The Kroger Co., which operates Foods Co grocery stores in California, including the one in Fresno pictured here, submitted a letter on Monday reversing its policy of 90 day payments for produce suppliers. Photo by David Castellon.
The California Fresh Fruit Association is praising the decision by the nation’s largest grocery store chain not to extend the time it pays produce suppliers to 90 days.
“We appreciate Kroger’s acknowledgement that the ‘Net 90’ payment plan didn’t work for the produce industry. We stand by our position that Kroger’s original push to implement its plan was wrong and illegal,” under the Perishable Agricultural Commodities Act, a law created specifically to protect the perishable fresh fruit industry, George Radanovich president of the Fresno-based association, said in a written statement.
PACA, a law dating back to 1930, offers trade protections to produce growers and guarantees prompt payment for their goods within 30 days.
Among the concerns in the produce industry was that some produce suppliers couldn’t stay afloat if they would have go from waiting just 10 to 30 days for The Kroger Co. to pay what it owes them to 90 days, along with the possibility of losing some PACA protections if the growers forfeited their right to get paid within the timeframe set in the law.
In a July 9 letter responding to objections by the Fresno-based CFFA and other groups representing the produce industry, Kroger’s senior manager for sourcing finance Matt P. Hodge wrote, “We’ve shared with individual produce suppliers that we will respect existing contractual and legal mandates, including PACA. We never intended for PACA-eligible produce suppliers to waive their PACA Trust rights.
“I’d like to take this opportunity to clearly state that produce suppliers protected under PACA are not required to participate in Net 90 payment terms. For those PACA-eligible produce suppliers who are interested, we will continue to negotiate for payment terms that are permitted within their PACA Trust rights.”
The Kroger letter makes no mention of whether the grocery chain – which operates FoodsCo stores in California – will alter it planned 90-day payment schedule for suppliers of non-produce goods.
“As I’ve stated before, the fresh produce industry has been a good partner to Kroger, we appreciate that Kroger remembered that partnership and fixed the mess it created,” Radanovich said in the release.
Also praising Kroger was Irvine-based Western Growers, representing fruit and nut farmers in California and other western states.
Matt McInerney, the organization’s senior executive vice president, stated in a posting on the Western Growers website that he was “gratified and appreciative” for Kroger’s reversal.
“We also want to acknowledge the associations across the country who unified together and provided the business rationale for why the announced policy would not be in the best interest of farmers and sellers of fruits and vegetables.”
McInerney also acknowledged the US Department of Agriculture “for taking an active outreach role with Kroger which resulted in the letter rescinding the policy. As we continuously articulated, PACA trust rights are never negotiable.”