June 4, 2014
Albany, NY

Commissioner Reminds Farmers to Sell to Licensed Dealers

Commissioner Reminds Farmers to Sell to Licensed Dealers
Agricultural Producers Security Law Protects Farmers from Nonpayment

New York State Agriculture Commissioner Richard A. Ball today reminded farmers to only sell to licensed farm product dealers this growing season. Article 20 of the New York State Agriculture and Markets Law, more commonly known as the Agricultural Producers Security Law, requires dealers to be licensed and contribute to a security fund in order to offer financial protection to farmers in the event of a default in payment.

Farm product dealers are required to be licensed with the Department of Agriculture and Markets.  Dealers’ licenses expire on April 30 of each year and must be renewed for the license year beginning May 1.  The Department maintains a current list of licensed dealers on its website and will provide a hard copy upon request.

Article 20 of the New York State Agriculture and Markets Law provides financial protection for farmers against nonpayment for their products sold to licensed dealers.   This financial protection consists of security in the form of a bond or letter of credit furnished by the dealer, and supplemental financial coverage from the Agricultural Producers Security Fund, which is funded by licensed dealers.  In order to preserve a producer’s eligibility for the financial protections available under the Agricultural Producers Security Law, producers must:

  • Sell only to licensed dealers.  Only sales to licensed dealers are covered under Article 20.  The dealer must be licensed at the time of the transaction. 
  • Ensure that the sale of farm products between the producer and dealer, for which a claim is made, has occurred within 120 days from the earliest unpaid transaction date at the time the claim is filed.  Unpaid transactions that occur after the 120 day period will not be eligible.   
  • Claims of nonpayment must be filed with the Department no later than 365 days after the sale and delivery of the farm products.  In the event the Department has issued a notice to file claims, claims must be submitted by the date specified in the published notice.

A producer can also take advantage of Article 20’s trust provision, a legal mechanism that holds a dealer responsible for the full amount owed to a producer.  The “Article 20 Trust” is established upon delivery of the producer’s farm products to a dealer and ends once the amount due is fully paid.  The trust assets are the farm products and the proceeds from the sale of those farm products. To take advantage of the Article 20 Trust, a producer must provide a written notice to the dealer within 60 days from the date when payment is due informing the dealer that the producer is electing the trust benefit.  The written notice must provide details of the transaction, including the dealer’s name, transaction date, product sold, quantity, price per unit, amount owed and the date payment is due.  As a practical matter, a producer may wish to provide written notice to a dealer on the invoice itself.  The Department recommends that producers consult with their attorney concerning matters involving preservation of their trust benefit, or to enforce the trust.

For up-to-date information about the law, a copy of the brochure or a list of licensed dealers, please visit the Department’s website or call the Department at 1-800-554-4501.