PACA Consignment Produce Enforcement — Federal Rules Against Dumping and Fraud in Interstate Produce Consignments
Legal Authority
- 7 U.S.C. §§ 491–497 — Act of March 3, 1927; prohibits unnecessary destruction and dishonest accounting in interstate consignment transactions for farm produce; predates PACA but addresses the same anti-fraud concerns for consignment arrangements
- 7 CFR Part 48 — USDA AMS implementing regulation; prohibits unnecessary dumping without a USDA/authorized inspection certificate, false reporting about condition/quantity/sale price, and failure to provide true and correct accounting; establishes violation reporting procedures
Key Mechanics
Seven CFR Part 48 addresses a specific historical fraud in the produce trade: consignment receivers (brokers, dealers, commission merchants) who receive fresh produce from interstate shippers and sell it on the shipper's behalf, then misreport what happened. The three prohibited practices are: (1) unnecessary dumping — destroying, abandoning, or throwing away consigned produce without a good and valid reason; (2) false reporting — intentionally and fraudulently misrepresenting the produce's condition, quantity, sale price, or disposition to the consignor; and (3) failure to account honestly — not providing a true and correct accounting of the consignment proceeds. A key procedural rule: receivers who believe consigned produce has no commercial value must obtain a certificate from a USDA-authorized inspector or state/local inspection service before dumping — dumping without the certificate provides no defense even if the produce was genuinely worthless. The intent requirement applies to false reporting (requires intent to defraud, not honest mistakes), but the dumping-without-certificate violation does not require fraudulent intent. Violations are reported to the AMS Director, who investigates and takes appropriate action. This regulation coexists with the modern Perishable Agricultural Commodities Act (PACA), which provides the comprehensive licensing and trust framework for the produce industry.
Current Rule (2026)
| Parameter | Value |
|---|---|
| Citation | 7 CFR Part 48 |
| Issuing agency | USDA Agricultural Marketing Service (AMS) |
| Statutory authority | 7 U.S.C. §§ 491–497 (Act of March 3, 1927) |
| Last major amendment | No recent Federal Register amendments |
What This Rule Does
When a farmer or shipper sends fresh produce to a broker, dealer, or commission merchant on consignment — meaning the receiver sells it on the shipper's behalf and remits the proceeds — the shipper is entirely dependent on the receiver's honesty about what happened to the produce and what it sold for. Before federal intervention, receivers sometimes destroyed or abandoned produce that was profitable to sell and simply told the shipper it had no value, pocketing the proceeds. Or they provided false accounting about sale prices, quantities, and expenses.
The Act of March 3, 1927 (enforced through 7 CFR Part 48) makes these practices federal violations. Part 48 prohibits: (1) unnecessary destruction, abandonment, or dumping of consigned produce received in interstate commerce; (2) false reporting to shippers about the condition, quality, quantity, or disposition of consigned produce; and (3) failure to provide a true and correct accounting.
The rule applies to any person who receives produce shipped across state lines or in the District of Columbia for someone else. It predates the modern Perishable Agricultural Commodities Act (PACA) and addresses the specific fraud vector of receiver misconduct in consignment transactions.
Key Provisions
- § 48.2 — Definitions: "Act" means the March 3, 1927 federal law requiring honest accounting and prohibiting unnecessary destruction of consigned farm produce; "person" means an individual, partnership, or corporation who receives produce in interstate commerce for others; terms apply to all who take physical or constructive possession of consigned produce in interstate or D.C. commerce
- § 48.4 — Prohibition on unnecessary dumping: a person who receives consigned produce from interstate shipment may not destroy, abandon, throw away, or dump that produce without a good and valid reason; the prohibition extends to directing others to dump or acting in concert to dump; violation is a federal offense regardless of whether the receiver personally performs the dumping
- § 48.5 — Prohibition on false reporting: it is unlawful to intentionally and fraudulently give a false report to the person who consigned the produce about: how the produce was handled, its condition or quality, the quantity received, or how it was sold or disposed of; the prohibition requires both intent to defraud and a false representation — honest mistakes or good-faith estimates are not covered
- § 48.6 — Accounting requirement: anyone who receives consigned produce in interstate commerce or in D.C. must provide the consignor with a true and correct accounting; intentionally failing to account honestly — with intent to cheat — is a violation of the Act
- § 48.7 — Certificate required before dumping: if a receiver believes consigned produce has no commercial value and intends to destroy, abandon, or dump it, they must first obtain a certificate or other proof that the produce has no commercial value; such proof must come from a USDA-authorized produce inspector or from a state, county, city, or other authorized inspection service; a receiver who dumps without this certificate has no defense against charges of unnecessary dumping
- § 48.8 — Reporting violations: anyone who believes the Act or Part 48 regulations were violated should promptly report all facts to the AMS Director; the Director will investigate and take appropriate action
How It Affects You
If you ship produce on consignment to a broker, dealer, or commission merchant who will sell it and remit proceeds, federal law entitles you to an honest accounting. If you suspect your receiver understated the sale price, misrepresented the quantity sold, or claimed the produce was worthless and dumped it without a certificate, you can report the suspected violation to USDA's AMS Director. The Act creates federal liability for receivers who defraud consignors.
If you receive produce on consignment, you must obtain a USDA or authorized inspection certificate before destroying, abandoning, or dumping any consigned produce — even produce that appears worthless. Dumping without a certificate, even if the produce genuinely had no commercial value, leaves you without a defense if the consignor later challenges the destruction. Get the certificate first.
The "no good reason" standard for dumping focuses on commercial reasonableness. Receivers are not required to sell produce at any price — declining to sell clearly worthless produce and destroying it may be reasonable. But destroying produce that retains market value, and claiming it was worthless, is the core offense the Act targets.
Relationship to PACA: The modern Perishable Agricultural Commodities Act (PACA, 7 U.S.C. § 499a et seq.) provides the comprehensive licensing, trust, and dispute resolution framework for the fresh produce industry. Part 48 addresses the specific anti-fraud rules for consignment transactions and predates PACA, but both regimes coexist and complement each other.
Statutory Authority
This rule implements:
- 7 U.S.C. §§ 491–497 — Act of March 3, 1927; prohibits unnecessary destruction and dishonest accounting in interstate consignment transactions for farm produce; predates the Perishable Agricultural Commodities Act but addresses the same anti-fraud concerns for the specific context of consignment arrangements
Recent Rulemakings
No major Federal Register amendments. The statutory framework and implementing regulations have been stable since promulgation.