Canada’s Fruit and Vegetable Dispute Resolution Corp., which celebrates its 10th anniversary this year, has changed over the years to meet the needs of the industry it serves.

“If I think about the last 10 years, we’ve completely rewritten our bylaws because we’ve had certain challenges over time,” said Stephen Whitney, president and chief executive officer.

As DRC turns 10, industry still seeks PACA-like trust

Courtesy Dispute Resolution Corp.

Matt McInerney (left), executive vice president of Western Growers, Irvine, Calif., and chairman of the DRC board, and Stephen Whitney, president and chief executive officer of the DRC, work the organization's booth at the Canadian Produce Marketing Association's annual convention in 2000.

Acting on requests from a few large Canadian retailers, the organization added transportation disputes to its list of services in 2005. Whitney said the transportation industry is a natural fit because most of the trade is basically an f.o.b.-type market, although trucking companies are a small segment of the group’s membership.

“What hasn’t happened is we haven’t seen a lot of the transportation industry run to our door for membership,” Whitney said.
The DRC also has pushed the industry to build a new model for destination inspections.

“If the DRC had not come to be, I’m not sure what the landscape would be,” Whitney said. “They’re (licenses, registration and desintation inspections) not government priorities because they don’t measure up to food safety issues.”

Matt McInerney, executive vice president of Western Growers, Irvine, Calif., and volunteer chairman of the DRC since its inception, said the group’s involvement in issues like changing inspection protocols makes it the go-to association in Canada.

“You need something to go back to your growers with if product doesn’t look right. So we worked pretty diligently to get a new agreement for destination inspections. That is beginning to happen. It’s taken time, damn near 10 years,” Whitney said.
Without destination inspections, buyers eliminate a piece of evidence that can help them out in a dispute. Because 61% of the disputes handled by the DRC relate to product condition, destination inspections are extremely important, Whitney said.

The Canadian Food Inspection Agency, the U.S. Department of Agriculture’s Canadian counterpart, handles those inspections. Mexico is without a government-sponsored inspection service.

Although the DRC has accomplished a lot in the past 10 years, the system does not have the power to ensure produce industry creditors are a priority, like the Perishable Agricultural Commodities Act in U.S., said

“What we lack is equivalent to a PACA trust, where produce companies have priority in bankruptcy repayments,” said Fred Webber, vice president of trading assistance for the DRC.

The DRC continues to work with trade associations in Canada and the U.S. on risk mitigation to offset financial risks beyond its power.

“Our industry says ‘Look, that would be a good tool to have up here,’” said Dan Dempster, president of the Canadian Produce Marketing Association. “All we’re looking for is to try and get some of those extra tools here. That would strengthen the DRC, both for enforcement and licensing, and the DRC would provide more bang for the buck.”

Aside from all the nitty gritty details involved in dispute resolution, the group has, more than anything, provided validation for its members and a way to weed out the less-reliable produce companies, Webber said.

“One of our initial missions was to identify the bad players,” he said. “People look at DRC membership as a way to qualify a company to do business with. We turn the bad away.”

Along the same time, however, Whitney said companies must continue to research possible trading partners.

“Some people are not scrutinizing on who they’re dealing with well enough,” Whitney said.

Whitney said he’ll keep pressuring law enforcement agencies to do more about companies that turn away from their financial obligations.

“The most important thing, at the end of the day, is to get paid for products you can say you grew, packed and shipped,” McInerney said.