Much like you need a driver’s license to operate a vehicle, the law requires that you have a PACA license to operate a produce business. A PACA license is proof to your customers and suppliers that you are a serious business person who can be trusted to honor the terms of your contracts.
The PACA license is the key to ensuring that traders meet their contractual obligations under the law. Fruit and vegetable buyers and sellers must abide by the fair trading practices established by the PACA or face possible suspension or revocation of their license. This includes meeting contract specifications, paying all contracts promptly, and maintaining trust assets.
A person knowingly operating a produce business without a license may face a monetary penalty of up to $1,200 for each violation and up to $350 for each day the violation(s) continue.
Beyond its value in enforcing the PACA, the license can also provide information about a firm’s type of ownership, business history, and principles.
Who Needs a PACA License?
In general, any person who buys or sells more than 2,000 pounds of fresh or frozen fruits and vegetables in any given day is required to be licensed under the PACA. Wholesalers, processors, truckers, grocery wholesalers, and foodservice firms fit into this category.
A person who negotiates the sale of fruits and vegetables on behalf of another person is required to be licensed on the first transaction. A person operating in this capacity may be considered to be a commission merchant, broker, or a growers’ agent. A broker handling only frozen fruits and vegetables, however, is not subject to the PACA licensing requirements until the invoice value of the total negotiated sales exceeds $230,000 in a calendar year.
A person selling at retail is subject to a PACA license once the invoice costs of fresh and frozen fruits and vegetable purchases exceed $230,000 in a calendar year.
PACA Licensing Fees
As of 2010, the current base annual license fee for commission merchants, brokers, and dealers is $995 plus $600 additional fee for each branch location or additional business facility. The aggregate annual fees paid by applicants will not exceed $8,000.
To obtain more specific information about licensing requirements or to apply for a license telephone us toll free at 1-800-495-7222 (PACA).