The fresh produce industry is facing unprecedented losses with the COVID-19 pandemic according to Western Growers, which is asking the U.S. Department of Agriculture to cover all claims through the Perishable Agricultural Commodities Act to ensure produce sellers are fully protected.
In a March 25 letter to Agriculture Secretary Sonny Perdue, Western Growers President and CEO Dave Puglia asks for measures to counteract losses to the industry to be put in place immediately.
The PACA trust ensures that licensees receive payment before non-licensees when companies face financial difficulties. With measures designed to slow the spread of COVID-19 disrupting the supply chain, and in the case of restaurants and other foodservice operations, shutting it down completely, produce company are facing financial hardship, according to Puglia.
“In this crisis , an issue that is of growing concern is that given the extremely volatile environment currently in the food supply chain, the likelihood of delayed payments or non-payments and the drain on cash flow will be much greater than could have ever been forecasted,” Puglia wrote. “Indeed, many of our members are already facing repeated requests from their buyers for payment extensions beyond the standard 30 days.”
That concern is especially acute in the foodservice sector, he said.
Western Growers is calling on the USDA to guarantee the payment of all PACA trust claims. An overhaul of the system is not necessary, according to Puglia, but if a claim has not been satisfied after going through the PACA process, “USDA would shore up any shortfall” to pay the full amount of qualified receivables.
“With these measures, we can ensure reduced financial risks to our nation’s fresh produce industry as it continues to push at full capacity to meet the national emergency needs of our country’s citizens,” Puglia wrote.
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