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TEN STEPS TO FIGHT FREIGHT FRAUD

Freight fraud is on the rise. Again.

U.S. shippers and receivers of fresh produce are falling victim to the repeated schemes by unprincipled freight brokers. The most common occurrences: you pay the freight broker, but the freight broker skips town and doesn’t pay the carrier; or the freight broker reassigns the job to another broker, who doesn’t pay the carrier, or even worse, steals the load. In the produce industry, where sales are made at lightning speed to keep up with the transportation of highly perishable commodities, by the time the deception is discovered, it’s often too late. The cause may be a broker’s insolvency, negligence, or willful wrongful acts. The effect is the shipper and receiver can suffer loss of the perishable agricultural commodities and are exposed to liability for double payment for the freight charges.

The problem is exacerbated by debt collectors buying up freight claims because they assert they have two pockets for recovery: the shipper and the receiver. These debt collectors or law firms representing them send demand letters citing court cases that seem to support double payment from a shipper. These debt collectors do not care if you’re a shipper who prepaid for the shipment by paying the broker. They hedge bets that you, as a shipper, will double pay for a shipment rather than trouble your customer/receiver for an unpaid freight bill.

Generally, payment of freight charges is the responsibility of the shipper unless otherwise agreed. Freight payment terms are either freight collect (receiver/consignee pays after delivery) or freight prepaid (shipper/consignor pays before shipment).

Older versions of the U.S. Uniform Straight Bill of Lading included a non-recourse provision, which provided a method for a consignor to avoid liability for freight charges on a collect shipment by entering a signature or endorsement in the box containing the provision (“Section 7” of the bill of lading). If the carrier accepted the shipment for carriage, then the carrier did not have recourse against the consignor for the freight charges in the event the consignee did not pay.

The non-recourse provision in the Section 7 box was a safeguard for a shipper because it relieved the shipper/consignor from liability for freight charges on collect shipments, i.e. that the carrier would have “no recourse” against the shipper because the receiver/consignee had primary liability for payment of freight charges on collect shipments. Shippers also used the provision to protect it from liability on “prepaid” shipments for additional freight charges after delivery.

In December 2022, the U.S. National Motor Freight Traffic Association published a revised Uniform Straight Bill of Lading and removed the Section 7 box and non-recourse provision. Instead, the back side of the current Uniform Straight Bill of Lading’s terms and conditions states:

Sec. 7. (a) The consignor, consignee, or shipper shall be liable for the freight and other lawful charges accruing on the shipment, as billed or corrected as specified in 49 U.S.C. §13710, and carrier may require prepayment of the charges prior to delivery and refuse to give up possession at the destination until payment is made, as specified in 49 U.S.C. § 13707(a).

Put simply, the shipper and receiver bear responsibility for the freight charges if the carrier does not receive payment, unless there is a specifically negotiated agreement stating otherwise. Shippers and receivers should use a tailored bill of lading (not the revised Uniform Straight Bill of Lading) making it clear who is responsible for freight payment and to have the carrier waive recourse against the appropriate non-responsible party.

Here are ten steps to fight back against freight fraud in the U.S.:
  1. Verify Broker Credentials: Ensure that the freight broker is properly licensed and registered with the Federal Motor Carrier Safety Administration (FMCSA). You can check their USDOT number and MC number on the FMCSA website here SAFER Web – Company Snapshot (dot.gov).
  2. Require a Bond and Insurance: Verify that the broker has appropriate insurance coverage and bonding. This provides financial protection in case of fraud or negligence. Licensing & Insurance Carrier Search (dot.gov)
  3. Investigate Broker Reputation: Research the broker’s reputation by checking online reviews, asking for references from other clients, and looking for any complaints filed with industry associations (The Blue Book Services) or regulatory bodies (FMCSA website here SAFER Web – Company Snapshot (dot.gov)). In addition, contact your attorney to research litigation history of the broker and other public records databases to verify the identity of the principals and freight broker before you enter into a contract or send any funds.
  4. Use Established Brokers: Work with well-established and reputable brokers with a proven track record of reliability and honesty in the industry.
  5. Have a Robust Contract with Broker: Contact your attorney to prepare a robust broker contract that clearly states the broker’s obligations, with hefty indemnification provisions, insurance requirements, and clear payment terms.
  6. Use a Customized Bill of Lading: Use a well-drafted customized bill of lading that includes terms and conditions that accurately state the payment obligation and that require the carrier to waive recourse against the shipper.
  7. Obtain Documentation: Request and review all necessary documentation for each shipment, including insurance certificates, proof of delivery, and bills of lading.
  8. Monitor Shipments: Keep track of your shipments through tracking systems and regular communication with both the broker and carrier. Promptly address any discrepancies or concerns.
  9. Payment: Consider paying only after confirming delivery of the produce.
  10. Report Suspicious Activity or Theft: If you suspect fraud or encounter any irregularities, report them to the appropriate authorities such as the FMCSA or local law enforcement agencies.

