CURRENT ISSUE

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The PACA branch of the U.S. Department of Agriculture has determined that electronic invoicing, with the proper verbiage, does protect a seller's rights under the Perishable Agriculture Commodities Act Trust Provision.

The PACA Trust is a regulation that essentially puts sellers of produce in a priority position in the event that the buyer of their product files for bankruptcy protection and has not paid the provider for the fruits and vegetables that are part of the seller's inventory or accounts receivables. Amendments, new regulations and case law have defined the PACA Trust over the past decade concerning many issues including how a shipper protects his or her rights. One such amendment determined that the proper wording on an invoice was sufficient for a shipper to notify the receiver of his PACA Trust rights, and his intent to preserve those rights.

This newest issue arose because more and more shippers, at the request of retailers and other buyers, are sending invoices electronically, usually through third-party service providers. The cost of those electronic transmissions sometimes is determined by their length, so some buyers were not downloading or accepting the PACA Trust verbiage.

Tom Oliveri, director of commodity services and trade practices for Western Growers Association, said that the issue first surfaced during a meeting of the USDA's Fruit & Vegetable Industry Advisory Board.

Subsequently, WGA and other grower-shipper representatives took up the issue and lobbied the PACA branch of the USDA to address it. PACA did initiate a rule-making proceeding and accepted dozens of comments on the subjects. In the process, PACA determined that the PACA Trust language was not being received by the buyer in many instances when electronic invoicing was involved.

Mr. Oliveri said that PACA identified numerous situations when the wording was omitted from an electronic invoice. In some instances, the buyer's system was not set up to receive it, and in other cases, the buyer simply opted to not have it transmitted. There were also situations where the data field including that language was not being translated by the third-party invoice provider.

The new regulation specifically requires the buyer or a third-party representative to accept the PACA Trust notice as part of the submission of any invoice whether it is received as a paper invoice or electronically. Additionally, buyers must make space available in their data interchange program to receive this information. Finally, failure to do so is considered a violation of the act.

The Federal Register posting of this final rule on May 30 indicated that the PACA received 41 comments on the proposed rule, all of which favored it. Though there has not been a situation where the preservation of PACA Trust rights in an electronic invoice was the subject of a court challenge, Mr. Oliveri said that it was only a matter of time before this issue would have surfaced in a bankruptcy case.

Which firms receive priority position in a bankruptcy proceeding is typically one of the top issues litigated in any such case.

"This is a very important decision and one that Western Growers has been advocating for quite some time," he said. "We actively supported this position and believe it clarifies and preserves a very important right."

Although there was some consideration that the new PACA regulation also deal with the cost of transmitting this notice of intent to preserve one's PACA Trust rights electronically, the new rule does not address that issue.

Consistent with federal regulation procedures, this new regulation becomes effective June 29, which is 30 days after its posting in the Federal Register. For the most part, Mr. Oliveri said that sellers and buyers would continue to operate as they have in the past with only minor changes necessary in most computer invoicing programs.
Saying that their livelihoods could be at risk due to the current labor situation, merchants on New York City's Hunts Point produce market are stepping up in support of immigration reform.

In a May 14 letter to U.S. Sen. Charles Schumer (D-NY), the merchants said that a "substantial portion" of business conducted on the market is "threatened by the fact that our suppliers in the U.S. produce market may not be able to bring their crops out of the field and orchard due to a shortage of farm workers to pick and harvest."

The market, which is comprised of more than 50 merchants and has annual revenues of $2 billion, serves over 20 million people in the tri-state region of New York, New Jersey and Connecticut.

The Hunts Point Terminal Produce Cooperative Association became involved in the petition at the request of Jim Allen, president of the Fishers, NY-based New York Apple Association, which is a major proponent of immigration reform. Mr. Allen contacted Myra Gordon, the executive administrative director of the market, who then approached 20 operators on the market to sign the letter.

"We are very appreciative of Myra's willingness to walk the letter door to door [at the market] for signatures," said Mr. Allen.

Ms. Gordon deflected the praise, saying that immigration reform is widely supported on the market and that there is "a crucial need to address the issue sooner rather than later. Until the issue is resolved one way or another, we need to keep New York farmers in business.

"I would be loathe to think that one day we look back and realize that we treated the farmers so shabbily that all the food has to be sourced offshore," she added.

