By Sebastián Osman, Head of International Fruit Trade and partner at Dante Legal.
Fruit exporters mainly focus on harvesting high-quality fruit, but the export process itself also carries significant risks that can lead to losses or even bankruptcy.
Once fruit is shipped internationally, exporters lose control over it—It moves into the hands of the carrier and then the receiver's, two parties over whom the exporter has little or no influence.
Exporters should not only prepare for quality harvesting but also anticipate potential issues in international transport and destination markets by implementing preventive measures before shipment. There are two key elements for safe and secure fruit exports.
A good relationship between exporters and receivers
Contracts are the foundation of preventive measures with receivers. These do not need to be lengthy—a two- or three-page document is usually enough. In some cases, a pro forma invoice or purchase order may be adequate.
There are several elements that contracts must provide total clarity on.
First, there's the type of transaction. It should specify whether it is at a fixed price, an open consignment, a minimum guaranteed price, or Price After Sale. Then there's determining protocols for inspection at the final destination. Here, the receiver must have clear instructions for checking the fruit upon receipt. This item must also specify a defined timeframe to do so.
Given that the exporter and receiver are in different countries, there will always be room for debate over which law applies—the exporter’s or the receiver’s. This must be agreed upon, and it is particularly advisable to use international regulations to avoid complications.
Lastly, but certainly not least important, is the definition of a dispute resolution procedure. This is often the most critical element. If the receiver does not pay and there is no contract, the exporter may need to sue in the destination country. High litigation costs and lengthy timelines (four to six years) often make this impractical, leading to losses.
Arbitration, such as through the International Chamber of Commerce, is a better option because it reduces costs and time (typically nine to 12 months). The goal is to prevent disputes—if the receiver knows the exporter can act quickly and cost-effectively, they are less likely to withhold payment.
Don't forget the in-between: carriers
Significant risks arise during international transit. Cold chain failures, delays, or other incidents can compromise the fruit’s condition and value.
While many exporters have insurance, poor claim management is a common issue. Missing documentation, lost evidence, and missed deadlines often undermine claims.
To avoid this, it's important to perform quality controls at origin and destination, submitting letters of protest to the carrier, and issuing timely invitations to the carrier and the insurer (if applicable) to inspect the cargo at destination. Additionally, it's crucial to establish proper document management and initiate claims with carriers and insurers (if applicable) correctly and within the required timeframes.
Given the loss of control over the fruit once it is shipped, preventive measures with receivers and carriers are the path to safe and protected exports. However, these measures are not enough if the exporter’s internal processes do not ensure their execution.
Real protection—true safeguarding—requires that processes and measures function like interlocking gears: orderly, consistent, and executable.
