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What is the Perishable Agricultural 

Commodities Act?

The Perishable Agricultural Commodities Act 

(PACA) establishes a code of fair trading practices 

covering the marketing of fresh and frozen fruits 

and vegetables in interstate and foreign commerce. 

The PACA protects growers, shippers, distributors, 

retailers, and others who deal in those commodities 

by prohibiting unfair and fraudulent practices.

Why do businesses that buy or sell 

fruits and vegetables need more 

protection than businesses in other 

industries?

The produce industry is unique. Dealers handle a 

perishable product and even a 1- or 2-day delay in 

marketing can mean the difference between profit 

and loss. By spelling out the responsibilities of 

all involved parties, the PACA helps promote the 

prompt marketing of produce, and protects the 

rights of buyers and sellers in the event of a contract 

dispute.

How is the PACA enforced?

The U.S. Department of Agriculture (USDA) 

PACA Division enforces the PACA through a 

licensing system. Nearly every trader involved in 

the marketing of commercial quantities of fresh 

and frozen fruits and vegetables in interstate or 

foreign commerce must have a valid PACA license. 

A produce trader who is found to have committed 

unfair trade practices may face a monetary penalty 

or other sanctions, license suspension, or in the most 

serious cases, license revocation.

How do I get a PACA license?

For information on obtaining a license, visit 

www.ams.usda.gov/paca or call the PACA Division 

at 800-495-7222.
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Who needs a license? Who doesn’t? 

In general, wholesalers, processors, truckers, grocery 

wholesalers, and foodservice firms that buy or sell 

more than 2,000 pounds of fresh or frozen fruits 

and vegetables in any given day are required to be 

licensed under the PACA. 

Commission merchants, brokers, or growers’ agents 

who negotiate sales of fresh fruits and vegetables on 

behalf of others are required to be licensed on their 

first transaction. 

Brokers who negotiate sales of only frozen fruits and 

vegetables on behalf of the vendor are subject to 

the PACA licensing requirements after the invoice 

value of total negotiated sales exceeds $230,000 in a 

calendar year. 

Retailers must obtain a PACA license once the 

invoice cost of fresh and frozen fruit and vegetable 

purchases exceeds $230,000 in a calendar year.

Growers can apply for a PACA license but otherwise 

are exempt, so long as they sell only products they 

have grown.

Is there a penalty for operating without 

the required PACA license?

Yes. Companies that operate without a valid PACA 

license are subject to fines of up to $1,200 for each 

offense and $350 for each day the offense continues. 

Court injunctions can be issued against those who 

continue to operate without a license.

How is the PACA program financed?

The USDA PACA program is funded by license fees 

and complaint filing fees. No tax revenues are used 

to fund the PACA program.
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What are my responsibilities as a 

PACA licensee?

The law requires that produce traders comply with 

the terms of their contracts. Sellers must ship the 

quantity and quality of produce specified in the 

contract. Buyers must accept shipments that meet 

contract specifications and pay promptly after 

acceptance. Prompt payment is defined as payment 

within 10 days unless the buyer and seller agree, 

prior to the sale, in writing, to different payment 

terms.

What can I do if I have a dispute with 

a supplier or a buyer over a business 

transaction?

The PACA Division offers dispute resolution services 

to members of the produce industry. A party can file 

a complaint, if a transaction is unpaid or there is a 

dispute between the parties over the contract. The 

other party must be a licensee or operating subject 

to license for a claim to be handled. The written 

complaint, accompanied by a $100 filing fee, must 

be filed within 9 months from the date payment was 

due or the damages were suffered.

The PACA Division's complaint services include 

informal mediation to help the parties resolve 

their differences. Mediation allows both parties to 

air their differences in a neutral environment and 

identify a resolution. 

If parties cannot reach an informal resolution, the 

complainant may file a formal complaint. USDA 

handles formal complaints much like lawsuits are 

handled in a court of law. However, instead of a 

judge, the Secretary of Agriculture determines the 

outcome of the complaint, and can issue an award, 

plus interest, based on the evidence in the case. 

There is a $500 filing fee for a formal complaint.
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The complainant can recover the filing fee if an order 

is issued in its favor.

If a licensee fails to satisfy a PACA award, USDA 

will suspend the firm’s license and restrict the firm 

and its principals from operating in the produce 

industry for up to 3 years.

What types of unfair trade practices 

can result in claims being filed?

• Failure to pay promptly the agreed price of 

produce that complies with contract terms;

• Failure or refusal to account truly and 

correctly, or to make full payment promptly, 

for produce shipped on consignment or on 

joint account;

• Rejecting, without reasonable cause, produce 

bought or contracted to be handled on 

consignment;

• Failure to deliver the contracted produce in a 

timely manner, and at the price and quality 

level specified in the purchase agreement; and

• Discarding, dumping, or destroying without 

reasonable cause any produce received to be 

sold on behalf of another firm.

Where can I get information about 

a firm’s PACA license status or 

complaint history?

Visit www.ams.usda.gov/paca to verify whether a 

firm has a valid license. Call the PACA Division 

at 800-495-7222, for general information about a 

firm’s PACA complaint history. 
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Can I recover money from a firm that 

has gone out of business or filed for 

bankruptcy protection?

Yes. Under the PACA trust provisions, a buyer 

must hold its produce-related assets for the benefit 

of unpaid produce suppliers who have preserved 

their trust rights. In the case of a business failure, 

the debtor’s trust assets are not available for general 

distribution to other creditors until all valid trust 

claims have been satisfied. Because of this, suppliers 

that file for trust protection have a far greater chance 

of recovering money owed them when a buyer goes 

out of business.

What must sellers do to preserve their 

trust rights?