The letter to Mr. Schumer said, "We are deeply concerned that our supply of healthful, local produce will be threatened without the passage of the AgJOBS bill. The reality is that without meaningful agricultural labor reforms, such as those put forth in AgJOBS, American farmers, food merchants and ultimately consumers will suffer."

In addition to Ms. Gordon, signatories of the letter were Stephen Katzman of S. Katzman Produce Inc.; Matthew D'Arrigo of D'Arrigo Bros. of New York Inc.; Cary Rubin of Rubin Bros. Inc.; Ira Nathel of Nathel & Nathel Inc.; Joe Palumbo of Top Banana; Jeffrey Haas of Henry Haas Inc.; Chris Armada of E. Armada Fruit & Produce; Richard Cochran of Robert T. Cochran; Cathy Hunt of D.M. Rothman; James Margiotta of J. Margiotta Co.; Mary Ellen Verrico of Morris Okun; Sal Vacca of A.J. Trucco; George Valdivia of Hunts Point Tropical; Denise Goodman of M&R Tomato Distributors; Ciro Porricelli of Jerry Porricelli Produce; Tim Motley of Food Barn; Leona Settani of Albee Tomato Co. Inc.; John Garcia of Kris-Pak Sales Corp.; and Angela Venuti of Ven-Co Produce Inc.
WASHINGTON -- Produce trade associations have called for federal food safety oversight, and now the Fruit & Vegetable Industry Advisory Committee approved a new resolution that calls on the U.S. Department of Agriculture to advocate for unified food-safety standards.

The 25-member advisory committee agreed on two resolutions at its June 4-5 meeting that will be presented to U.S. Secretary of Agriculture Mike Johanns. Created in 2001, the committee recommends ways that USDA can tailor its programs to meet the needs of the fruit and vegetable industry. The group recommended that USDA "facilitate and advocate the development and adoption of unified food-safety standards for the fruit and vegetable industry that reflect the risks associated with individual commodities and the entire supply chain."

Congress is very interested in revamping the food-safety system, and U.S. Sen. Tom Harkin (D-IA) is drafting legislation that would create a new federal framework targeted at fresh produce.

"Majority staff of the Senate Agriculture Committee is working with the produce industry and food-safety advocates on legislation that will provide a national regulatory framework for reducing foodborne illness caused by produce," said a spokesperson for the Senate Agriculture Committee. "The bill is in the draft stages now, and we hope to introduce something before the August recess."

This also comes as the California Senate approved three bills June 6 that would change how the produce industry does business in that state as a result of the 2006 E. coli outbreak associated with spinach. The bills would create a new on-farm inspection program, mandate Good Agricultural Practices for processors of leafy greens and create a new traceback program. The second resolution focused on the current farm bill debate, praising Mr. Johanns for his strong support for specialty crops in USDA's 2007 farm bill proposal.

"Recognizing the significant contributions the specialty crop industry makes to the American diet, U.S. agriculture and the economies of the states in which they are produced, the Fruit & Vegetable Industry Advisory Committee believes fruit and vegetable growers should receive equitable treatment in federal farm programs," the resolution read.

The industry committee called on USDA to support the EAT Healthy America Act (H.R. 1600) and the Specialty Crops Competition Act of 2007 (S. 1160), which provide "needed assistance to fruit and vegetable producers in critical areas such as conservation, international trade, pests and disease, nutrition, research, block grants to states, and renewable energy."

But the advisory committee called on USDA to change direction on another farm bill policy. USDA should reconsider its position that favors eliminating the fruit and vegetable planting restriction on program crop acres, said the resolution.

"The removal of this important provision would place unsubsidized fruit and vegetable producers at a competitive disadvantage to subsidized program crop producers," said the committee.

Also at the meeting, the group heard from Jeffrey Grode of U.S. Customs & Border Inspection about the status of the agency's pest-prevention activities at the border. He said that staffing has improved in ports of entry, as have inspector training and coordination with USDA on agriculture duties.

There are four bills in the House and Senate that would transfer agriculture inspections from Customs and back to USDA, he said.

Kathy Staley of USDA's Fresh Products Branch told the group about food- safety activities at the Agriculture Marketing Service. In July, all fresh product vendors for USDA will be required to adhere to a GAP/GHP and food-defense audit within 10 days before shipment, she said in a prepared presentation. The group heard other presentations on the federal food stamp program and bioterrorism activities.

