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 $20,000 annually to re-sell at wholesale.
The purpose of the law is to:
- ensure that New York State producers are paid fully and promptly;
- ensure payment in the event a dealer defaults in payment; and
- suppress and prevent any unfair and fraudulent marketing practices.
The Department 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.
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.
Licensed dealers are required to file security in the form of a bond or letter of credit with the Department.
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 licensed Dealers, which are based on their individual annual volume of purchases of New York farm products.
Use the forms below to apply for a Farm Products Dealer License.
Learn how to apply for a Farm Products Dealer License.
Use this form to describe how you conduct business with New York producers.
Agricultural Producers Security Program
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.
Any person who grows farm products or sells livestock in New York is eligible to participate in the Agricultural Producers Security Program. All agricultural products grown or raised in New York State are covered by the law with the exception of dairy, eggs, and timber.
Sell to a Licensed Dealer
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.
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.
File a Complaint
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.
Agricultural producers can use the forms below to file a complaint against a licensed Farm Products Dealer.
This document contains instructions for filing a Farm Products Dealer complaint.
Producer Eligibility and Dealer Default
When a Dealer defaults in payment, the following provisions affect producer claim eligibility:
- The dealer must be licensed at the time of the transaction. Only sales to licensed dealers are covered under this law.
- All licenses expire April 30, unless revoked sooner by the State Department of Agriculture and Markets or surrendered by the dealer. Check the current status of a dealer on the Directory of Licensed Farm Product Dealers.
- 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.
- 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.
- 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.
- Enforcing 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.