By taking these precautions and staying vigilant, U.S. shippers and consignors can reduce the risk of falling victim to freight broker fraud. Contact your agribusiness attorney to develop strategies and customize contracts and other documents to minimize your risks of freight fraud.


© 2024 – Fennemore, LLP. All rights reserved. The information in this article has been prepared by Fennemore, LLP for informational purposes only and does not constitute legal advice.

This article is republished with permission and was originally written by June Monroe of Fennemore with offices in California, Arizona, Nevada and Colorado.

June Monroe is a director and attorney at the Irvine office of Fennemore, LLP. June practices agricultural law, employment law, commercial law, secured transactions and general business law. She concentrates on federal litigation, in district court and bankruptcy court, to enforce produce suppliers’ statutory rights under the Perishable Agricultural Commodities Act (PACA). June also assists growers, marketers, and shippers with drafting growing, marketing, packing, and supply contracts.

June is the current Chair of the Agribusiness Committee, Business Law Section, of the California Lawyers Association for the State Bar of California.

Outside of work, June is a weekend painter and enjoys painting fruits and vegetables for her agribusiness clients. June posts her artwork on her LinkedIn page: June Monroe | LinkedIn

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Membership Update for April 2024

New Members List | Membership Change in Status | Automatic Terminations

Welcome new members!

We are pleased to welcome the following 20 new members during the month of April 2024. Here’s a list of who they are: 

1000832035 ONTARIO LTD., ON, Canada
ALINE PACKAGING LTD., BC, Canada
CITRUS SAM INC., ON, Canada
EL CHARRO INC., ON, Canada
FRASER VALLEY FARM MARKET INC., BC, Canada
FRESH VEGETABLES ARE S.A. DE C.V., Puebla, Mexico
FRESHFUSION IMPORT INC., ON, Canada
FROBISHER INTERNATIONAL ENTERPRISE LTD., BC, Canada
GARUDA IMPORTS & EXPORTS (A d/b/a of 11924656 Canada Corp.), ON, Canada
JINXIAN GLOBAL FOOD INC., ON, Canada
KALIGA BAZAAR (A d/b/a of 2704097 Ontario Inc.), ON, Canada
NATUS FOODS LLC (Also d/b/a Born Farms), TX, United States
OPERADORA COMERCIAL DATI S DE RL DE CV, Michoacan, Mexico
POC HOLDINGS CORPORATION (Also d/b/a POC Trading), BC, Canada
R&D INTERNATIONAL FOODS CORPORATION, ON, Canada
SHIVANI SALES INC., MB, Canada
SKOTIDAKIS GOAT FARM (A d/b/a of 1048547 Ontario Inc.), ON, Canada
SOAGRO CORP., ON, Canada
SRT TRADING LTD., BC, Canada
TAAMAY EXPORT MEXICO S.A.P. I DE C.V. (Also d/b/a TAAMAY), Ciudad de Mexico, Mexico

To view a complete list of active members, click here.

DRC Membership Change in Status

As of April 30th, 2024 the following organizations no longer hold a DRC membership:

