Agriculture & Markets - Licensing of Farm Products Dealers - Form and amount of security; agricultural producers security fund; scope of coverage


Published: 2017-08-04

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Subscribe Now for only USD$40 per month.
§ 250. Form and amount of security; agricultural producers security
fund; scope of coverage. 1. (a) The bond or letter of credit required
by section two hundred forty-eight of this article shall be upon a form
prescribed by the commissioner and shall be in the sum fixed by the
commissioner, provided that the sum shall not be less than three
thousand dollars nor more than four hundred thousand dollars, and shall
be conditioned on the faithful compliance by the licensee with the
provisions of this article. Upon notice, the commissioner may increase
the security based upon review of the applicant's or licensee's
financial statements and other materials in support of its application.
In the case of an applicant or licensee owned in whole or in part by a
producer, said producer may execute a waiver of his or her right to
recover from the applicant or licensee's security and the agricultural
producers security fund and the amount of the security said applicant or
licensee is required to provide shall be adjusted accordingly.

(b) In addition to the bond or letter of credit required by section
two hundred forty-eight of this article, a fee for deposit in the
agricultural producers security fund shall be paid annually to the
commissioner at the time application is made for a license. Such fee
shall be determined on the basis of the annual dollar volume of
purchases of farm products as shown in the application for license under
this article in accordance with the following schedule:

Annual Volume Fee

$5,000,000 and over $2,500

3,000,000 - 4,999,999 1,750

1,000,000 - 2,999,999 1,000

500,000 - 999,999 750

300,000 - 499,999 500

50,000 - 299,999 300

20,000 - 49,999 200

(c) In lieu of filing the bond or letter of credit required by section
two hundred forty-eight of this article and paying the fee as provided
for in paragraph (b) of this subdivision, the applicant may elect to
file a bond or letter of credit in the amount determined by the
commissioner, but which shall not be less than an amount covering ninety
percent of the previous year's dollar volume of purchases of New York
state farm products.

(d) Upon initial application for a license under this article, the
applicant who elects to participate in the agricultural producers
security fund shall pay into the fund an amount equal to one-half the
fee determined in paragraph (b) of this subdivision, based on an
applicant's good faith estimate of his or her annual dollar volume of
purchases.

(e) There is hereby established in the joint custody of the
comptroller and commissioner of taxation and finance a fund to be
designated as the agricultural producers security fund. The commissioner
shall deposit all moneys received from dealers pursuant to paragraph (b)
of this subdivision into the fund. The moneys so received and deposited
in the agricultural producers security fund shall not be deemed state
funds. The comptroller shall be empowered to invest such funds pursuant
to section ninety-eight-a of the state finance law consistent with the
purposes of this article. The commissioner is hereby authorized to draw
upon such funds, in his or her discretion, to purchase credit insurance
for the benefit of the agricultural producers security fund. The expense
of administering the licensing and bonding provisions of this article
shall be paid from the fund upon vouchers certified by the commissioner.
Payments from the fund for administrative expenses shall not exceed five
percent of the maximum amount authorized for the fund. The commissioner
shall make an annual report of the receipts to and disbursements from
the fund, including the costs of administration of the fund, which
report shall be made available to each dealer and to any other person
having an interest in the fund, and any person who may request a copy of
that report.

(f) At any time the fund exceeds four million dollars on the one
hundred twentieth day prior to the commencement of the next license
year, the commissioner shall suspend collection of the security fund
fee, unless he or she has reason to believe that pending claims may
reduce the fund below that amount.

2. When and as required by the commissioner, a licensee shall file
with the commissioner a verified statement of his or her disbursements
during a period to be prescribed by the commissioner which shall contain
the names of the producers from whom farm products were received or
purchased and the amount due to the producers. Prior to acceptance of
such statement for filing, the commissioner may require, at the expense
of the licensee, the submission of an audit by a certified public
accountant. If, in the judgment of the commissioner, it appears from
such statement or from facts otherwise ascertained by him or her that
the security afforded to producers delivering or selling farm products
to such licensee does not protect such producers to the extent intended
by this section, the commissioner may require such licensee to give an
additional bond or letter of credit in a sum to be determined by the
commissioner, but in no event shall the combined bonds for the licensee
exceed four hundred thousand dollars.

3. If satisfied from an investigation of the financial condition,
character and record of the person applying for a license that (a) such
person is solvent and possessed of sufficient assets reasonably to
assure compensation to producers of farm products; and (b) the gross
volume of farm products purchased from producers by said applicant will
not exceed one hundred thousand dollars during the license year, the
commissioner, in his or her discretion, may relieve such applicant from
the provision of this section requiring the filing of a bond or letter
of credit.

4. The commissioner, at least annually, shall publish the names of all
licensees and the amount of their security and shall, upon request,
furnish such list to any person.