BATTLE FOR PACA REFORM FINALLY DRAWS TO A CLOSE

JOANNA RAMEY

WASHINGTON (FNS) -- The battle over reform of the Perishable Agricultural Commodities Act, which had pitted growers and distributors against their customers, has finally ended with the settlement of a lingering skirmish over fees.

Two years ago Congress voted to gradually phase out retailer and wholesaler participation in the program, but a U.S. Department of Agriculture plan detailing the three-year transition was still sparking controversy over the collection of licensing fees. PACA was created as a Depression-era program to ensure produce suppliers were promptly paid.

The USDA had contended retailers and wholesalers who apply for a PACA license for the first time during the transition period must pay an annual renewal fee. Retailers and wholesalers argued the law provides no benefits to them with the advent of modern-day innovations in distribution and retailing.

In their latest action, USDA officials recently decided to drop the renewal requirement for new applicants after receiving protests from retailers and wholesalers, as well as from authors of the PACA phase out legislation. Since the agency has been collecting these fees for the last two years, it will now provide refunds with interest.

Supermarket industry representatives regarded the latest development as a clear victory. "USDA's decision to obey the law is a welcome one in that it is consistent with the agreement originally reached by the industry and passed by Congress," said Thomas K. Zaucha, president of the National Grocers Association, Reston, Va.

Retailers and wholesalers decided to fight this battle even though it meant an inequity during the transition between new PACA participants and those who have been paying into the licensing fund for years. There have been about 1,000 new applicants.

Timothy M. Hammonds, president of the Food Marketing Institute here, said the fight over renewal fees and new PACA members was one of principle. "The industry isn't going to stand for the undoing of our agreement," he said. "It was an absolutely clear violation of the agreement. It's our way of saying, 'We're not going to let you expand this program.' "

During the phaseout, veteran PACA participating retailers and wholesalers are required to pay $400 for annual license renewals for the first store in a chain and $200 for each additional outlet, with a $4,000 cap. All renewal fees end Nov. 14, 1998, although retailers and wholesalers will still have to be licensed. New PACA participants also will have to continue to pay an initial registration fee.

For their part, vegetable growers and distributors, who will continue to fund PACA, and had fought vigorously against retailer and wholesaler withdrawal from the program, are resigned to this final development.

"This was a quasi-technical argument over what the law really said," said John McClung, vice president of industry relations at the United Fresh Fruit and Vegetable Association, Alexandria, Va.