Although the trust automatically goes into effect 

when the buyer receives the goods, sellers must 

properly preserve their trust rights by meeting 

specific notification requirements. Produce sellers 

can preserve their eligibility for trust benefits by 

providing a trust notice that contains detailed 

information sufficient to identify the transaction to 

their selling agent or customer.

What are the notification 

requirements?

The law allows PACA licensees to qualify 

automatically for trust protection by including 

on their invoices or other billing documents the 

following statement:

“The perishable agricultural commodities listed 

on this invoice are sold subject to the statutory 

trust authorized by section 5(c) of the Perishable 

Agricultural Commodities Act, 1930 (7 U.S.C. 

499e(c)). The seller of these commodities retains a 

trust claim over these commodities, all inventories 

of food or other products derived from these 

commodities, and any receivables or proceeds from 
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the sale of these commodities until full payment is 

received”.

Unlicensed produce sellers must provide the buyer, 

i.e., the produce debtor, with written notice of their 

intent to preserve trust benefits under the PACA 

within 30 days of the date that payment was past 

due or notification was received that a payment 

instrument was dishonored.

I am a grower selling only produce 

that I grow. While I am not required 

to have a license, can I obtain a PACA 

license and use the alternative method 

of including the trust statement on my 

invoices to qualify for trust protection?

Yes, a grower with a PACA license is eligible to 

use the alternative method of including the trust 

statement on its invoices or other billing documents 

to qualify for trust protection.

How long are a seller's rights 

preserved?

Trust claimants who preserve their trust rights by 

providing proper notice remain beneficiaries until 

paid.

How is payment from trust assets 

enforced?

The trust is a self-help tool that is separate and 

unrelated to filing a complaint under the PACA. 

Trust beneficiaries may file an action in U.S. 

District Court to enforce payment from the 

trust immediately following a buyer's failure to 

pay promptly. If the debtor is bankrupt, trust 

beneficiaries should file their claims for payment 

with the bankruptcy court.
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If I file a trust claim with the court, can 

I still file a PACA complaint?

Yes, a party can file a complaint under the PACA 

while pursuing a trust action with the court. 

However, PACA may, in some cases, stay the PACA 

complaint pending resolution of the trust action.

Can I agree to payment terms other 

than those in the PACA regulations 

and still qualify for protection under 

the trust?

Although PACA prompt payment terms specify 

payment within 10 days of the date of acceptance, 

a buyer and seller may agree to extended terms as 

long as the agreement is made in writing prior to 

the transaction, and the terms are reflected on the 

invoice and all other billing documents. However, 

to qualify for trust protection, the agreed-upon 

payment term cannot exceed 30 days from the date 

of acceptance.

What is a disciplinary action under the 

PACA?

USDA may penalize a licensee or an entity 

operating subject to license that repeatedly and 

flagrantly violates the PACA. Disciplinary action 

may include sanctions and/or the suspension or 

revocation of an individual’s or firm’s PACA license. 

In lieu of suspension or revocation, the Secretary 

of Agriculture may assess a civil penalty of up 

to $2,000 for each violation or for each day the 

violation continues.
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How does the USDA decide if a PACA 

license should be suspended or 

revoked as the result of a disciplinary 

proceeding?

USDA considers the seriousness and nature of the 

violation(s), the number of violations that took 

place, the length of time during which the violations 

occurred, and the effect that the violations had on 

the produce industry. Revocation of a PACA license 

is the most severe penalty that can be imposed.

How does a PACA license suspension 

or license revocation restrict a firm 

and/or its principals?

Upon the suspension or revocation of a PACA 

license, both the firm and its responsibly connected 

individuals are automatically subject to licensing and 

employment restrictions that prohibit them from 

working or operating in the produce industry for a 

certain period of time. Individuals are considered 

to be responsibly connected if they are an owner, a 

partner in a partnership, a member or manager in 

a limited liability company, or an officer, director, 

or holder of more than 10 percent of the stock of a 

corporation or association.

When a PACA license is suspended, or a licensee or 

individual fails to pay a reparation award resulting 

in sanctions, the firm or individual cannot conduct 

business in the produce industry. Furthermore, 

none of the persons responsibly connected with the 

firm can engage in business under the PACA, nor 

can another PACA licensee employ them, unless a 

PACA-approved surety bond is posted.
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After one year, responsibly connected individuals 

that were barred from employment as a result of a 

license revocation or sanctions based on findings of 

repeated and flagrant violations may be employed by 

a PACA licensee that posts a PACA-approved surety 

bond.

What are some common PACA 

violations that prompt the USDA to 

take disciplinary action?

• Failure to pay for produce purchased; 

• Slow payment;

• Failure of a commission merchant or grower’s 

agent to render accurate accountings and pay 

promptly the net proceeds due the shippers 

and growers;

• Flagrant misbranding or misrepresentation 

of produce shipped in interstate or foreign 

commerce;

• Making false and misleading statements for a 

fraudulent purpose; and

• Employing a restricted person after receiving 

notice from the USDA that the employment 

is prohibited.

Does the produce industry support the 

PACA?

The industry developed and sponsored this law, 

and the PACA is broadly supported throughout the 

produce industry. The law has been amended several 

times over the years to keep pace with changing 

trade practices.
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Where can I get more information 

about the PACA program?

Visit the PACA Division’s website at: 

www.ams.usda.gov/paca

The website contains information on licensing, 

current PACA licensees, resolving commercial 

disputes, mediation, reporting PACA violations, 

the PACA trust, PACA publications and 

announcements, and PACA’s regional offices and 

staff contacts.

The USDA PACA Division also offers a free online 

training program that covers the basic information 

needed to comply with the PACA. To access the 

online training, click on the Education and Training 

link on the website.

For questions or additional information, call the 

PACA Division at 800-495-7222.
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