PACA uses the guidelines from the FOB Good Arrival Guidelines Table (pdf) to interpret the maximum allowances for various fresh fruits and vegetables sold F.O.B. and inspected at destinations anywhere from 1 to 5 days away from the shipping point. For those commodities with U.S. Grade Standards, the starting point for determining maximum allowable defects are the shipping point tolerances provided in the standards for those commodities.
For those commodities that do not have a U.S. Grade Standard, the most common shipping point tolerance of 10% for average defects, including 5% for defects causing serious damage and 1% for decay, may be used as a starting point for determining the maximum defect allowances, unless it appears that an existing standard for a similar commodity would be more applicable.
The F.O.B. Good Delivery Guidelines Table applies only to produce sold F.O.B. In an F.O.B. sale, the seller warrants that the produce meets the contract terms at shipping point, and that it is also in suitable shipping condition to arrive at the contract destination without abnormal deterioration. The defect allowances listed in the table can be used to determine whether the product was loaded in suitable shipping condition. Those allowances should, however, be viewed only as guidelines, as many factors enter into the determination of whether a load of produce meets the terms of a particular contract. For example, if product is sold "F.O.B. acceptance final," rather than merely "F.O.B," an inspection showing a breach in one instance may not show a breach in the other. Some other considerations may be the timing of the inspection, air temperatures maintained by the carrier, whether or not transit time was normal, the location of the product when it was inspected, and how much of the load was inspected. You are encouraged to consult with your nearest PACA regional office @ (800) 495-7222, option 2 for an interpretation of your rights, given the specific circumstances surrounding your transaction.
Please note that the information contained in the F.O.B. Good Delivery Guidelines Table does not have the force of law and is subject to judicial review at any given time.
Using the Table
In the "U.S. Grade Standards" and the "Maximum % of Defects Allowed" columns, the first number represents the maximum total percentage of damage (defects) allowable for the commodity to meet the terms of an F.O.B sale at destination. If the product is purchased without a grade specification, this number represents the maximum percentage of condition defects. The second number, if any, represents the maximum percentage of allowable serious damage, including decay. The third number represents the maximum percentage of decay allowable.
Example: The series 15-8-3 means 15% total damage, including not more than 8% serious damage (including decay) and not more than 3% decay.
For those commodities showing only two numbers, like artichokes, there is no separate tolerance for defects causing serious damage.
Where an asterisk (*) appears next to the commodity name, the U.S. Grade Standards specify special tolerances and types of defects, and should be consulted before making a judgment regarding whether the inspection results show a breach of contract. In addition, the following abbreviations are used in the table: "stds" = U.S. Grade Standards, "vsd" = very serious damage, "int." = internal, "ext." = external, and "sda" = sunken discolored areas.
As previously stated, the guidelines apply only to truck shipments. However, produce shipped by rail where transit periods are substantially longer will be subject to the same maximums allowed for truck shipments, as will international ocean shipments, unless precedent has established, or adequate proof is presented, that foreign markets have come to expect and tolerate a higher percentage of defects.