Dive Brief:
- Canada has lost its preferential treatment under U.S. law regarding produce shipments -- a change that could cost Canadian grower-shippers millions of dollars.
- The USDA last week revoked Canada's "privileged" status under the Perishable Agricultural Commodities Act. Under that status, Canadian companies did not have to post surety bonds when trying to collect payments from delinquent buyers. No other nation has had such status.
- With the special status gone, a Canadian shipper must post a bond for twice the amount they are seeking to collect, thus taking actions to recover $100,000 would require the purchase of a $200,000 bond.
Dive Insight:
There's been a lot of bad blood about the PACA rules in recent weeks. The short version of the story is this: Canada doesn't have a dispute-resolution system like PACA. U.S. regulators and shippers have been demanding one. Canada hasn't delivered. And now the U.S. has taken action.
No one wins in this situation (unless you include some buyers). And grower-shippers on both sides of the border are expressing frustration with Canadian regulators. It's a possibility that Canada will come up with a plan for reciprocity quickly now that the USDA has made its move.
