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Unit 7: USDA Inspection Services  

 
The official USDA inspection certificate is a cornerstone of fair trading practices in the marketing of fruits and vegetables. This document certifies the quality and quantity of goods shipped, supports breach of warranty claims, and substantiates (or disproves) the markings on consumer and commercial packages. It reflects the results of an inspection by an unbiased, professional third party and, as such, it is prima facie evidence (presumption of fact) in administrative and civil proceedings.

 
Who May Request an Inspection

 
An application for inspection may be made by any financially interested person or authorized agent. This includes dealers, commission merchants, common carriers, and brokers. Those who are merely negotiating for a purchase are not yet "financially interested." A broker is financially interested only to the extent of the brokerage and expenses incident to the sale.

 
Value of Shipping Point vs. Receiving Point Inspections

 
Shipping point inspections:

 
  • Prevent misbranding in the market place by insuring that products meet the descriptions on the their packaging; and,
  • Provide the shipper with a reliable means of monitoring the quality of the products being shipped.

 
Receiving point inspections:

 
  • Serve as proof of the damages claimed by receivers;
  • Can be good evidence to support a carrier claim;
  • Can also be used on consignment shipments to show poor condition on arrival to justify possible slow or low sales of produce; and
  • May be used to establish that produce dumped had no commercial value.

 
All sellers and buyers should understand terms like "appeal inspections," "restricted inspections," and "unrestricted inspections."

 
If a buyer or seller is dissatisfied with the results of the first inspection, it may request an "appeal inspection," usually performed by two inspectors who examine twice the customary number of samples.

 
"Restricted" inspections are typically performed while the commodity is still loaded on the car or truck, in which case samples are taken from that part of the load accessible to the inspector.

 
In "unrestricted" inspections, samples are taken from the entire load. As such, unrestricted inspections are better evidence of the condition of a load.

 
Note: A buyer relying on a restricted inspection to justify a rejection should realize that the seller has the option of later getting an unrestricted inspection which might prove that it did comply with the contract, in which case it could hold the buyer responsible for any losses suffered.

 
Appeal Procedure

 
Any financially interested party or the PACA Branch may request an appeal inspection when the results of the original inspection are in question.

 
An appeal inspection will be performed when:

 
  • The lot is positively identified as the lot previously certified by means of trailer license, car or van number or approved Federal or Federal-State Positive Lot Identification.
  • The lot is misbranded and is positively identified.
  • The complaint concerns a permanent factor (such as quality, grade, size or weight) that would not have changed since the previous inspection.
  • The complaint concerns a condition factor that may change, but the time lapse, temperatures, perishability of product and degree and type of deterioration makes it apparent that the condition was present at the time of the previous inspection.
  • Under certain circumstances, where it is obvious that procedures have not been followed, improper sampling was obvious, or there seems to be a lapse of grader judgment, and there are no complaints, the Fresh Products Branch may request that an appeal be performed.

 
A request for an appeal inspection will be denied when:

 
  • The complaint concerns a factor which may have undergone a change of condition since the original (previous) inspection; or
  • The shipping point inspection was restricted to "samples taken," submitted samples or other portion of the load that is not identifiable; or
  • A large number of containers from the original (previous) manifest are not accessible for sampling or have been disposed of; or
  • A lot is not positively identified and misbranding is not involved; or
  • The shipping point certificate was a warehouse/platform inspection or the only identity of the lot is through a manifest certificate issued by a person other than a USDA inspector; or
  • An appeal inspection has already been made on the lot.

 
Note Sheet v. Certificate

 
Each certificate is based on notes made at the time of the inspection. The inspector’s note sheet becomes a part of the permanent record of the inspection. The information shown on the note sheet is confidential, but it can be disclosed to any financially interested party upon written request. Requests for copies of note sheets should be forwarded in writing to the Federal Supervisor or their State Program counterpart.

 
Interpreting a Certificate

 
The results of an inspection cannot necessarily be taken at face value, and must instead be interpreted in connection with the terms of the applicable contract.

 
For example, in the bell pepper example used in our discussion of suitable shipping condition, where an inspection of the peppers at destination disclosed a total of 11 percent defects, including 4 percent scars, 6 percent turning red, and 1 percent decay, we stated that the bell peppers were sold with no grade specified. This means that only the non-permanent condition factors, or 7 percent of the defects, would count against the contract. That level of defects clearly would not be sufficient to establish a breach of warranty. Nevertheless, the grade statement on the inspection certificate would read "fails to grade U.S. No. 1 account condition defects."

 
In contracts that specify a grade (U.S. No. 1, U.S. Extra Fancy, etc.), the percentage of permanent quality defects may not exceed the percentages specified in the U.S. Grade Standard. When the inspection summary statement reads "Fails to grade account quality defects", no further interpretation is needed; the contract has been breached by the shipper.

 
Becoming familiar with the various elements that make up an inspection certificate may also aid in its interpretation.

 
Temperatures

 
A buyer’s ability to hold a shipper responsible for the deteriorated condition of a product at destination will often depend upon its ability to show that the product was held at proper temperatures pending the inspection. Therefore, the inclusion of pulp temperatures on an inspection certificate is essential if the certificate is intended for use as evidence in a contract dispute.
For Example, a destination inspection on strawberries sold F.O.B. showing temperatures in excess of 40°F would typically be viewed as evidence of improper handling sufficient to void the warranty of suitable shipping condition. Likewise, a foreign survey that is otherwise sufficient, i.e. percentages of specific defects are given, sufficient samples taken, etc., may be viewed as inadequate evidence of a breach of warranty if there was a delay between arrival and inspection and the surveyor fails to note the pulp temperature on the survey.

 
Interpreting Foreign Inspections or Survey Reports

 
Often, when product is shipped outside the U.S. the receiver does not have access to a governmental inspection service that uses standard procedures and terminology. This presents problems in interpretation. The receiver can still obtain useful inspection results, however, by specifying to the foreign inspection service or surveyor certain criteria:

 
  • An adequate number of samples should be chosen at random.
  • Pulp temperatures should be reported.
  • Defects should be carefully described, and reported in average percentage terms.
  • The product should be accurately described, reporting brands, type of container, etc.
  • The product, if inspected out of the container, should be properly identified with the transport service and container.

 
Using Altered or Forged Certificates

 
The alteration or forgery of any certificate of inspection issued under the authority of the USDA is considered a false and misleading statement under PACA provisions and is subject to the penalties as severe as license revocation.

 
If you have any questions regarding this course material, please direct them to John Koller, Director, Dispute Resolution Section, PACA Branch, Washington DC; phone 202-720-1442, or via email at john.koller@usda.gov.

 

 
  Last Modified Date: 01/17/2013