The Wholesale Produce Dealers Act and the Wholesale Produce Dealers Rules are designed to provide economic protection to Minnesota producers, farm marketing cooperatives and licensed dealers who do not receive payment after selling their perishable agricultural products.
As part of the licensing process, wholesale dealers must obtain a surety bond that can be used for reimbursement if payment is not made. In addition to the bond and trust claims described below, the Wholesale Produce Dealers Act provides for mediation and other protections under the law.
List of wholesale produce dealers.
Any wholesale dealer or food processor who purchases or contracts with other Minnesota dealers or farmers for any of the following products needs to be licensed as a Minnesota Wholesale Produce Dealer
Retailers, Agents or Brokers:
Farmer-owned cooperatives do not need to be licensed as Minnesota Wholesale Produce Dealers if 75% of the cooperative's business is with members or stockholder patrons.
You may also be required to obtain a wholesale food processor/manufacturer license by MDA's Dairy and Food Inspection Division.
For further information about a wholesale food processor/manufacturer license, please contact the Dairy and Food Inspection Division licensing line at: 651-201-6062
Print and fill out the Application for License as a Wholesale Produce Dealer (PDF: 113 KB / 2 pages) form and submit it to the Minnesota Department of Agriculture (MDA) along with a check for the license fee. After the application is received, the amount of the bond will be determined by the MDA, based on the financial statement and the dollar amount of the dealer's produce purchases. The applicant is then sent a bond form to be completed by an insurance company for the specified amount. After the completed bond form is returned to the department, the Wholesale Produce Dealers License will be issued.
Before a seller enters into an agreement with a buyer, he may want to check the current list of licensed dealers to make certain the buyer is licensed and bonded. This provides the seller the protection of the Wholesale Produce Dealers Act in the event of nonpayment.
A Wholesale Produce Dealers Bond Claim must be filed within 40 days after the due date for payment. If there is no due date, produce must be paid for within 50 days after the date of transaction. The claim and copies of invoices or other proof of payment owed should be sent to:
The department will verify the claim and payment will be made directly from the bond insurer. If the total amount of all claims exceeds the amount of the bond, payment will be made on a pro rata basis.
The Wholesale Produce Dealers Act creates a trust in the dealer's produce, products of produce, accounts receivable and proceeds. This is another way that a seller can seek reimbursement from the buyer. This trust operates like a lien against the dealer's property and takes priority over security interests others may have. The seller must file a claim with the following entities:
The trust claim must be filed within 40 days after the due date for payment. If there is no due date, produce must be paid for within 10 days. In that case, a claim must be filed within 50 days after the date of the transaction. This type of claim is resolved in court.
Contractors and buyers who are operating without a wholesale dealers license and those who engage in unfair trade practices may be subject to a civil penalty not to exceed $500 per violation. Failure to pay is considered an unfair trade practice as is inaccurate weighing, retaliation against growers for asserting their rights, and breaking promises the farmer reasonably relied upon. The law also identifies other violations that are subject to fines. A separate violation occurs with respect to each different person involved, each purchase or transaction involved, and each false statement. Criminal penalties may also apply.
Wholesale Produce Dealers Licensing