PACA Liens: A New Cloud On Title?

The Perishable Agricultural Commodities Act (PACA) was passed by Congress in 1930 to protect agricultural produce suppliers from unscrupulous vendors who refused to pay the suppliers for their goods.  PACA contains language creating a statutory trust, whose beneficiaries are the suppliers and whose trustees are the vendors, whom PACA calls "dealers."¹  The act imposes fiduciary duties on dealers to hold the agricultural commodities and any inventories, receivables and proceeds derived from them in trust until the suppliers are paid in full.²  If a dealer breaches its fiduciary duty to the trust by failing "to maintain trust assets in a manner that such assets are freely available to satisfy outstanding obligations to sellers of perishable agricultural commodities,"³ the supplier can file a PACA claim against it and seek to recover any assets improperly diverted from the trust.