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One method for imputing a salvage value to produce in this situation is to simply reduce the destination market value of the commodity in question by the percentage of defects shown on the USDA inspection certificate. While this method tends to overestimate the value of distressed produce, it must be remembered that this method is only used when the consignee fails in its obligation to provide the consignor with a detailed accounting reflecting a prompt and proper sales effort.
Additionally, PACA precedent provides for a customary commission of 15% (the parties may agree to a different amount) which the salvaging firm may deduct from the gross proceeds, along with any inspection fees or cartage expenses incurred. Conversely, PACA precedent disallows deductions for storage fees, profit and handling, or dumping fees not supported with a dump receipt.
And while a salvaging firm may correctly point out that this precedent is only directly controlling of transactions between produce vendors, the carrier or truck broker has two strong arguments in response: (1) following a rejection, and when consigning produce to another, the carrier is, in effect, acting as a produce vendor; and (2) if PACA precedent is reasonable and customary when produce is consigned between vendors, then there would seem to be no good reason why this precedent would not be reasonable when a carrier or truck broker happens to be acting as a consignor.
In summary, PACA has, over many decades, helped shape the guidelines, customary practices, and rules that govern produce transactions between vendors. Yet in the absence of a similar authority governing transportation claims involving fresh produce (note many of these claims are too small for traditional litigation), PACA has helped shape expectations and standards for reasonableness in the context of transportation claims. Consequently, carriers and truck brokers with a foundational understanding of PACA are better equipped to assess and negotiate a resolution to carrier claims.
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