1595645 ONTARIO INC., ON, Canada
AMIRA ENTERPRISES INC / LES ENTREPRISES AMIRA INC., QC, Canada
AVO INTEGRA SAPI DE CV, Michoacan, Mexico
BEDFORD BASIN FARMERS MARKET LTD., NS, Canada
BIMAL PATEL (Also d/b/a SBimal LLC.), CA, United States
BOKHARY FARMS LLC, MA, United States
CAPPADOCIA IMPORT TURKISH FOOD INC., AB, Canada
CARAVAN TRADERS INC., ON, Canada
FRIEDA’S, INC., CA, United States
GROUPE EDEAN LTÉE, QC, Canada
IMAN-DZ LTEE. (Also d/b/a Dattes HN), QC, Canada
J & J PRODUCE INC. (Also d/b/a J & J Family of Farms), FL, United States
JARDINS ST-LÉON GARDENS INC. (Also d/b/a St-Léon Gardens), MB, Canada
JR FRUITS (A d/b/a of 6735525 Canada Inc), QC, Canada
JUS LOOP INC. (Faisant également affaire sous LOOP Mission), QC, Canada
L.T. ENTERPRISES LTD., NB, Canada
LES FERMES YVON BOYER INC., QC, Canada
LES SAVEURS DU TERROIR, QC, Canada
MARAND COMPANY S.A.C., Lima, Peru
SAFIA FRUITS/FRUITS SAFIA (Faisant également affiare sous 93, QC, Canada
SHAHG TRADERS INC. (Also d/b/a ShahG Traders), ON, Canada
SILVA FARMS LLC., CA, United States
SUN FRESH CITRUS LLC, CA, United States
THE FUTURES EXCHANGE LTD. (Also d/b/a Greenhouse-Garlic), ON, Canada

Automatic Terminations

On April 9, 2024, FRESH EXPRESS LTD. was expelled from DRC for failure to meet their financial obligations and failure to provide requested information in violation of section 1.5 of the DRC Trading Standards and section 3.03 of the DRC By-laws. At the time of expulsion Sayed Farid Sadat (Director) was the only responsibly connected persons to this organization.

For details regarding a change in status, please contact the office.

Important note: Following membership termination, the former member remains liable for claims arising prior to their termination if the claim is submitted to DRC by way of a Notice of Dispute within nine (9) months from when the claim arose or within nine (9) months from when the claimant ought reasonably to have known of its existence.

For details regarding a change in status, don’t hesitate to connect with our Helpdesk.

To view a complete list of inactive members, click here.

About the DRC

The DRC is a non-profit membership-based organization whose core work is business-to-business commercial dispute resolution for produce. The DRC is a referee between parties when a purchase and sale do not go according to plan. Members adhere to a common set of trading standards and member responsibilities that promote fair and ethical trading for produce entering the North American marketplace. In Canada, membership in the DRC is a regulatory requirement to trade fresh fruits and vegetables (i.e., buy, sell, import, export) unless accepted by the regulations. Today, the DRC has members in 16 countries outside of North America, and membership continues to grow annually. Anyone exporting fresh fruits and vegetables to Canada must sell to a DRC member.

In addition to the DRC’s Operating Rules and Trading Standards, the DRC offers a comprehensive, tailored suite of tools to build the knowledge and capacity of members to avoid or resolve disputes. The DRC provides education, mediation, and arbitration services, along with the ability to impose sanctions and disciplinary actions on members who do not conduct business in accordance with the terms of their membership agreement.

To date, the DRC has resolved claims in excess of $105 million dollars. Although arbitration is available, 80% of these claims have been settled in an average of 26 days through our informal consultation/mediation services. Arbitration awards are court-enforceable in countries that are signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards or subsequent conventions.

For more information about memberships, click here or contact our Helpdesk.

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Temperature recording and monitoring of perishable goods for the transport refrigeration industry

Thankfully technology is available by Transport Refrigeration Unit (TRU) manufacturers that can help ensure cold chain quality and integrity of critical perishable cargo.

Current technology can provide on the spot printouts as well as USB downloads of temperature values, set points, date & time stamps along with other informative data pertaining to the operation of the TRU at time of delivery. TRU is also known in the industry as “Reefer”.

More thorough and informative reports are also available and can be reviewed and customized by the reefer manufacturers telematics platform. Reporting within the telematics platform also allows freight carriers to run reports retroactively given a specific time and date of past events.

Definition of telematics:

Telematics is a term that combines the words telecommunications and informatics to describe the use of communications and IT to transmit, store and receive information from devices to remote objects over a network.

Reefer telematics is a remote monitoring system that makes it easier to keep control of your cold cargo, avoid rejected loads by monitoring and recording core cargo temperature in real time. Maintain product quality by reducing reefer unit shutdowns that can lead to lost loads. TRU (reefer) fleet uptime is critical to avoiding lost loads and maintaining revenue.

The remote reefer monitoring and management system allows users to monitor and control the setpoint temperature and modes of operation as well as observe alarm status. It will also allow the operation of pre trip diagnostics remotely. Reefer telematics provide real time cargo traceability and asset monitoring to maximize uptime, optimize fuel usage and meet compliance needs. Using temperature reports and graphs you can prove the trailer was precooled at the time of loading and to the desired temperature. Listed below are some of the benefits of reefer telematics use.

