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
Kroger drops 90-day payments for produce
The Kroger Co. has rescinded a payment schedule that would have forced produce suppliers to lose PACA trust rights by extending payment terms to 90 days.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 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,
“We’ve shared with individual produce suppliers
“I’d like to take this opportunity
But according to the retailer’s original letter, there was no
Produce groups to Kroger on
90-day plan: ‘fix this mess’
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.
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
Kroger, however, has “expressed a willingness to be flexible” on the policy according to the release, but Radanovich said flexibility alone will not work.
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 said Kroger was
> 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