DRC urges caution in shipping to Montreal and Toronto
DRC urges caution in shipping to Montreal and Toronto
In mid-July, the Canadian-based Dispute Resolution Corp. took the unusual step of issuing what it called a "Red Alert," advising its members to be "especially careful about selling into eastern Canada.
The alert said, in part: "Based on reports we have received in recent weeks, we believe there has been an upsurge in fraudulent produce buying by unscrupulous individuals in Quebec and Ontario, most notably in Montreal and Toronto.
The alert said that the "vast majority of produce buyers in these two provinces are honorable and honest operators, and in fact, it was those honest buyers that asked the DRC to issue the alert.
The alert claims that the honest operators "are acutely aware that the industry's reputation in eastern Canada has been damaged in the past by unprincipled buyers, and share the DRC's interest in working to bring these reprehensible activities to an end.
The DRC as well as U.S. shippers have reported several of these individuals and companies to the Royal Canadian Mounted Police.
However, the DRC said in its alert that "the primary responsibility for protecting a company from fraud and non-payment rests with the shippers themselves. Industry representatives from DRC, Western Growers Association, Montreal and even shippers agree.
Matt McInerney, chairman of the board of the DRC and executive vice president of Western Growers Association, said that a license from DRC, the Canadian Food Inspection Agency or even the Perishable Agricultural Commodities Act isn't a guarantee of payment.
"A DRC, CFIA or PACA license does not take the place of an appropriate credit check by the seller, he said. "The DRC goes through a painstaking process to make sure the principals of any new licensee were not affiliated with a previous company that did not pay its bills, but that still doesn't guarantee payment. A seller must check reference and do his homework. Ask yourself appropriate questions: Why is this buyer calling me? Should my antenna go up?
Martin Desrochers, president of Hydroserre Mirabel Inc. in Montreal and current chairman of the Quebec Produce Marketing Association, said that he welcomed the alert about Toronto and Montreal from the DRC. Mr. Desrochers said that eastern Canada has had a bad reputation in the past, but the honest operators have been working hard to repair that image. In the past few years, he said that the situation has gotten much better for sellers, and this alert is proof of that. In earlier times, he indicated that the fraudulent element existed almost with impunity. Now the reputable operators are pointing them out and trying to clean up the image of both Montreal and Toronto.
"I do believe it has improved, but we have to do what we can to get rid of these fraudulent operators, he said. "They seem to be very well organized.
Mr. Desrochers, who is a member of the DRC board, believes sellers should do business only with DRC members. He said that there are reputable firms that have chosen to keep their CFIA license and not go the DRC route, "but it is easier to get a CFIA license. Look at [the firm] carefully. I think the DRC license is better.
Fred Webber, longtime executive with The Blue Book who just recently joined the DRC as a full-time employee, agreed that the onus is on the shipper. He said that the DRC has gone a long way toward improving the business environment in Montreal and Toronto, but sellers still need to beware.
Under Canada law, all contract law is a provincial matter decided by local courts in lieu of a private third-party agreement such as the DRC. Consequently under the old dispute resolution system of Ag Canada, no decision was enforceable. Under the DRC bylaws, buyers and sellers who are members agree to allow the DRC to hear any dispute and make a ruling. Both sides agree to abide by the final decision, under the penalty of losing their DRC license, which is then well-publicized.
Mr. Webber said that this system has clearly given both U.S. and Canadian shippers recourse when they sell to Canada. Of course, the keys are being a DRC member and shipping only to DRC members whenever possible.
In its alert, DRC specifically told sellers that they should not do business with produce companies in Montreal or Toronto that they do not know well. Of course, that isn't always possible, so the DRC said that one should make sure the buyer has a license to do business in Canada either from the DRC or the Canadian Food Inspection Agency.
The DRC listed other preliminary steps a seller can take:
" Check out the company with The Blue Book. If the company doesn't have a "good or "excellent character rating, and a record of paying its bills in 28 days or less, proceed with extreme caution.
"Ask the company to provide the names of several other suppliers he or she works with. Follow up with these references by calling them and asking if there have been any problems with slow or incomplete payments.
"Ask the company to furnish the name of its bank and account manager. Call the account manager and inquire as to the company's creditworthiness, and ask if the company has any history of dishonored checks or other credit problems.
