Jul 2, 2018

New Kroger payment terms subject of industry communication

Charles Hall, executive director of the Georgia Fruit and Vegetable Growers Association (GVGA), issued the following statement July 2 regarding The Kroger Co.’s new payment policy for grower/shippers:

“On June 19, The Kroger Company informed shippers of a new NET 90-day payment terms, scheduled to begin August 1. This new policy directly contradicts your rights under the Perishable Agricultural Commodities Act (PACA) trust. It is important to note these terms are “preferred” by Kroger – not required. Accepting these terms, or any others accepted outside the parameters of PACA (net 30 days), will waive your rights under the PACA trust.

A Georgia produce industry letter has been sent to Randy Riley, Kroger Corporate Director of Produce Merchandising on behalf of GFVGA, Georgia Agribusiness Council, Georgia Farm Bureau, Georgia Peach Council, Georgia Watermelon Association, Georgia Blueberry Growers Association and the Vidalia Onion Business Council.

After communicating the significant legal implications of these payment terms and reminding Kroger of their successful partnership with Georgia growers, the industry letter stated, “We request that Kroger recognize the importance of protecting produce shippers (local and otherwise) to obtain prompt payment for its sale of fresh produce, especially in light of the inherent perishable nature of the fresh produce being sold… With the already volatile state of the produce industry and high crop input costs, a change in payments will negatively affect both small and large farmers. A 60 to 80-day payment delay would have a ripple effect on the supply chain and ultimately cause issues for the grower.”

Currently under PACA, and to be eligible for trust benefits, you must use prompt payment, which means payment terms of “PACA Prompt” or “Net 10 days”. Sellers are allowed to extend those terms to a maximum of 30 days. Anything beyond 30 days will invalidate your protection and rights to the trust provisions. When Congress enacted the trust provisions in 1984, it recognized the uniqueness of the produce industry and the importance of protecting sellers of fresh produce.

GFVGA strongly recommends that you retain your rights under the PACA Trust. This trust exists to protect you. As you do business with Kroger or any other customer, know your rights and ensure that you continue to receive timely payments.”  

 – Charles Hall