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USDA proposes nearly doubling PACA license fees to shore up program

by Joan Murphy | March 16, 2010
WASHINGTON -- Fifteen years after the last Perishable Agricultural Commodities Act increase went into effect, the U.S. Department of Agriculture is proposing to nearly double the annual license fees, starting Oct. 1.

The PACA protects growers, shippers, distributors and retailers by prohibiting unfair and fraudulent trade practices. In 1995, PACA annual license fees increased to $550 from $400 for all licensees except retailers and grocery wholesalers. But office cutbacks and yearly appropriation supplements have not saved the program from proposing increases, USDA said in a March 11 Federal Register notice.

Without a fee increase in fiscal 2011, the program would exhaust its reserves by the second quarter of FY 2011 and would soon need to reduce its level of service to the industry, according to USDA's notice.

"We propose to increase the current base annual license fee for commission merchants, brokers and dealers" to $995 from $550, according to the Federal Register notice. "We also propose to increase the current $200 additional fee for branch locations in excess of nine to $600 for each branch location starting from the first branch. We further propose to increase the current aggregate fee maximum” to $8,000 from $4,000, said USDA.

USDA is also planning to remove the phase out of license fees by retailers and grocery wholesalers and eliminate the multi-year license renewal option for commission merchants, brokers and dealers.

While the PACA program has not seen a fee increase in 15 years, it may create a financial challenge for some businesses during this economic downturn, Lee Mannering, Produce Marketing Association's government relations and public affairs manager, said in a statement.

The industry has rubber-stamped the fee increase, however, as the USDA's Fruit & Vegetable Industry Advisory Committee unanimously recommended to the secretary of agriculture its approval of the proposed license fee increase last February.

The proposed rate hike would funnel $12.4 million to the PACA branch and allow it to maintain its current level of service until FY 2015, when the program is expected to dip low in reserves once again, according to USDA. Comments on the proposal are due May 10.