Date: 1983-11-15
Speaker: DE LA GARZA (democrat)
Chamber: H

Mr. Speaker. I rise in support of H.R. 3867. a bill to amend the Perishable Agricultural Commodities Act. 1930. to impress a trust on the commodities and sales proceeds of perishable agricultural commodities for the benefit of the unpaid sellersupplier. The Perishable Agricultural Commodities Act establishes a code for fair trading in the marketplace. provides for aid In the enforcement of contracts for marketing these commodities and serves to suppress unfair and fraudulent practices in the marketing of fresh and frozen fruits and vegetables. PACA. as this act is commonly referred to. has served the fruit and vegetable industry well since its enactment in 1930. However. the fruit and vegetable industry pointed out to our committee a problem of major concern. That concern in that in recent years we have unfortunately seen an increasing number of cases In which commission merchants. dealers. or brokers have either been slow in making payments for perishables or have not paid at all. The growing number of these cases has brought attention to what now appears to be a weak spot in the protective features of the act. During periods when there were few cases of failures to pay. that weakness was not apparent or very serious. Nowv. howvever. we are confronted with 4L situation that demands action. The record indicates a disturbing Increase in the number of cases in which payment to sellers is slow or is not made at all. All total. according to estimates made by the U.S. Department of Agriculture. the sellerssuppliers of perishable agricultural commodities lost about $65 million last year atone. and the same or higher amount is predicted for this year. Sellers of perishable commodities often are located thousands of miles from their customers. Many times. sales must he made while commodities are en route and under conditions which make it impossible to conduct normal business practices such as credit checks and conditional sales agreements. Under present law. in the case of failure of a commission merchant. dealer or broker. to pay sellers of fresh fruits/vegetables. no special protection is given to the unpaid seller. even though their produce provided much of the equity capital to support the financial strength of the buyers operation. Produce. under accounts receivable. are often assigned to the lender. without any guarantee that the seller will recover more than a small amount of the value of this produce. There is widespread agreement that. under current conditions. fairness demands some new protective features for those who sell agricultural commodities. H.R. 3867 Is designed to help address this problem by incorporating provisions similar- to those of the Packers and Stockyards Act which would make sellers. who have not received payment for their produce. the beneficiaries of a statutory trust. H.R. 3867 impresses a trust on all perishable agricultural commodities received by a buyer and all inventories of food or other products derived from perishable agricultural commodities. and any receivables or proceeds from the sale of such commodities or products for the benefit of the unpaid seller. Other important provisions of the bill include the following: Buyers of perishable commodities would have to maintain the trust assets until sellers receive full payment. When an account is not paid by due date. seller. In order to preserve the trust must notify both the buyers and the Secretary of Agriculture within time limits set by the bill. The U.S. district courts would be directed to entertain actions by sellers to enforce payments from trusts.ianid actions by the Secretary of Agricul ture to prevent dissipation of trusts. The failure of a buyer to maintain a trust when required by the new bill would be classed as an unfair trade practice under the Perishable Agricultural Commodities Act. making the person Involved subject to penalties ineluding suspension or revocation of his or her- PACA license. I want to point out that the provisions of this new legislation are not new to the agricultural marketing field. They have been in effect since 1976 for those businessmen whose activities are covered by the Packers and Stockyards Act. Pinally. Mr. Speaker. I want to note that this legislation has the support of the administration and the produce industry. and it has a distinguished list of cosponsors including the chairman and ranking minority member of the subcommittee and the ranking minority member of the full Committee on Agriculture. I ask all Members to join me in supporting enactment of H.R. 3867.09