U.S.: Industry associations lash out at Kroger's new payment policy
They say the "Net 90" plan that is due to become effective from August 1 would automatically force suppliers to waive their Perishable Agricultural Commodities Act (PACA) rights and protections.
PACA, which was signed into law in 1984, recognizes the unique position of produce suppliers as the providers of a highly perishable commodity. It ensures that they are first in line to receive payment for their produce in the event of the buyer’s bankruptcy, but becomes void if suppliers agree to payment terms in excess of 30 days.
NAPAR, the nation’s only produce trade association that exclusively represents produce wholesalers and receivers, said it is "deeply concerned" about the new payment policy, which Kroger announced in a letter to its suppliers earlier this month.
"Many produce suppliers, especially wholesalers and receivers, are small, family owned and operated businesses providing highly perishable produce to large retailers and food service businesses," it said.
"PACA was meant to level the playing field in the produce supply chain. It protects the wholesaler supplying the food industry’s giants."
Matthew D’Arrigo, of New York-based D’Arrigo Bros and chairman of NAPAR, advised members to "proceed with extreme care."
"Agreeing to any retailer’s 90-day payment policy would forfeit their rights and protection from the PACA Trust. This is not a decision to be made lightly and may not be good business practice,” he said.
The California Fresh Fruit Association (CFFA) has also expressed its "extreme displeasure" with Kroger's announcement.
"It is inappropriate, if not illegal to force suppliers to forfeit their rights under the Perishable Agricultural Commodities Act (PACA), an act created specifically to protect the perishable fresh fruit industry. We are very disappointed with Kroger’s decision," CFFA president George Radanovich said.
"It is our understanding the Kroger has expressed a willingness to be flexible with this new policy, but “flexibility” in this matter won’t help. By this action, they have opened the door for other retailers to violate supplier rights protected by law. Our industry should not and will not stand for attacks like this.
"The fresh produce industry has been a good partner to Kroger, we hope they will remember that partnership and fix the mess they’ve created. Kroger must withdraw this threatening proposal."