SUSPENSION AGREEMENT ON FRESH TOMATOES FROM MEXICO
- Clarification -
(May 2, 1997)
The reference price established in the October 28, 1996 Suspension
Agreement (Agreement) signed by the Mexican growers/exporters of
tomatoes is the f.o.b. price, U.S. port of entry at the Mexican
border, from the first handler (importer/broker) to an unaffiliated
purchaser (receiver). Pursuant to the Agreement, in no event shall
the price for any tomatoes accepted in a lot fall below the reference
price of $0.2068 per pound. The reference price includes all
palletizing and cooling charges which are incurred prior to shipment
and depending on the practice of the particular importer/broker, may
appear as separate line items in the invoice.
The following terms and conditions will be applied by the Department
when calculating prices for transactions involving adjustments due to
changes in condition after shipment:
No adjustments will be made for failure to meet suitable
shipping conditions unless supported by an unrestricted
USDA inspection called for no more than six hours from the
time of arrival at the receiver, and performed in a timely
fashion thereafter.
No adjustments will be made on a lot, other than a lot of
mature-green tomatoes, that has not been delivered to the
receiver within two weeks from the date of entry into the
United States.
If the USDA inspection indicates that the lot has: 1) over 8%
soft/decay condition defects, or 2) over 15% of any one condition
defect, or 3) greater than 20% total condition defects, the receiver
may reject the lot or may accept a portion of the lot and reject the
quantity of tomatoes lost during the salvaging process. In those
instances, price adjustments will be calculated as described below.
For these purposes, a condition defect is defined as any defect
cited by USDA on an inspection certificate that is not specifically
identified as a quality defect. When a lot of tomatoes has condition
defects in excess of those outlined above as documented on an
inspection certificate, the documented percentage of the tomatoes
with condition defects are considered DEFECTIVE tomatoes.
A USDA inspection certificate must be provided to support
claims for rejection of all or part of a lot.
No adjustments will be made for failure to meet suitable
shipping conditions if the USDA inspection certificate does
not indicate one of the condition thresholds outlined above.
In calculating the transaction price for lots subject to an
adjustment claim for condition defects, as defined above, the
tomatoes classified as DEFECTIVE will be treated as rejected
and as not having been sold.
It is the responsibility of all signatories to ensure that all sales
are made consistent with the requirements of the Suspension Agreement
and this clarification. To that end, signatories shall revise their
consignment agreements with distributors to be consistent with these
terms. Signatories shall also require their distributors to revise
their sales agreements with third parties to ensure that spoilage or
other claims inconsistent with the Agreement will not be permitted.
The Department will closely monitor spoilage claims on a signatory-
specific basis, through verifications and quarterly certifications,
to ensure compliance with the provisions of the Agreement. To the
extent that the Department finds that adjustments to price are being
used to circumvent the terms of the Agreement, it may modify this
clarification.
Rejection of Partial Loads
If the lot contains condition defects greater than those outlined
above and the receiver does not reject the entire lot of tomatoes,
the Department will factor certain adjustments into the transaction
price, provided that the following conditions apply:
The price invoiced to and paid by the receiver for the
accepted tomatoes must not fall below the reference price.
The shipper may reimburse the receiver for actual destruction
costs associated with the DEFECTIVE tomatoes. These expenses
will not be considered in the calculation of the price of the
accepted tomatoes.
The shipper may reimburse the receiver for the portion of
freight expenses allocated to the DEFECTIVE tomatoes. These
expenses will not be considered in the calculation of the
price for the accepted tomatoes.
The shipper may reimburse the receiver for the expenses,
associated directly with salvaging and reconditioning the
lot (e.g., inspection fees and repacking charges)
calculated as follows:
If the salvaging and reconditioning activity is performed
by a party unaffiliated with the receiver, the inspection
fee and the fee charged for the service may be reimbursed.
If the salvaging and reconditioning activity is performed
by the receiver or a party affiliated with the receiver,
the inspection fee and either the direct labor costs or,
in lieu thereof, one-half of the ordinary and customary
repacking charges may be reimbursed.
Any reimbursements from, by, or on behalf of the shipper which
are not specifically excepted above will be factored into the
calculation of the price for the accepted tomatoes by the
Department.
The receiver may not resell the DEFECTIVE tomatoes. The receiver
may choose to have the DEFECTIVE tomatoes destroyed, donated to
non-profit food banks, or returned to the shipper. The DEFECTIVE
tomatoes may not be sold to a processor.
In addition, the shipper should obtain/maintain the following
documents or information:
Shipper and grower name.
Shipping manifest.
Details of the shipper invoice, including invoice number,
date, brand, tomato type, quantity (boxes), and value.
Documentation supporting the freight expenses incurred
for the original shipment.
USDA inspection certificate.
Detailed listing of the expenses incurred in salvaging
the non-DEFECTIVE tomatoes.
Description of the destruction or donation process and
documentation from the landfill or food bank.
A statement that "No monies or other compensation was
received for the destroyed or donated tomatoes."
Signature of a responsible official at the receiver.
The shipper will maintain this information, with the original
shipping invoice, in separate files for each claim. These
claims will be verified, as provided for in Section IV.B of
the Agreement, at any time, without prior notice.
To facilitate the verification of claims for condition defects,
attempts should be made to resolve such claims within 10 working
days after a USDA inspection unless the claim is referred to
PACA for mediation.
When filing quarterly certifications with the Department,
shippers should report the number of lots on which claims for
condition defects were granted, the total volume of tomatoes
destroyed or donated, and the total value of claims granted.
Rejection of Full Loads
In cases where the receiver has rejected the full lot of tomatoes
based on condition defects, the shipper may choose to have the entire
lot destroyed, donated to non-profit food banks, or returned to the
shipper. If the entire lot is destroyed or donated, the shipper will
require the receiver to provide the documentation noted above for
partial lot rejection. In this case, the shipper may reimburse the
receiver for ordinary and customary expenses that the receiver
incurred with respect to the lot, including those expenses associated
with the destruction or donation process. The Department will treat
such transactions as "non-sales" provided that adequate documentation
is provided.
Alternatively, the shipper may sell the entire rejected lot to
another receiver. In that case, the price paid must be not less
than the reference price plus all costs incurred (e.g., transportation,
commissions, etc.) from the f.o.b. port of entry to the final receiver.
If the final receiver finds that the lot contains condition defects
greater than those outlined above, it shall follow the directions
stated above with respect to rejection of partial loads.
Effective Date
The effective date for this clarification is May 2, 1997.
Signatories shall revise their consignment agreements with
distributors to be consistent with these terms by May 15, 1997.
Furthermore, by May 15, 1997, signatories shall also require their
distributors to revise their sales agreements with third parties to
ensure that spoilage or other claims inconsistent with the Agreement
will not be permitted.
|
