Florida License and Bond Law
History and Purpose
The Florida License and Bond Law was enacted in 1941 to give market protection to producers of perishable agricultural commodities. Because the product the Florida grower is selling is perishable -- and indistinguishable from other like products once removed from the shipping container -- the producer is at the mercy of the receiver for payment. There is no opportunity to simply return the product. Without the administrative process offered by the Law, Florida growers would be faced with lengthy and expensive civil suits. In most cases, the cost of recovery would be greater than the value of the product.
License and Bond Requirement
The Law requires dealers in agricultural products be licensed with the Department if they buy directly from the producer or producer's agent and pay for that product in any form other than cash currency. Before receiving a license, the dealer must post a surety bond or certificate of deposit made payable to the Department. The bond amount must be equal to the dealer's largest month's purchases from Florida producers, not greater than $100,000 or less than $3,000. The license fee ranges from $65 to $265 depending on the volume of business transacted by the dealer.
The bond or certificate of deposit is in place to establish the financial responsibility of the dealer and to assist in the final payment of the product. The License and Bond Law currently covers all agricultural products except tobacco, sugar cane, and tropical foliage. Citrus is also exempt because citrus dealers operate under the Florida Citrus License and Bond Law.
Exceptions to the provisions of the Law are:
- Dealers who pay for their purchases with cash currency at the immediate time of purchase.
- Growers or groups of growers selling their own product.
- Dealers who operate as bonded licensees under the Federal Packers and Stockyards Act.
- Retail operations that purchase less that $1,000 per month from Florida producers.
Claims Against Dealers
The Law also requires that dealers account quickly and accurately for the products they purchase or handle for Florida producers. If a producer or his agent feels that he has not been properly paid for his product, he can file a claim with the Department against the dealer's license. The Department may issue a final order in the case after presentation of all the facts in the matter.
If it is found that the dealer does not comply with the order to pay, then the Department will order the bonding company to pay. In cases where the bond is not large enough to pay all claims against the dealer, the funds are distributed pro rata to the claimants. Claims must be filed with the Department within six months from the date of sale and must involve at least $250.
Updating the Law to Reflect the Evolving Marketplace
The Department of Agriculture and Consumer Services, recognizing that the marketplace and methods of conducting business have changed a great deal over the past 60 years, hosted a series of meetings during the summer of 2004 with representatives from various sectors of Florida's diverse agricultural community. The group reviewed proposed revisions to the License and Bond Law with the goals of developing a modern Law reflective of the needs of today's agricultural industry and fostering within the agricultural community a sense of solid equity and ownership in the new legislation.
This joint industry and Department review of the License and Bond Law coincided with an interim project of the Agriculture Committee within the Florida House of Representatives. These changes will offer growers and dealers more protection.
On February 23, 2005, the members of the House Agriculture Committee voted unanimously in favor of the legislation updating the License and Bond Law. The proposed legislation was assigned bill number HB 1231 and filed on February 28, 2005. The first reading in the House of Representatives occurred on March 8, 2005. HB 1231 was adopted by the house on April 27, 2005, with the addition of one amendment raising the minimum bond amount from $3,000 to $5,000.
A similar bill was filed in the Senate on February 24, 2005, and assigned bill number SB 1780. The bill was introduced in the Senate on March 14, 2005, and referred to the following committees: Agriculture; Banking and Insurance; Judiciary; and General Government Appropriations. HB1231, the amended version, was substituted for SB 1780 and passed the Senate on May 4, 2005.
On June 10, 2005, Governor Bush signed HB1231. Agricultural dealers and producers of perishable commodities will benefit from improvements to Florida?s License and Bond Law that will go into effect on October 1, 2005.
What are the changes?
- -- Changes the definition of "agricultural products" to include sod, tropical foliage, hay, and horticulture.
- -- Revises term "dealer in agricultural products" to include partnerships, corporations, or other business entities.
- -- Removes tropical foliage from the list of exemptions and adds timber and timber by-products to exemption list.
- -- Clarifies definition of "net return basis."
- -- Adds definitions for "producer's agent" and "negotiating broker."
- -- Revises "cash-only" exemption.
- -- Requires dealers to provide mailing and street addresses, and requires dealers to notify the Department in case of changes.
- -- Establishes criteria a surety company must follow before it can cancel a bond.
- -- Increases minimum bond requirement from $3,000 to $5,000.
- -- Doubles the amount of the bond or certificate of deposit to twice the dollar amount during the month of maximum transaction in the preceding 12-month period.
- -- Allows the Department to issue a conditional license.
- -- Clarifies complaint filing requirements/procedures.
- -- Changes minimum complaint amount from $250 to $500.
- -- Allows dealer to dealer complaints once all producer claims are paid out first.
- -- Increases fees, filing requirements, and fines.
Fees and Penalties
Fee increases are in place to assist the Department in offering the increased protections detailed in the law. Here's a breakdown of the statutory changes to fees and penalties:
- -- Changes maximum license fee from $300 to $500.
- -- Changes maximum license fee for each additional location from $50 to $100.
- -- Implements a $50 filing fee for filing a complaint with the Department.
- -- Changes maximum fine for violating the law from $1,000 to $2,500.
- -- Changes the continuing violation fine from $50 per day to $100 per day.
- -- Changes the penalty for late renewal of a license from $35 to $100.