Temperature Compliance: temperature reports and graphs to prove that sensitive cargo was maintained at the desired temperature throughout every point in the journey.

Asset Security: with door sensor data available by telematics, you can record all door openings to keep an eye on temperature and load security.

Cargo Traceability: track shipment location and condition to know instantly when a delay occurs and to proactively manage exceptions.

Asset Location: monitor the current location of your assets at any time to ensure a quick and effective response to any emerging issue.

Vehicle Uptime: eliminating unscheduled breakdowns by means of preventive maintenance equals lower operating cost.

Fuel Usage: maintain visibility to ensure the most fuel-efficient mode is consistently used when running loads.

Example of a Tabular telematic download:

Listed below is the terminology used in the telematic tabular report above.

Date & Time: 15-minute reporting events would trigger extra reporting intervals.
Vehicle Name: Trailer designation
Unit Power: Either on or off
Unit Mode: Cycle sentry stop/start or Continuous run
OP1: High cool, Low cool, Modulation cool, High heat, Low heat, Modulation heat, Defrost, etc.
SP1: Set Point Zone 1 would be a single temperature unit. There could be two other zones as well (Multi-Temp unit).
RA1: Return air temperature zone 1 is most representative of box temperature. There could be two other zones as well (Multi-Temp unit).
DA1: Discharge air temperature zone 1. There could be 2 other zones as well (Multi-Temp unit). Air leaving the unit could be colder or hotter depending on the operating mode.
Ambient Temp: Ambient temperature during travels.
Fuel Level: Most tanks are 50-gallon tanks and will change in 5% increments.
Battery Voltage: Amount of electrical potential a reefer unit uses, measured in volts.
Engine RPM: Most units have two speeds, High and low.
Unit Alarm: Hundreds of different alarms pointing the drivers, dispatchers, and technicians about current issue.
Total Hours: This hour meter will be recording anytime the unit is turned on.
Engine Hours: This hour meter will be recording only when engine is running.

Note:
Single temperature Reefer is 1 temperature zone within the cargo space.
Multi-Temperature Reefer is 2-3 temperature zones within the cargo space.

Example of a telematic Temperature Chart and Graph download

Note:

  • S1, S2, S3, S4, S5, S6 and TL1, TL2, TL3, TL4, TL5, TL6 on this report are unused channels designated for additional temperature sensors and temperature data loggers.

Article provided by:

For more information, contact:

Nicole MacDonald
Communications and Marketing Specialist
Fruit and Vegetable Dispute Resolution Corporation
Email: [email protected]
Ph: +1-613-234-0982

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ATTENTION FOREIGN SUPPLIERS! Here’s how to send fresh produce to Canada as an NRI.

Does your foreign business wish to send fresh produce to Canada? If so, you must go through a licenced Canadian importer or become a non-resident importer (NRI) if your business qualifies. In order to bring fresh produce into Canada, you must obtain a licence under the Safe Food for Canadians Regulations (SFCR) and likely will need a DRC membership.

NRIs EXPLAINED

NRIs are businesses exporting food into Canada from a fixed place of business outside the country. In this case, as we are talking about importing fresh fruits and vegetables (FFV), the only country currently applicable to do this is the United States (US). The reason is that the US mirrors a similar level of protection as the SFCR, making US NRIs eligible to hold a Safe Food for Canadians licence (SFC licence) to import food into Canada. As authorities evaluate more food safety systems, they may add more countries to the list in the future.

HOW TO OBTAIN AN SFC LICENCE AS AN NRI

The first step in obtaining a licence as an NRI is to create an account through the My CFIA website. From there, you’ll have access to a full range of operational and administrative services to ensure a seamless registration process.
Once you obtain your SFC licence number and DRC membership number, you should add these to your import declaration forms to ensure your FFV shipment clears customs and enters the country without any problems.

DRC MEMBERSHIP REQUIRED

The SFCR requires NRIs to hold a DRC membership to send FFV across the border into Canada. The CFIA lists permitted exceptions to this requirement.

It is worth noting that an SFC licence and a DRC membership have different intents. An SFC licence identifies and authorizes businesses to conduct licensable food safety-related activities such as NRIs. A DRC membership requires fair and ethical trading practices that minimize trade irritants and facilitate effective dispute resolution so you can #tradewithconfidence.

As a member of the DRC, you’ll have access to additional services that lower the risk of conflict in a transaction. Click on the link to learn more and how to apply.

