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.
Last modified: February 3, 2019