An American business which is believed to be one of Tesco's former primary sweet potato suppliers has been served with an administrative action by the US Department of Agriculture (USDA) for allegedly failing to pay around $1.7 million to growers.
It is claimed that the Bissett Produce Company, which operates from Spring Hope in North Carolina, failed to make payment to nine growers for 72 lots of produce it purchased in interstate and foreign commerce from September 2010 to June 2013.
The firm - which one insider claimed was hailed as a 'leading light' when Tesco began adopting its pioneering GFS procurement model - had been given an opportunity to request a hearing since the administrative action was filed at the end of October last yearunder the Perishable Agricultural Commodities Act (PACA) following a USDA investigation.
But according to a spokesperson for the USDA, Bissett failed to respond to the federal executive department by the specified deadline of 1 January 2015.
Should the USDA find that the company committed 'repeated and flagrant violations', Bissett would be barred from trading within the produce industry for two years. Furthermore, its principal directors could not be employed by or affiliated with any PACA licensee for one year, and then, thereafter, only with the posting of a USDA-approved surety bond.
The Agricultural Marketing Service (AMS), PACA division, regulates fair trading practices of produce companies operating subject to PACA, which includes buyers, sellers, commission merchants, dealers, and brokers within the fruit and vegetable industry.
All oversight of actions related to PACA are conducted by AMS, an agency within the USDA. PACA establishes a code of good business conduct for the produce industry. Under it, all interstate traders in fresh and frozen fruits and vegetables must be licensed by the USDA, which is authorised to suspend or revoke a trader’s licence for violating the act.
In the past three years, the USDA resolved approximately 4,600 claims filed under PACA involving more than $87m.
Tesco declined to comment on the story.
