( File photo )

By Amelia Freidline

In June, Kroger sent suppliers a letter outlining a new 90-day payment plan designed to make operations more efficient for the retailer. Produce industry groups quickly pushed back, saying the terms of Kroger’s plan would cause suppliers and wholesalers to automatically lose their PACA licenses. Kroger eventually dropped the policy after multiple groups expressed their concern.

July 9
Kroger drops 90-day payments for produce
By Chris Koger

The Kroger Co. has rescinded a payment schedule that would have forced produce suppliers to lose PACA trust rights by extending payment terms to 90 days.

The Net 90 mandate, announced by Kroger in letters to suppliers in mid-June, was set to go in effect Aug. 1. It was met with immediate concern and scorn by produce trade groups, shippers and anyone in the industry dependig on the Perishable Agricultural Commodities Act as a remedy to recoup losses in bankruptcy and non-payment situations.

The PACA outlines a maximum payment extension of 30 days.

Judith Wey Rudman, director of the U.S. Department of Agriculture’s PACA Division’s Fair Trade Practices Program, sent Kroger a letter questioning the Net 90 policy on June 25.

In a July 9 letter responding to Rudman, Matt Hodge, Kroger’s senior manager of enterprise sourcing finance, wrote that the retailer has responded to suppliers questioning the policy.

“We’ve shared with individual produce suppliers that we will respect existing contractual and legal mandates including PACA. We never intended for PACA-eligible produce suppliers to waive their PACA Trust rights,” according to the letter.

“I’d like to take this opportunity to clearly state that produce suppliers protected under PACA are not required to participate in Net 90 payment terms Hodge wrote. “For those PACA-eligible produce suppliers who are interested, we will continue to negotiate for payment terms that are permitted within their PACA Trust rights.”

But according to the retailer’s original letter, there was no indication that was the case, calling for the policy to cover “all aspects” of Kroger’s business.

June 25
Produce groups to Kroger on 90-day plan: fix this mess’
By Chris Koger

Kroger’s new 90-day payment policy has brought more criticism from produce groups, with the California Fresh Fruit Association expressing “extreme displeasure” and a group representing wholesalers saying it is “deeply concerned.”

Both groups cite concerns of how the policy affects suppliers’ Perishable Agricultural Commodities Act protections. Kroger recently sent a letter on the new policy to suppliers. It is scheduled to go into effect Aug. 1.

The National Association of Perishable Agricultural Receivers (NAPAR), Washington, D.C., which represents produce wholesalers, said suppliers who comply with the 90-day standardized payment policy will automatically lose PACA protections.

The California Fresh Fruit Association on June 25 also weighed in on the issue.

“It is inappropriate, if not illegal, to force suppliers to forfeit their rights under the (PACA), an act created specifically to protect the perishable fresh fruit industry,” George Radanovich, the president of the association, said in a news release. “We are very disappointed with Kroger’s decision.”

Kroger, however, has “expressed a willingness to be flexible” on the policy according to the release, but Radanovich said flexibility alone will not work.

June 25
Kroger letter sparks alarm about PACA trust rights
By Tom Karst

Western Growers has sounded the alarm over a letter from Kroger to fresh produce shippers announcing the company’s standardized payment terms of net 90 days.

The letter, which Western Growers linked to on its website, said the new payment terms, applied to “all aspects” of the chain’s business, will be effective Aug. 1.
The letter said Kroger was making the change to:
> Smooth the company’s cash conversion cycle;
> More efficiently manage the chain’s working capital in order to re-invest in business; and
> Harmonize terms with Kroger’s industry peers.
In addition, Kroger said it would offer an early payment option in return for a discount on the invoice.

Matt McInerney, senior executive vice president for Western Growers, said accepting these new payment terms directly conflicts with growers’ protection rights under the Perishable Agricultural Commodities Act Trust. Agreeing to any extension beyond 30 days permanently waives your PACA trust protection, according to Western Growers.