USDA has agreed to renew the two-year charter and will be asking for nominations for a new panel in the coming weeks.
FRESNO, CA -- Z&S Fresh Inc., here, which last fall introduced a fresh tomato salsa kit under the "Old El Paso Fresh" label, is now launching a peach salsa kit under the same label. The new product was expected to begin shipping about mid-June, according to Justin Bedwell, the company's director of marketing.

Z&S entered into an agreement with General Mills in August to ship fresh produce items under General Mills' "Old El Paso Fresh" brand, following the successful test marketing of some lemons and bell peppers under that brand several months earlier. Since then, several other items have been added, such as other citrus items, onions and avocados, in addition to the tomato salsa kit.

The tomato salsa kit, which was scheduled to be launched about June 15, consists of four Roma tomatoes, one white onion, two jalapeno peppers, a serrano pepper, a lime, and a packet of spices all contained in a clear plastic clamshell, according to Mr. Bedwell.

The new peach salsa kit is similar in its composition, but rather than tomatoes, it will have four yellow-flesh peaches. "It has two chili peppers," one less than in the tomato salsa kit, and "we are substituting a red onion in this kit" for the white onion in the tomato salsa kit. "It will also have a lime and then a seasoning packet," Mr. Bedwell said.

Directions for making the salsa are also included and the kit yields about 24 ounces of salsa.

"We are going to be borrowing from our idea of the tomato salsa kit and see if we can increase peach consumption," he said. In discussing the idea with growers, "we decided it would maybe be a nice outlet for some smaller-size peaches" that will fit in the clamshell, he said.

"I'll be honest with you, I was a little bit skeptical" when the idea of marketing a peach salsa kit was first discussed at Z&S, Mr. Bedwell said. "But we made up a sample batch over here" during the past winter, using Chilean peaches that were available at the time. "We ... bought a whole lot of pork chops, grilled them up," and covered them with the salsa, "and I'll tell you, it was just delicious," he said. "It's got a real sweet flavor, with a little bit of a spicy kick to it."

"People in the know say that peach salsa is used primarily as a condiment with pork ... seafood and poultry," he said.

The varieties of peaches used in the peach salsa kit will be selected for their flavor, Mr. Bedwell stated.

"The reason we waited until June" to begin packing and shipping the product "is we wanted to wait for some of the better varieties," he said, adding that the quality and timing of the California peach crop is such that "this year we probably could have gotten away with it a little earlier."

The plan is to start with "some of the Lady varieties" such as Rich Lady and Fancy Lady, he said. "We will be using the Elegant Lady when we get into July." Those are "some of the better-eating, true peach-flavored peaches," he said. The peach salsa kits will be packed in both Reedley, CA, and in Los Angeles, he said.

The plan is to keep the product seasonal, using fresh California peaches, Mr. Bedwell said. "We are going to pack it from the middle of June to probably the middle of September."

It will be marketed primarily to customers in the Midwest and the East "where our 'Old El Paso' concentration is higher," he said. "But we've also got a chain down in L.A." that will be carrying the product.
A five-pound bag of Idaho potatoes isn't the only place to find the "Grown in Idaho" seal. While stationed in Guam, Technical Sergeant Ben David, who is currently stationed at Hill Air Force Base in Utah, had the famous "Grown in Idaho" seal tattooed on his right shoulder.

"A couple years ago, I looked at the 'Grown in Idaho' seal and thought, 'Hey, I'm grown in Idaho, too,'" said Mr. David. "I am extremely proud of my Idaho roots and am not afraid to show it. To me, the seal not only means great potatoes, it means a great state, a great way of life and something to be proud of."

Mr. David isn't the only person with the seal on his arm. Two of his brothers also had it tattooed on their shoulders when Mr. David came home on leave. There is still one brother who is tattoo-less, but Ben David believes that it's only a matter of time before his Idaho pride compels him to follow his siblings.

"When I learned of Ben's tattoo, I was actually touched," said Frank Muir, president and chief executive officer of the Idaho Potato Commission. "Here is a young airman who is so proud of his American heritage, especially his Idaho roots, he has a permanent tattoo to symbolize this drawn on his shoulder."

The commission tells consumers to look for the "Grown in Idaho" seal when purchasing potatoes to make sure they are buying genuine Idaho potatoes. However, when it comes to people wearing the seal, the commission believes that anyone who tattoos the logo on their shoulder must be genuine in every sense of the word.