12 months

A number of retailer operations that have not been subject to the current requirement to hold either a CFIA Produce Licence or a DRC membership as authority to buy and sell fruit and vegetables will now be required to be a member of the DRC.

The requirement will be of particular interest to independent retail operations as well as a number of franchise operators.

To learn more, check out the DRC’s self-assessment for Retail

You may already be a Non-Resident Importer (NRI) shipping to Canada, thinking about becoming an NRI if you are shipping to Canada, or perhaps your customer wants you to be the importer of record for shipments going to them in Canada. No matter the circumstance, it is important to know that on January 15, 2019 the new Safe Food for Canadians Regulations (SFCR) come into effect and will impact the way NRIs currently export to Canada.

What does this mean from a DRC and SFCR perspective?

CFIA defines a non-resident importer as a person importing food into Canada whose fixed place of business is in a country other than Canada. Effective January 15, 2019 in order to be an NRI for fresh fruits and vegetables, CFIA will apply four main conditions when considering NRI status:

1. Food Safety: To be eligible to obtain a licence as an NRI under the SFCR, the NRI’s fixed place of business must be in a country that the CFIA has recognized as having a food safety system that provides at least the same level of protection as that of Canada’s. Currently, this includes commodities covered by USDA and CFIA Food Safety Systems Recognition (FSSR) Arrangement. As more food safety systems are evaluated, more countries may be added in the future.
2. Port of Entry (United States): Product must enter Canada directly through the US. In other words, the product must land and clear US customs before it can move into Canada. You cannot be a US NRI and ship the product from another country straight into Canada.
3. DRC Membership:  A DRC Membership is required for NRIs shipping fresh produce into Canada as the SFCR requires that anybody importing or moving fresh fruits and vegetables across provincial and/or international borders must be a DRC member in good standing. It is important to keep in mind that a SFCR licence and a DRC membership do not have the same intent. A SFCR licence intends to identify businesses and authorize those businesses to carry out licensable activities such as NRI. A DRC membership requires fair and ethical trading practices by minimizing trade irritants and facilitating effective trade dispute resolution.
4. CFIA Licence: Obtain a licence as an NRI from CFIA. To do so, set up a myCFIA account and complete the application for a license. We strongly recommend doing so prior to the January 15, 2019 implementation date in order to avoid any delays.

As always, if you still need help or want to explore other scenarios, please give us a call (+1 613-234-0982) or drop us a line at [email protected].

To view this information as a pdf file follow this link:  https://t8t979.p3cdn2.secureserver.net/wp-content/uploads/2018/12/DRC-SFCR-and-NRI-2019-January-1.pdf

DRC is a membership based organization whose core work is “business-to-business private commercial dispute resolution” between members and, if applicable, between a member and a non-member.  DRC’s jurisdiction to help parties resolve a dispute is automatic if both parties were members at the time of transaction.  If one or both were not a member when the dispute arose, it may be more difficult to DRC to assist you.  Simply put, as a DRC member, always make sure you deal only with other DRC members, so your access to fast, affordable dispute resolution services is not compromised.

DRC can resolve domestic (intra or interprovincial) disputes provided the companies are within Canada,           the United States or Mexico. In addition, DRC will resolve international disputes provided the dispute arises in relation to a transaction that has entered into commerce in Canada, the United States or Mexico.

DRC attempts to help its members regardless of whether the dispute is with another DRC member or a non-member. However, in disputes between a member and a non-member, an arbitration clause or a voluntary arbitration agreement is needed to be able to use DRC’s Dispute Resolution Rules as an effective and efficient alternative to the courts. That said, DRC’s recourse is limited when you deal with a non-member, therefore we strongly recommend you encourage your trading partners to join in order to avoid being left without recourse through DRC.

Disputes must be brought to DRC within nine (9) months from the date on which the dispute arose. Unresolved disputes that fall outside of nine months will be deemed to have been abandoned.

When a company has decided to join DRC, through their membership application process, it is important that the applicant lets DRC membership staff know if they have an ongoing or previous dispute. We want to make sure you join for the right reasons and not under the impression that our rules are retroactive. However, if you are involved in a straight no-pay with one of our members, you can report that matter to our Trading Assistance Office, and that issue will be investigated.

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]