N.Y. Agriculture & Markets Law § 250: Form and amount of security; agricultural producers security fund; scope of coverage

§ 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) (i) At any time the fund exceeds six 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 such commissioner has reason to believe that pending claims

may reduce the fund below that amount.

(ii) In the event that the fund exceeds six million dollars on the one

hundred twentieth day prior to the commencement of the next year, but

when adjusted for the rate of inflation, the security fund does not

provide the same level of protection to the producers as provided for by

subparagraph (i) of this paragraph, the commissioner shall continue the

collection of security fund fees for such year.

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.