RESOURCES

For more information, contact: 

Nicole MacDonald
Communications and Marketing Specialist
Fruit and Vegetable Dispute Resolution Corporation
Email: [email protected]
Ph: +1-613-234-0982

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Accessing Government Quality / Condition Inspection Reports

According to the Fruit and Vegetable Dispute Resolution Corporation (DRC) Trading Standards and Good Inspection Guidelines, if your fresh produce arrives in a deteriorated condition, the buyer or receiver is responsible for requesting a government inspection to demonstrate the load is in poor condition. Generally, after the inspection, the applicant will receive the inspection report directly from the government agency and is required to share it with the shipper or seller in a timely manner.

In the United States, the United States Department of Agriculture Agricultural Marketing Service offers electronic access to government inspection reports by entering the certificate number and password provided in the inspection report (https://fpbinspections.ams.usda.gov/). However, in Canada, the Canadian Food Inspection Agency Destination Inspection Service (CFIA–DIS) does not offer similar access. To access these government inspection reports, you have to contact the appropriate DIS regional office by email or phone and provide the inspection’s serial number.

Recently, the DRC reported that a member was modifying CFIA inspection reports, which resulted in their expulsion from their DRC membership. Therefore, it is important for our members to be aware that access to a government inspection report is available to other principals in the transaction and not just the applicant.

To facilitate access to CFIA inspection reports, we are currently working with the CFIA to make inspection reports available, like the USDA. This expedited access to inspection reports can validate the information received and help decide if an appeal inspection is necessary.

For more information, contact:

Nicole MacDonald
Communications and Marketing Specialist
Fruit and Vegetable Dispute Resolution Corporation
Email: [email protected]
Ph: +1-613-234-0982

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Membership Update – March 2024

Welcome new members!

We are pleased to welcome the following 16 new members during the month of March 2024: 

ANAVARA LIMITED (Also d/b/a JusFres), BC, Canada
ARONA TRADING, SA., Lima Peru
DA PRODUCE GUYS (A d/b/a of 1710709 Ontario Inc.), ON, Canada
FALCONS GLOBAL CORPORATION, ON, Canada
FRUIT WORLD COMPANY, INC., CA, United States
GOSAL TRUCKING LTD., BC, Canada
GRUPO COMERCIAL CAMPO VERDE SAC (También haciendo negocios como Grupo Campo Verde), Lima, Peru
GUJARATI KITCHEN INC., ON, Canada
HGC (A d/b/a of 1445913 Ontario Inc.), ON, Canada
LIGHT SPEED LOGISTICS INC., AB, Canada
MALLADI HOLDINGS CORP., SK, Canada
MANGO FRESH MARKET LTD. (Also d/b/a Freshest Fruits and Vegetables / Save Way Retail), PE, Canada
OSU TROPICAL MARKET INC., ON, Canada
RIG LOGISTICS INC., AB, Canada
SHERRINGTON TRANSPORT INC., QC, Canada
SHREE SUPERMARKET INC., BC, Canada

To view a complete list of active membersclick here.

DRC Membership: Change in Status

As of March 31, 2024 the following organizations no longer hold a DRC membership:

10621692 CANADA INC., QC, Canada
AGROTRADE CORPORATION CANADA (Also d/b/a Agrotrade), AB, Canada
BEST FRESH PRODUCE INC., BC, Canada
HELLER BROS. PACKING CORP., FL, United States
HOUSE OF AVOCADO INC., ON, Canada
INTERNATURAL MARKETING INC., FL, United States
KAHKASHAN TRANSPORATION INC./ TRANSPORT KAHKASHAN INC., QC, Canada
LENDERS MULTIMEDIA INC., ON, Canada
ONEONTA TRADING CORPORATION, WA, United States
PALMAS WHOLESALE CORP., ON, Canada
ST. DAVID’S HYDROPONICS LTD., ON, Canada

Automatic Terminations:

On March 29, 2024, ALIMENTS KURAS / KURAS FOODS (A d/b/a of 122011 Canada Ltée) was expelled from the DRC for failure to meet their financial obligations and failure to provide requested information in violation of section 1.5 of the DRC Trading Standards and section 3.03 of the DRC By-laws. At the time of expulsion, Sabrina Levesque (President) was the only responsibly connected person to this organization.

Important note:

Following membership termination, the former member remains liable for claims arising prior to their termination if the claim is submitted to DRC by way of a Notice of Dispute within nine (9) months from when the claim arose or within nine (9) months from when the claimant ought reasonably to have known of its existence.

