Agriculture_Markets
Andrew M. Cuomo, Governor | Richard A. Ball, Commissioner
 
   
 Agricultural Producers Security
Mark McMullen, 518-457-4383

Farm Products Dealer Licensing Program

The Agricultural Producers Security Program under Article 20 of the Agriculture and Markets Law - Licensing & Sale of Farm Products provides for the licensing of all dealers who buy or receive farm products from New York producers in excess of $10,000 annually to re-sell at wholesale.

The purpose of the law is to ensure New York State producers are paid fully and promptly; ensure payment in the event a dealer defaults in payment; and, to suppress and prevent any unfair and fraudulent marketing practices. Licensed dealers are required to file security in the form of a bond or letter of credit with the Department. Supplemental financial coverage is provided by the Agricultural Producers Security Fund, which is funded by the licensed dealers. Producers are provided further protection through a provision of the Article 20 Law, which authorizes a statutory trust (replaces the producer lien, effective July 20, 2005) in the event a dealer defaults in payment.

Attention New York Producers – Sell to Licensed Farm Product Dealers

    Directory of Licensed Dealers for the period May 1, 2016 through April 30, 2017

    Dealers are required to pay New York producers promptly. The “Prompt payment” provision of the law means payment within 30 days of the date farm products sold by a producer to a dealer are delivered to such dealer, or other person as the purchaser may designate, or such other period of time as otherwise agreed upon in a writing signed by the dealer and accepted by the producer on or before delivery of said farm products, provided that in no event shall such period exceed 120 days from said date of delivery.

To download forms to become licensed or to file a complaint, click on the forms below:

    To File a Complaint:

Division Responsibilities:

    The Division administers the licensing process, conducts audits of licensed dealers, investigates complaints of unfair and fraudulent practices, and initiates enforcement action for violations to the Article 20 Law.

    A major responsibility associated with the licensing process is to determine the amount of surety a licensee is required to provide. This amount is based on the applicant's dollar volume of business and its financial condition. If a licensed dealer fails to make full payment for farm products purchased from a producer without reasonable cause, the dealer's surety that is held by the Department is available to pay the producer's losses up to the extent of the surety.

    If the surety amount is not adequate to reimburse producers for the eligible amounts owed, supplemental financial coverage (80 percent of the balance that is eligible for payment) is provided by the Agricultural Producers Security Fund. This fund is maintained through fees paid by dealers, which are based on their individual annual volume of purchases of New York farm products.

Key Provisions of the Agricultural Producers Security Program

    Eligible Producers

    Any person who grows farm products or sells livestock in New York is eligible to participate.

    Products Covered

    All agricultural products grown or raised in New York State are covered by the law with the exception of dairy, eggs and timber.

    Those Subject To A License

    Dealers, including commission merchants, net-return dealers, brokers and processors who buy or receive New York farm products from New York State producers for resale are subject to a Farm Products Dealer License. Dealers who handle livestock and who are registered and bonded with the USDA Grain Inspection, Packers and Stockyards Administration are exempt from the licensing and bonding provisions of Article 20. Agricultural cooperative corporations when receiving, processing, and marketing farm products of its producer members are also exempt.

Provisions that Affect Producer Eligibility if a Dealer Defaults in Payment

  1. The dealer must be licensed at the time of the transaction. Only sales to licensed dealers are covered under this law.
  2. The transactions which are owed and that would be eligible must have occurred within 120 days of the earliest unpaid transaction between the producer and the dealer. This is a transaction that remains unpaid as of the date the claim is filed, whether or not the earliest unpaid transaction is included in the claim.

  3. Claims must be filed with the Department no later than 365 days after the sale and delivery of the farm products. However, in the event of a dealer’s default in payment where the Department has initiated advertising for claims, claim and statement forms must be submitted by the date specified in the advertised notice. Click here for a copy of the claim and statement forms.

  4. As of July 20, 2005 producers who sell and deliver farm products to dealer have the benefit of a statutory trust on their deliveries of farm products, food or other products derived from those farm products and any receivables or proceeds arising from the sale of their farm products:

    • When and Where to File - To preserve the trust benefit, a producer must give written notice to the dealer within 60 days from the date payment is due by statute, regulation or by written agreement. As a practical matter, a producer may wish to provide written notice to a dealer on the invoice itself.

    • What to Provide - The written notice should state the name of the dealer who received the product, description of the product (transaction date, commodity sold, quantity, price per unit and the amount owed), and the date on which payment was due.

    • How do I enforce the trust benefit ? The producer can bring an action against the dealer by contacting their attorney to enforce the trust. Such actions are entertained and under the jurisdiction of the State Supreme Court. A producer who prevails in an action to enforce payment from the trust shall recover from the dealer related costs, fees and disbursements and may recover reasonable attorney fees as determined by the court.

    It is always recommended that producers consult their attorney concerning matters involving preservation of their trust benefit.

For further information concerning Article 20 of the Agriculture and Markets Law or to request a copy of the statute, contact Mark McMullen in the Division of Agricultural Protection and Development Services at 518-457-4383 or email mark.mcmullen@agriculture.ny.gov.

Producers of fruits and vegetables that transact business interstate may also wish to file a claim under the Federal Perishable Agricultural Commodities Act (PACA) by calling them at 1-800-495-7222. Inquiries concerning PACA coverage should be directed at the same number.

Producers of livestock may also wish to file a claim under the USDA Grain Inspection, Packers and Stockyards Administration (GIPSA) by calling them at 1-800-998-3447. Inquiries concerning GIPSA should be directed to the Packers and Stockyards Administration at the same number or direct at 404-562-5848.

Related Links

Ag Producers Security Program Press Release

Article 20 Law

Program Brochure