Bonded Dealers & Handlers
The Dealers and Handlers of Agricultural Products Law ensures farmers receive prompt and full payment from buyers through licensing and bonding requirements. Anyone who purchases products (except tobacco, cotton, dairy, or timber) from a farmer in a payment form other than cash, is required to be licensed and bonded. Grain producers have added protection through the Grain and Cotton Producers Guaranty Fund.
The Dealer and Handler Miller Exemption applies when a producer receives payment for grain in form of a check at delivery time, and the producer has no protection. The Dealer and Handler Cash Affidavit is used when a producer is paid cash at delivery time; therefore, no protection is needed in form of bond or guaranty fund.
It is unlawful for a dealer in agricultural products to engage in that business without a state license issued by the commissioner. This requirement applies to all dealers in agricultural products who are not exempted.
Grain and Cotton Producers Guaranty Fund
The South Carolina Dealers and Handlers Law protects farmers and producers who might otherwise be injured financially by dealers who fail to pay. Dealers purchasing agricultural products directly from producers and later reselling those products are required to be licensed by the South Carolina Department of Agriculture, complete with a surety bond.
Producers should always verify that they are working with a licensed dealer to ensure that they will be entitled to the protections offered by the Dealers and Handlers Law. ‘Agricultural commodity’ or ‘commodity’ means cotton and all agricultural products commonly classed as grain, including corn, wheat, oats, soybeans, barley, and grain sorghum, produced within this State. An agricultural commodity dealer shall include cotton gins if the gin is engaged in above-described activity. Cotton gins that are not purchasing will be registered as a Cotton Ginner Non-Purchaser for the purpose of collection of baled cotton assessments.
The South Carolina Grain and Cotton Producers Guaranty Fund operates as an additional insurance policy for grain and cotton producers whose claims exceed the licensed dealer’s surety bond. Valid claims against this fund must also be for losses incurred when selling grain or cotton to a dealer licensed under the Dealers and Handlers Law. Claims are limited to two years from date of loss as determined by the department.
The South Carolina Grain and Cotton Producers Guaranty Fund is not subsidized by tax dollars. Instead, producers pay an assessment fee of 1 cent per bushel for soybeans, 1/2 cent per bushel for other grains produced and sold, and 50 cents per bale of cotton at place of ginning. These fees are collected by licensed grain dealers, cotton ginners and remitted to the Department to be placed into the South Carolina Grain and Cotton Producers Guaranty Fund. Assessments are not collected once the fund total reaches $25 million. If the fund drops below $25 million, however, the assessments will be collected once again.
To verify that a business is licensed or for more information, call the Consumer Services Division of the South Carolina Department of Agriculture at 803-737-9700.
