BILL TO REPEAL PACA SPLITS VENDORS, STORES

AMY I. STICKEL

ANAHEIM, Calif. -- One produce executive called it the hottest topic he's seen in his 47 years in the business.

Another called it a family war.

An industry observer said without it, the cost of doing business will rise, and, subsequently, so will the price of produce to consumers.

"It" is the Perishable Agricultural Commodities Act, which first established a code of trading practices for the fruit and vegetable industry in 1930. After nearly five years of attempted reforms by the industry, a Republican in the House of Representatives introduced a bill Jan. 26 to completely abolish the Act.

The 65-year-old law was designed to ensure prompt payment to produce suppliers. Under PACA, all fresh and frozen fruit and vegetable shippers, receivers or buyers in interstate or foreign commerce are required to be licensed. And, buyers must pay for produce within 10 days unless other terms are agreed upon.

The one-sentence bill, submitted by John Boehner, R-Ohio, drew loud criticism last week at the annual convention of the United Fresh Fruit and Vegetable Association held here last week.

Boehner's proposal has divided the supplier and buyer side of the industry. The grower-shippers say PACA is crucial to their business, and retailers say the high cost of PACA licensing fees yields few results that they can see.

Alexandria, Va.-based United has sided with suppliers and growers, and has helped to draft a compromise bill designed to address some retailer concerns. (See related story, Page 18.)

Rep. Richard Pombo, R-Calif., is expected to submit that bill, although he had not submitted it by late last week, according to United officials. The produce industry's other major trade group, the Produce Marketing Association, Newark, Del., has also expressed support of PACA.

Boehner's bill has the support of many retailers and is backed by the Food Marketing Institute, Washington, and the National-American Wholesale Grocers' Association, Falls Church, Va.

Boehner told SN earlier that he does not want to abolish PACA, but rather wants the bill to be seen as a way to spur reform.

"This is really a family fight," said John McClung, vice president of issues management for United, speaking at a packed meeting of the Baltimore-based National Association of Perishable Agricultural Receivers, held the day before the United convention here.

"We've got a good tool that works fairly well," said John D. Flanagan, chief of the PACA branch of the Fruit and Vegetable Division of the Agricultural Marketing Service, a unit of the U. S. Department of Agriculture, at the NAPAR meeting. "A hell of a lot of people in other industries would love to have this tool."

Flanagan acknowledged that the Act is not perfect. He said the formal complaint procedure is extremely lengthy, sometimes taking up to a year for a resolution. He said reforms are in the works, though.

"Frankly, I think this program will survive. But it may starve to death," he said.

Another speaker, Walter Lindsay, president of the Produce Reporter Co. Blue Book Services, Carol Stream, Ill., which offers credit reports on growers and shippers, said the abolition of PACA will result in more difficult credit situations, more unscrupulous operators and more misbranding of produce.

"The cost of doing business would rise, and the cost of produce at the supermarket would rise," he said.

Many retailers, wholesalers and suppliers have been reluctant to take a public stand on the issue, because of its controversial nature.

In private conversations with SN, some shippers and growers complained that retailers are not willing to pick up their share of the costs involved in regulating the industry. "This industry is tied closely together," one grower-shipper said. "You just can't take out a link and expect it to work."

Several other growers and shippers agreed with United's McClung's assessment, that retailers resent the prompt payment guarantees built into PACA. Retailers and other receivers could make more money by "floating" payments, and extending the payment dates as long as possible, McClung said.

One retailer said he feels his licensing fees basically support growers and shippers in California. He said he simply could not afford to spend his money that way.

Several wholesalers said independent retailers pay proportionally more in licensing fees than do large chains, which they think is unfair. Several said they know some of their independents are not paying their licensing fees as required by law, but they will not bring up the issue with those independents.

Retailers, growers and shippers alike do agree on one issue, though. And that is, that there are no easy solutions.