For details regarding a change in status, don’t hesitate to get in touch with the office.

To view a complete list of inactive membersclick here.

About the DRC

The DRC is a non-profit membership-based organization whose core work is business-to-business commercial dispute resolution for produce. The DRC is a referee between parties when a purchase and sale do not go according to plan. Members adhere to a common set of trading standards and member responsibilities that promote fair and ethical trading for produce entering the North American marketplace. In Canada, membership in the DRC is a regulatory requirement to trade fresh fruits and vegetables (i.e., buy, sell, import, export) unless accepted by the regulations. Today, the DRC has members in 16 countries outside of North America, and membership continues to grow annually. Anyone exporting fresh fruits and vegetables to Canada must sell to a DRC member.

In addition to the DRC’s Operating Rules and Trading Standards, the DRC offers a comprehensive, tailored suite of tools to build the knowledge and capacity of members to avoid or resolve disputes. The DRC provides education, mediation, and arbitration services, along with the ability to impose sanctions and disciplinary actions on members who do not conduct business in accordance with the terms of their membership agreement.

To date, the DRC has resolved claims in excess of $105 million dollars. Although arbitration is available, 80% of these claims have been settled in an average of 26 days through our informal consultation/mediation services. Arbitration awards are court-enforceable in countries that are signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards or subsequent conventions.

For more information about memberships, click here or contact our Helpdesk.

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Dealing with a Bad Load? Your Options as a Buyer/Receiver Revealed.

As a Free on Board (FOB) buyer/receiver, it is important to understand what actions to take if you receive a product that does not meet the contract terms or DRC’s Good Arrival Guidelines. Additionally, on a FOB transaction, once the carrier picks up the product, the buyer/receiver becomes the owner of the load.

But what if you find that the product is in poor condition during unloading? You have the right to reject the load, but to maintain this right, you must immediately load the product back into the truck and request a government inspection, or if agreed upon, a private inspection.

If the inspection report confirms that the product does not comply with DRC’s Good Arrival Guidelines or contract terms, you have three options: reject the product and return it to the shipper, renegotiate the contract terms, or claim damages if they cannot agree on renegotiating the contract, and rejecting the load is not an option.

What is required when you REJECT a load?

The proper or legal act of rejection requires that you:

  • Do not divert a shipment by sending your product to a different location from the one indicated in the bill of lading (BoL).
  • Do not unload the shipment except for the purpose of inspection.
  • Give your notice of rejection within a reasonable time.

Rejecting a load requires you to follow the procedure indicated in DRC’s Trading Standards – Section 10, which states:

“2. Where a receiver has:

  1. purchased an perishable agricultural commodity that is damaged or in a deteriorated condition, or
  2. offered to handle a perishable agricultural commodity on consignment that is damaged or in a deteriorated condition, he shall:
  1. within 8 working hours, exclusive of Sundays and holidays, after receipt of notice of arrival of the shipment of a perishable agricultural commodity apply for inspection and, within three hours after he has received an oral or a written report of the result of the inspection, advise the shipper or the seller’s local representative in writing that he rejects the perishable agricultural commodity,
  2. within 24 hours of the receipt by him of a certificate in respect of the inspection forward a copy thereof to the shipper of the perishable agricultural commodity,”

What to do when ACCEPTING a load in deteriorated condition?

Remember that the ownership of the load is transferred to the buyer/receiver once the carrier picks up the product. If the inspection report confirms the product has failed to meet DRC Good Arrival Guidelines or contract terms, and you still wish to accept the load, then you can renegotiate the contract terms.

But what if you and the seller cannot agree on a price adjustment? You may negotiate other alternatives such as Repacking, Price After Sale or Consignment terms. However, if no agreement is reached, you can only claim damages.

Claiming damages is a process where the buyer/receiver must salvage the product to the best of its capabilities to minimize the loss. The responsibility is to market the product and make every reasonable effort to sell it at the best possible price and as quickly as possible. From the sales, you can deduct any expenses resulting from the breach of contract, such as freight, inspection costs, brokerage, and any other agreed-upon expenses. The most straightforward way to demonstrate damages is by presenting an account of sales.

Remember that the DRC Trading Standards are a set of rules and guidelines that apply to all transactions made by DRC members. Although members can also have their own Standard Operating Procedure (SOP), it is your responsibility to demonstrate that your clients have discussed, understood, and agreed with your SOP. Protect your business by getting familiar with and understanding the DRC Good Arrival Guidelines and Trading Standards.


