A grower's agent sells produce on behalf of a grower and remits the proceeds less agreed expenses to the grower. Because the agent is not buying the produce and has total control over the sale and proceeds, PACA places additional duties on grower's agents.
Written Agreement or Statement
A grower's agent must give the grower a written document explaining how the grower's agent will handle the produce for the grower.
The written document can be in the form of a contract signed by both the grower and the agent, or in the form of a written statement which is given to the grower before the agent begins to sell the grower's produce. If a statement is provided to the grower, then the grower's agent should have proof the grower received the statement.
If there is no written document, and a dispute between the grower and agent develops, then it is likely many charges deducted by the grower's agent will be disallowed. The usual problems are failures to notify the grower of adjustments, and failure to obtain inspections. Without a written statement or agreement that addresses these issues, PACA will disallow those adjustments which will result in additional moneys being owed to the grower by the agent.
A grower's agent must keep proper records. A grower's agent must give an accounting to the grower, and the agent must have records to back up each charge and each reduction to the buyer. Unless the written agreement or statement provides otherwise, if a reduction in price is granted, it must be supported by a federal inspection. Failure to support each adjustment will likely result in the grower's agent being held liable to the grower for the adjustment, if the grower files a complaint.
Buying As a Grower's Agent
A grower's agent is allowed to buy produce from the grower but only if the agent fully discloses his status as a buyer. The grower's agent may not charge a fee when buying produce from the grower.
Also a grower's agent may not sell produce to a company that is related or controlled by the grower's agent unless there is full disclosure and prior approval by the grower.
Payment of Price and Negligence
A grower's agent is not responsible for guaranteeing payment by the buyer; and, even if the buyer fails to pay, the grower's agent is entitled to receive a selling fee. However, a grower's agent can be held liable for negligence by failing to perform. This type of case usually arises because a grower is dissatisfied with the returns and claims the agent undersold the market.
Preserving Trust Rights
A grower’s agent must preserve the PACA trust rights on behalf of the grower, and may be liable to the grower for payment if the grower’s trust rights are not preserved.