PACA Trust and 30-Day Terms for Produce Distributors

This post is general information, not legal advice. PACA cases turn on facts and short deadlines. Read USDA’s pages listed at the end, and before you change your terms or your invoices, talk to a lawyer who handles PACA claims.

What the PACA trust is

The Perishable Agricultural Commodities Act, PACA, covers trade in fresh and frozen fruits and vegetables. In USDA’s words, its trust provisions “put sellers of fresh and frozen fruits and vegetables in a priority status in the event their buyers become insolvent or file for bankruptcy protection.”

The buyer holds a trust over produce it has received but not paid for. It reaches further than the boxes: under the regulation, the trust is made up of the produce, the food or products made from it, and the receivables or proceeds from selling them. It is a “floating” trust — the assets don’t have to sit in a separate account, but they have to stay available to pay produce sellers. Unpaid sellers enforce it in federal district court.

Who is bound? The regulation counts “jobbers, distributors and other wholesalers” buying or selling produce in wholesale quantities — one ton, 2,000 pounds, or more in a day — as dealers. If that describes you, the trust binds you when you buy. USDA can tell you whether your business needs a PACA license.

When you are the buyer

When a grower or shipper sells you produce, the trust is theirs. Three things follow.

• Your receivables are their security. What your restaurants owe you for that produce is a trust asset. The regulation requires buyers bound by the trust to keep trust assets freely available to pay their produce sellers, and calls dissipating them — anything that could divert them or leave sellers unable to recover — unlawful.
• The default term is 10 days. Unless you agreed something else in writing before the deal, paying “promptly” for produce you buy means within 10 days after the day you accept it.
• Late payment is enforced. In March 2026, for example, USDA filed an administrative complaint alleging that BLJR Distribution LLC, operating from New York, failed to make prompt payment to 16 produce sellers in the amount of $576,663 from October 2024 through March 2025. These are allegations, and the company can request a hearing. USDA’s release says that if it finds repeated and flagrant violations, the company could be barred from the produce industry as a licensee for three years, or two years with a USDA-approved surety bond.

The squeeze to plan for: if your growers are paid in 10 days and your restaurants pay in 30, you are financing 20 days of produce. Either agree longer written terms with your sellers, or give your customers shorter ones. And don’t be surprised when a shipper turns down Net 45: agreeing to it in advance would take that sale out of their trust protection.

When you are the seller

When you sell produce on, you are the seller, and the trust can protect you the same way — if your customer is a buyer the trust binds, and you meet two conditions on terms and one on notice.

Whether a particular restaurant is bound is a fair question to put to your lawyer. The definitions turn on quantity: wholesale quantities for dealers, and for retailers, produce purchases over $230,000 in a calendar year. The answer depends on how much a customer buys and how.

Terms that keep the trust

1. 30 days at most. The longest payment term a seller can agree to before the sale, and still be eligible for the trust, is 30 days after the produce is received and accepted. Net 45 agreed in advance puts that sale outside it.
2. In writing, before the sale. Any term other than prompt payment has to be agreed in writing before the transaction, with a copy in your records. And the payment terms have to be shown on the invoices and other documents for the sale.

Count from delivery. The 30 days run from receipt and acceptance. “Net 30” counted from a month-end statement can run past 30 days from delivery for most of the month’s orders. If you bill on statements, ask your lawyer how to word terms that stay within 30 days of each delivery.

A payment plan afterwards is different. Under the regulation, a seller who met these conditions doesn’t lose eligibility by agreeing to a schedule for a past-due amount, or by accepting a partial payment. Long terms agreed up front are the problem; a plan for a late customer is not.

Preserving it: a notice, or the invoice

Being eligible isn’t enough. You also have to preserve the trust, on a short clock. There are two ways.

• A written notice to the buyer within 30 calendar days after payment was due, or after you learn a payment was dishonored. It has to say it is a notice of intent to preserve trust benefits, and give each shipment’s details and the amount past due. Sellers without a PACA license use this route.
• The invoice itself, if you are a PACA licensee. Your invoice or billing statement, on paper or electronic, carries this statement exactly:

The invoice also has to show the payment terms, if they differ from prompt payment and were agreed in writing before the sale. An electronic invoice counts when you can verify it was sent to the buyer.

Practical steps

1. Put every customer’s terms in writing before their next order. A short signed page, kept on file. Due on receipt, Net 15, Net 30 — for produce, no more than 30 days if you want the trust.
2. Set terms per customer. A café that pays on delivery and a hotel on Net 30 need different paper. Keep a list of who is on what, and check it before you give anyone longer.
3. Fix the invoice template once. Payment terms on every invoice, and the trust statement word for word if you are licensed. Ask whoever runs your accounting system where that text goes.
4. Watch the 30-day notice clock. If you rely on separate notices, the clock starts when payment is due, not when you notice. A weekly look at overdue produce invoices catches it.
5. Get written terms from your own sellers. If you need more than 10 days to pay a grower or shipper, agree it in writing first, and keep it within 30 days — a seller has good reason to refuse more.
6. Book an hour with a PACA lawyer. Bring your terms page and an invoice. It is easier to fix a gap before a customer fails than after.

Where Supligo fits

Supligo keeps each customer’s payment terms — due on receipt, Net 30 and the like — and what each customer owes you, so you can see who is on what. It does not issue legal invoices and it does not collect payments: your invoices come from your own accounting system, and that is where the payment terms and, if you are licensed, the trust statement belong. Keep the signed terms on file yourself. More on how Supligo works for produce distributors.