For more information, contact:

Nicole MacDonald
Communications and Marketing Specialist
Fruit and Vegetable Dispute Resolution Corporation
Email: [email protected]
Ph: +1-613-234-0982

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Membership Update – February 2024

Welcome new members!

We are pleased to welcome the following 15 new members during the month of February:

1 MILL ROAD WINERY LTD., BC, Canada
9311-3652 QUEBEC INC., QC, Canada
AGRILEZA CANADA INC., AB, Canada
ALIMENTS JANNA (Faisant également affaire sous 9481-022, QC, Canada
COMERCIALIZADORA TROPIEXPRESS S.A. DE C.V., Puebla, Mexico
GLYCAN FOOD LIMITED, BC, Canada
HAO FU FARM LTD., ON, Canada
MAQUIAGRO S.A. (Also d/b/a Unispice), Guatemala, Guatemala
MEDRANO PRODUCE LLC., TX, United States
MOHAMED AHMED MEGAHED MOUSA INSTITUTION, Egypt, Egypt
NOSTALGIA INC., AB, Canada
PRIMEORGANIC INC., ON, Canada
TN FRESH LTD. (Also d/b/a TN Fresh), ON, Canada
UNITED EXPORTS SALES AND MARKETING LLC., FL, United States
VISION GLOBAL GROUP LLC, NJ, United States

To view a complete list of active members, click here.

DRC Membership: change in status

As of February 29th, 2024, the following organizations no longer hold a DRC membership:

A&B TROPICAL PRODUCE, LLC FL United States
BAKER PRODUCE, INC. WA United States
Bles Seed Potatoes Ltd. AB Canada
BUON VINO MANUFACTURING INC. ON Canada
FOKA INTERNATIONAL INC. ON Canada
JA CANADA (A d/b/a of Jaime A. Aparicio) ON Canada
JEAR LOGISTICS, LLC SC United States
KOR PRODUCE (A d/b/a of Kor Services, LLC) PA United States
LES FERMES LUFA INC. / LUFA FARMS INC. QC Canada
LYMAN HUESTIS & SON INC. PE Canada
NAT FEINN & SON CA United States
NEW ERA LOGISTICS INC. OH United States
OPEN & CLOSE FOOD SERVICES (A d/b/a of John Haga AB Canada
PABLO’S PRODUCE, INC. CA United States
PANERA BREAD (BC) ULC (Also d/b/a Panera Bread) ON Canada
PISMO OCEANO VEGETABLE EXCHANGE CA United States
PRIME TROPICALS OF AMERICA LLC. TX United States
READY PAC PRODUCE, INC. CA United States
SANG YUAN ONLINE MARKET INC. BC Canada
SKYE VIEW FARMS LTD. PE Canada
TRYCE WHOLESALE CASH & CARRY LTD. AB Canada
WOLFE’S GREEN DIRT FARM (A d/b/a of Immian Ray Wolfe) BC Canada
XATLANTIC ENTERPRISES INC. ON Canada

Automatic Terminations: 

On February 19, 2024, VALLEY FIELD FOODS (A d/b/a of 9386-4171 Quebec Inc.) was expelled from DRC for failure to meet their financial obligations and failure to provide requested information in violation of section 1.5 of the DRC Trading Standards and section 3.03 of the DRC By-laws. At the time of expulsion David Bouhadana (President) was the only responsibly connected persons to this organization.

Important note:

When a membership is cancelled, the former member remains liable for any claims arising prior to the closure of their membership if the claim(s) is submitted to the DRC by way of a Notice of Dispute within nine months from when the claim arose or within nine months from when the claimant ought reasonably to have known of its existence.

For details regarding a change in status, please contact the office.

To view a complete list of inactive members, click here.


About the DRC

The DRC is a non-profit membership-based organization whose core work is business-to-business commercial dispute resolution for produce. The DRC is a referee between parties when a purchase and sale do not go according to plan. Members adhere to a common set of trading standards and member responsibilities that promote fair and ethical trading for produce entering the North American marketplace. In Canada, membership in the DRC is a regulatory requirement to trade fresh fruits and vegetables (i.e., buy, sell, import, export) unless accepted by the regulations. Today, the DRC has members in 16 countries outside of North America, and membership continues to grow annually. Anyone exporting fresh fruits and vegetables to Canada must sell to a DRC member.