"If the company is new in the business, does not have a rating, cannot provide the names of several other suppliers, or supply the name of its bank and account manager, the DRC would recommend that credit not be extended to this company. If it is necessary to sell to this company, sell on a cash-only basis.
The alert said, in part: "Based on reports we have received in recent weeks, we believe there has been an upsurge in fraudulent produce buying by unscrupulous individuals in Quebec and Ontario, most notably in Montreal and Toronto.
The alert said that the "vast majority of produce buyers in these two provinces are honorable and honest operators, and in fact, it was those honest buyers that asked the DRC to issue the alert.
The alert claims that the honest operators "are acutely aware that the industry's reputation in eastern Canada has been damaged in the past by unprincipled buyers, and share the DRC's interest in working to bring these reprehensible activities to an end.
The DRC as well as U.S. shippers have reported several of these individuals and companies to the Royal Canadian Mounted Police.
However, the DRC said in its alert that "the primary responsibility for protecting a company from fraud and non-payment rests with the shippers themselves. Industry representatives from DRC, Western Growers Association, Montreal and even shippers agree.
Matt McInerney, chairman of the board of the DRC and executive vice president of Western Growers Association, said that a license from DRC, the Canadian Food Inspection Agency or even the Perishable Agricultural Commodities Act isn't a guarantee of payment.
"A DRC, CFIA or PACA license does not take the place of an appropriate credit check by the seller, he said. "The DRC goes through a painstaking process to make sure the principals of any new licensee were not affiliated with a previous company that did not pay its bills, but that still doesn't guarantee payment. A seller must check reference and do his homework. Ask yourself appropriate questions: Why is this buyer calling me? Should my antenna go up?
Martin Desrochers, president of Hydroserre Mirabel Inc. in Montreal and current chairman of the Quebec Produce Marketing Association, said that he welcomed the alert about Toronto and Montreal from the DRC. Mr. Desrochers said that eastern Canada has had a bad reputation in the past, but the honest operators have been working hard to repair that image. In the past few years, he said that the situation has gotten much better for sellers, and this alert is proof of that. In earlier times, he indicated that the fraudulent element existed almost with impunity. Now the reputable operators are pointing them out and trying to clean up the image of both Montreal and Toronto.
"I do believe it has improved, but we have to do what we can to get rid of these fraudulent operators, he said. "They seem to be very well organized.
Mr. Desrochers, who is a member of the DRC board, believes sellers should do business only with DRC members. He said that there are reputable firms that have chosen to keep their CFIA license and not go the DRC route, "but it is easier to get a CFIA license. Look at [the firm] carefully. I think the DRC license is better.
Fred Webber, longtime executive with The Blue Book who just recently joined the DRC as a full-time employee, agreed that the onus is on the shipper. He said that the DRC has gone a long way toward improving the business environment in Montreal and Toronto, but sellers still need to beware.
Under Canada law, all contract law is a provincial matter decided by local courts in lieu of a private third-party agreement such as the DRC. Consequently under the old dispute resolution system of Ag Canada, no decision was enforceable. Under the DRC bylaws, buyers and sellers who are members agree to allow the DRC to hear any dispute and make a ruling. Both sides agree to abide by the final decision, under the penalty of losing their DRC license, which is then well-publicized.
Mr. Webber said that this system has clearly given both U.S. and Canadian shippers recourse when they sell to Canada. Of course, the keys are being a DRC member and shipping only to DRC members whenever possible.
In its alert, DRC specifically told sellers that they should not do business with produce companies in Montreal or Toronto that they do not know well. Of course, that isn't always possible, so the DRC said that one should make sure the buyer has a license to do business in Canada either from the DRC or the Canadian Food Inspection Agency.
The DRC listed other preliminary steps a seller can take:
" Check out the company with The Blue Book. If the company doesn't have a "good or "excellent character rating, and a record of paying its bills in 28 days or less, proceed with extreme caution.
"Ask the company to provide the names of several other suppliers he or she works with. Follow up with these references by calling them and asking if there have been any problems with slow or incomplete payments.
"Ask the company to furnish the name of its bank and account manager. Call the account manager and inquire as to the company's creditworthiness, and ask if the company has any history of dishonored checks or other credit problems.
"If the company is new in the business, does not have a rating, cannot provide the names of several other suppliers, or supply the name of its bank and account manager, the DRC would recommend that credit not be extended to this company. If it is necessary to sell to this company, sell on a cash-only basis.
