What Is PACA?
Farming/Agriculture/PACA and Licensing
Our area is one of the United States’ most productive farming and agricultural areas. If you sell produce and don’t understand PACA, you could be placing your company at risk. PACA (Perishable Agricultural Commodities Act) is the federal law which regulates interstate and international trade in fresh and frozen produce. If you sell fresh or frozen fruits, vegetables, fresh herbs, or fresh roots coming into the United States or between states, PACA almost certainly applies to your transactions with your receiver, consignee, broker or buyer.
PACA provides a code of fair play that guides farmers and others involved in enforcing their contracts. The PACA statute requires traders to comply with the terms of their contracts. Suppliers must ship the specified quantity and quality of produce. Buyers must accept shipments that meet all of the contract specifications and pay immediately after acceptance.
PACA also requires that many joint producer operations that purchase fruits and vegetables from affiliates, or negotiate sales on behalf of members of the affiliates, obtain a license.
You are required to get a PACA license if:
- You buy or sell more than 2,000 lbs. of fresh or frozen fruits and vegetables in a given;
- You are part of a brokers or commission merchants firm that negotiates the sale of fruits and vegetables on behalf of another person that exceeds $230,000 per year; or
- You are a food retailer that purchases at least $230,000 of fruits and vegetables per year.
Those exempt from the PACA licensing requirement include:
- Retailers who buy less than $230,000 of fruits and vegetables per year;
- Frozen food brokers who are independent agents and sell less than $230,000 per year of fruits and vegetables;
- Processors – except potato processors – who buy produce only for processing within the state where the produce is grown; and
- Restaurants (unless you are a restaurant group that buys produce and resells it to individual restaurants through a separate entity).
Even if you aren’t required to obtain a PACA license, companies buying or selling produce in wholesale quantities are subject to PACA rules. However, being a PACA licensee will benefit you by helping to preserve your trust rights under the PACA Trust, which is a remedy for produce sellers to obtain payment on undisputed amounts owed for produce sales in or to the U.S.