In addition to the DRC’s Operating Rules and Trading Standards, the DRC offers a comprehensive, tailored suite of tools to build the knowledge and capacity of members to avoid or resolve disputes. The DRC provides education, mediation and arbitration services along with the ability to impose sanctions and disciplinary actions towards members who do not conduct business in accordance with the terms of their membership agreement.

To date, the DRC has resolved claims in excess of $105 million dollars. Although arbitration is available, 80% of these claims have been settled in an average of 26 days through our informal consultation/mediation services. Arbitration awards are court-enforceable in countries that are signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards or subsequent conventions.

For more information about memberships, click here or contact our Helpdesk.

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Withholding payment of an undisputed amount: Tips for Better Business Practices

The Fruit and Vegetable Dispute Resolution Corporation (DRC) has noticed that, from time to time, a buyer may choose to withhold payment of the undisputed amount when a disagreement on a transaction occurs.

It is not uncommon to see this practice in our industry especially when the parties disagree on a return after the product has failed to meet contract terms and the load has been handled to minimize the loss. It also happens when there is more than one transaction between the parties, one of the invoices is in a dispute, and the other invoices are not paid until the disputed invoiced is resolved.

Here’s what the DRC recommends to buyers and sellers in this situation:

As per the DRC Trading Standards, all members must fulfill their financial obligations by paying their invoices within the agreed payment terms or follow DRC Trading Standards when no payment terms have been agreed. Undisputed invoices cannot be withheld unless the buyer and seller agree otherwise.

In regards to payment of undisputed amounts, the DRC Trading Standards Section 19 subsection 10 states:

“(11) … If there is a dispute concerning a transaction, the foregoing time periods [paragraphs (1) through (10)] for prompt payment apply only to payment of the undisputed amount.”

Paying the undisputed amount is a good business practice and can help you have better customer relationships. Here are some of the benefits:

  1. The disputed amount may become significantly less.
  2. The smaller the amount of a dispute, the easier it is to negotiate a settlement.
  3. Helps avoid situations where the supplier feels like they are being held for ransom. When buyers withhold money that do not belong to them, suppliers may become more reluctant to negotiate a settlement.
  4. Paying the undisputed amount can alleviate financial strain on the seller.
  5. The buyer’s reputation avoids being tarnished in the market.
  6. In the event a dispute reaches an arbitration process, and the arbitrator awards interest, the losing party will pay less interest.

If you want to learn more about payment terms and practices, feel free to contact DRC’s Trading Assistance staff through our Help Desk.

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CFIA’s Pause on FFV Grade Standards Sparks Concern

The Fruit and Vegetable Dispute Resolution Corporation (DRC)-led initiative to amend the Safe Food for Canadians Regulations (SFCR) Compendium 2, Canadian Grade Compendium: Volume 2 – Fresh Fruit or Vegetables Grades and Requirements has stalled. The Canadian Food Inspection Agency (CFIA) implemented a pause to the phased updates to individual fresh fruit and vegetable (FFV) grades.

Fresh Produce Alliance (FPA) organizations consisting of the DRC, the Canadian Produce Marketing Association, and the Fruit & Vegetable Growers of Canada were recently advised by CFIA that it will continue to review its priorities and allocate resources to the highest-risk areas.

The CFIA has informed the FPA of their intention to pause work to develop a more efficient model for grades that will facilitate trade, support economic growth, and align with the CFIA’s mandate. They further indicated that they are redirecting resources to prioritize and complete this engagement in a timely manner. The CFIA will continue to engage with the FPA to better understand the role that grade standards play in the marketplace, including the role and value of the standards.

The FPA points out that the pause to phased updates will delay the completion of the grade standards, which are required for Canada to remain competitive and provide Canadians with affordable fresh fruits and vegetables.

The horticultural industry is particularly eager for the proposed changes to be implemented as the pause raises concerns with quickly approaching Test Market Authorizations (TMA) that will expire soon. For instance, a TMA for nectarines is set to expire on July 5, 2024.

While the new stand-alone grade standard for nectarines would address elements of the TMA, an extension may not be possible, and the proposed new standard may not be implemented by July as a result of the pause.

The DRC looks forward to providing further updates and discussion on grade standards at the upcoming FVGC AGM to be held in Ottawa from March 4-7, 2024.

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For more information, contact: 

Nicole MacDonald
Communications and Marketing Specialist
Fruit and Vegetable Dispute Resolution Corporation 
Email: [email protected]
Ph: +1-613-234-0982

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