- Q: What is the Farm Products Act?
A: The Colorado Farm Products Act is a law designed to protect sellers of farm products. It is a system of licensing and bonding to assist the seller in getting paid.
- Q: How does it work?
A: The law requires that dealers and brokers license and bond with the Department of Agriculture. When a complaint is filed against a licensee, the Department investigates the complaint, and if the complaint is deemed to be valid, a claim will be made against the licensee's bond.
- Q: Will this ensure that I get paid?
A: No, your claim may exceed the amount of the licensee's bond, and there may be competing claims for the bond. In that event, you will receive a pro-rata share of the bond proceeds. This will not prevent you from seeking relief in the court system.
- Q: Are all dealers bonded?
A: No, there are two exceptions: the small-volume dealer, and the cash buyer. The Act provides for the licensing of small-volume dealers, who purchase less than $20,000 of farm products in any one year, with no one transaction exceeding $2,500.
- Q: Who needs to be licensed?
A: Anyone or any company that is purchasing Colorado farm products for the purpose of resale or processing.
- Q: What is a Farm Product?
A: A farm product is an unprocessed product of the soil, livestock, milk, honey, and hay. It does not include poultry, nursery stock, timber products, commodities*, or livestock purchased and not resold or processed within 90 days.
*Commodities are grain and dry edible beans.
- Q: How is the act enforced?
A: A dealer that is operating without a license is committing a class 6 felony, and is subject to prosecution under the criminal statutes.
- Q: Are there any exceptions to the requirement to license?
A: Restaurants, retail grocery stores, small feedlots, and any person or company that is purchasing farm products for their own consumption need not license.
- Q: Why are commodities excluded from the act?
A: They are covered under a similar act called the Commodities Act.
- Q: How can I protect myself?
A: Document the transaction by obtaining evidence of sale. Scale tickets, bills of lading, warehouse receipts, or delivery receipts can be used.
- Q: Should I use a contract?
A: Yes, one of the major problems that we incur in trying to settle disputes is trying to determine what the buyer and seller agreed to. Get a contract in writing.
- Q: Do I need a fancy contract?
A: No, a plain handwritten contract explaining the terms of the sale can be used.
- Q: What should I include in the contract?
A:
- Who Is The Buyer?
- Quantity Sold
- Quality Agreed Upon
- Sale Price
- Method Of Payment
- Use Of The Farm Product
- Where And When Does Title Transfer
