USDA: Transcription of QA session from tomato web seminar

03/18/2013 03:45:00 PM
Tom Karst

The question is, if a full load is rejected, and it scores 25% out of grade, can the entire load be rejected or just 25%?

If it meets the minimum requirement as it would with 25%, the entire load can be rejected in accordance with the Agreement. And again those requirements are all in Appendix B, the section for making adjustments for condition defects.

I have a question here; where some contracts from selling agents are saying that only one half of the customary repacking reconditioning charges are allowed to be deducted off if the lot fails.

I would encourage you please to go to Appendix B of the Agreement. Section B4 explains the allowances for the repacking charges. And there is a difference if it is performed by unaffiliated party or if it is performed by the selling agent itself. So that is a very specific question, so it is probably best if you read that section of the agreement. It should become clear that if the salvaging and reconditioning activity is performed by the Selling Agent’s customer or a party affiliated with the Selling Agent, the direct labor costs or, in lieu thereof, one-half of the ordinary and customary repacking charges may be reimbursed. So that is exactly where that statement comes from.

The question about the repacking fee of $2.50 per carton, how was that calculated; is it considered ordinary and customary?

The Agreement tries to reflect the market realities. Over time we have had a lot of experience with this, and what is in there with the $2.50 is only an example. We have found that it varies very much. It is going to cost much more to repack the tomatoes in New York than it will cost to repack them in Oklahoma, for instance. So those are things that we have a sense of: what is excessive, what seems to low. We get that over time, where we have questions we will ask and require supporting paperwork documentation. The concern is that in some of these cases, if the Agreement was more restrictive it would cause more problems for everyone. So this is recognition that it can be different in different locations, and if it seems too high or too low we do ask those questions.

Someone asked if it is possible that Mexican growers and sellers use Canada’s market to sell tomatoes at really low prices to get rid of excess production?


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