Produce Pointers: Interpreting Inspection Certificates

The Problem

USDA inspection called at destination.

The Key Point

Recall the four Ts of Good Arrival.

The Solution

Inspections must be reviewed carefully.

Q. We ship tropical fruit out of South Florida. Recently, we sold a load of Peruvian limes to the Northeast. Upon arrival, the customer received the product but complained that the limes looked “old” and called for a USDA inspection certificate. We could use some help interpreting the results. Does our customer have a right to deduct damages from our invoice based on this inspection?

A. When reviewing inspection certificates it’s helpful to consider the four Ts: Timing, Temperature, Totals, and Terms. Let’s walk through each of these for the inspection certificate in question.

Timing: Technically speaking, under PACA regulations, sellers only warrant their product will arrive at the contract destination without abnormal deterioration (i.e., will make “good arrival”) on the day the product arrives (presuming normal transit time). So, if the product arrives on Monday, but isn’t inspected until Wednesday, it’s important to consider whether the defects indicated on the inspection certificate are advanced enough to establish that the product was abnormally deteriorated when it arrived two days earlier. Here, however, the inspection was taken on the day of arrival, so we do not need to consider the condition of the limes on prior days.  

Temperature: Similarly, sellers only warrant that their product will hold up to destination if temperatures are properly maintained in transit. Has the buyer provided readings from a portable temperature recorder and/or reefer download showing air temperatures were properly maintained in the trailer during this trip?

Totals: Was the total lot made available for inspection? It’s important to remember that any product not made available for inspection, including any product sold prior to the inspector’s arrival, must be factored into the inspection results as defect-free product. Here, however, the entire lot was inspected.  

Terms: The inspection certificate shows 19% quality defects and indicates the limes failed to grade U.S. No. 1 on account of quality. Sounds bad, but don’t be fooled. What were the terms of sale? Did you sell these limes as U.S. No. 1 product? If not, you had no obligation to meet this standard. When product is sold without a grade (on a “no-grade” basis) quality defects do not score against good arrival standards. After deducting quality defects, the checksum shown on the inspection certificate is reduced to just 5% condition defects, which would not be considered abnormally deteriorated in breach of the warranty of suitable shipping condition.

Interpreting inspection certificates can be tricky, but the Four Ts framework can help. Also, keep in mind, you can always get assistance from the Blue Book Services claims team, the USDA’s PACA office, or Canada’s Dispute Resolution Corporation (DRC).