USDA Steps Up PACA Enforcement: What Produce Businesses Need to Know to Comply, by Richard J. Perr, Esq., Graeme Hogan, Esq., and Dominic Borelli, Esq., 6-9-2026

The U.S. Department of Agriculture (USDA) has recently announced a series of enforcement actions against produce businesses operating in California, Florida, New Jersey, New York, North Carolina, Ohio, Washington, and other states for violations of the Perishable Agricultural Commodities Act (PACA). The actions serve as a reminder that PACA compliance remains a significant regulatory obligation for businesses involved in the produce supply chain.

The USDA’s enforcement actions arose from failures to satisfy payment obligations for produce transactions and failures to pay reparation awards issued under PACA. As a result, the affected businesses faced license suspensions and restrictions that may bar certain owners, officers, directors, members, managers, and major shareholders deemed “responsibly connected” from being employed by or affiliated with a PACA licensee without USDA approval. In some cases, USDA may approve such employment if the employing licensee posts a surety bond in an amount satisfactory to the agency, subject to applicable timing and statutory requirements.

Understanding PACA
Congress enacted PACA to promote fair trading practices in the fresh and frozen fruit and vegetable industry. The statute establishes a framework designed to ensure that sellers receive payment for produce transactions and provides mechanisms for resolving disputes between buyers and sellers. PACA applies broadly to produce dealers, brokers, and commission merchants engaged in the interstate and foreign commerce of fresh and frozen fruits and vegetables.

In addition to licensing requirements, PACA contains trust provisions that provide unpaid produce sellers and suppliers with important protections when a buyer becomes insolvent or files for bankruptcy. Under the PACA trust, produce buyers generally must maintain trust assets sufficient to satisfy payment obligations owed to eligible unpaid produce sellers and suppliers.

Why These Enforcement Actions Matter
PACA violations can have consequences that extend beyond monetary liability. When a business fails to pay a PACA reparation award, USDA may suspend the company’s PACA license and impose restrictions on individuals deemed responsibly connected to the business. Those restrictions can significantly impact a company’s ability to continue operating in the produce industry.

For produce businesses, the recent enforcement actions highlight USDA’s continued focus on prompt payment practices and compliance with dispute-resolution orders. USDA regularly publishes PACA enforcement actions, demonstrating that these sanctions are not isolated events.

Key Compliance Considerations for Produce Businesses
Businesses operating in the produce industry should consider the following compliance measures:

Prioritize Prompt Payment Obligations: PACA generally requires prompt payment for produce transactions. In many circumstances, prompt payment means payment within ten days after acceptance, unless the parties have a valid written agreement, not exceeding 30 days, under PACA regulations.
Review Credit and Accounts Payable Procedures: Produce buyers should evaluate internal controls governing invoice processing, payment approvals, and accounts payable functions. Delayed payments can quickly escalate into PACA disputes and enforcement proceedings.
Monitor PACA Trust Obligations: Businesses that purchase produce should understand their obligations regarding PACA trust assets and ensure that company practices do not jeopardize the rights of unpaid produce suppliers. Produce sellers should also take steps to preserve their PACA trust rights through proper invoice language or timely written notices when necessary.
Respond Promptly to PACA Claims and Reparation Proceedings: Ignoring PACA complaints, claims, or reparation orders can significantly increase risk. Businesses should promptly evaluate any PACA dispute and seek legal guidance before deadlines expire.
Evaluate Ownership and Management Risks: Because PACA sanctions can extend to individuals who are officers, directors, members, managers, partners, or major shareholders of a sanctioned business, company leadership should understand the potential personal and professional consequences of noncompliance.

What Produce Businesses Should Do Now
In light of USDA’s recent enforcement actions, produce businesses should consider conducting a PACA compliance review that includes:

• Reviewing payment practices and outstanding produce payables.
• Confirming compliance with PACA licensing requirements.
• Evaluating procedures for preserving and honoring PACA trust rights.
• Assessing internal controls for handling produce disputes and claims.
• Training accounting, finance, and operations personnel on PACA payment obligations.
• Reviewing contracts and credit arrangements for consistency with PACA requirements.

The recent sanctions underscore that PACA compliance is not simply an administrative obligation. For produce businesses, failure to comply with payment requirements and dispute-resolution orders can result in license restrictions, operational disruption, and significant business consequences. Businesses involved in the purchase, sale, brokerage, or distribution of produce should take proactive steps to ensure their policies and practices remain aligned with PACA’s requirements.

Authors: 

Richard J. Perr
Co-Managing Partner of Philadelphia Office,
Co-Chair of Financial Services & Institutions Practice Group

Graeme Hogan
Partner

Dominic Borelli
Attorney