The Agricultural Investigations Program enforces the Commission Merchants Act RCW 20.01 and administrative rules. Program staff investigates complaints to protect producers, buyers and sellers of agricultural products against illegal activities.
Washington’s Agricultural Investigations Program was established to protect producers, buyers, and sellers of agricultural products against illegal business practices. RCW 20.01, Agricultural Products — Commission Merchants, Dealers, Brokers, Buyers, Agents, was first enacted in 1959. The statute gives the department authority to regulate individuals and businesses that receive on consignment, take possession or control of or act as brokers in the resale or processing of unprocessed agricultural products. The department regulates individuals and businesses through licensing and bonding. The program takes complaints from consignors, conducts investigations, and enforcement activities. This program is entirely funded through the collection of license fees and other charges WAC 16-623; no general fund dollars are received.
Among many provisions this law requires:
- Commission merchants, dealers, limited dealers, brokers, and cash buyers be licensed annually by the Washington State Department of Agriculture (WSDA). In most cases agricultural businesses must post bonds. Licenses can be obtained from WSDA at any time, however all licenses expire on December 31 of each year. Bonds are obtained through commercial surety companies.
- Commission merchants must remit payment for consignments within 30 days of selling agricultural products on the growers account unless otherwise agreed to by contract.
- Dealers in livestock must pay within seven days or as required by contract.
- Dealers in all other agricultural products must pay within 30 days of taking possession or as required by contract.
- Dealers or commission merchants in hay or straw must furnish the producer an endorsed fully completed manifest of cargo for each load. They must obtain a certified net and gross weight from the first certified public scale nearest the producer and furnish the producer a copy of the certified weight ticket within 72 hours of taking possession of the hay or straw.
- Limited dealers must pay for purchases of agricultural products upon taking possession.
- Cash buyers may only purchase produce for resale and must pay cash (no personal or business checks) for all produce at the time of taking possession. No bond is required for cash buyers.
Roadside inspections pertaining to vehicles transporting any agricultural products, including livestock will be conducted by the Agricultural Investigations Program under the authority of chapter 20.01 RCW and rules in chapter 16-623 WAC. During roadside inspections, the officer will ask for proper documentation of legal possession and verify compliance with chapter 20.01 RCW and chapter 16-623 WAC. Roadside inspections will be conducted at various locations in eastern and western Washington throughout the year.
(2) “Agricultural product” means any unprocessed horticultural, vermicultural and its by-products, viticultural, berry, poultry, poultry product, grain, bee, or other agricultural products. “Agricultural product” also includes (a) mint or mint oil processed by or for the producer thereof, hay and straw baled or prepared for market in any manner or form and livestock; and (b) agricultural seed, flower seed, vegetable seed, other crop seed, and seeds, as defined in chapter 15.49 RCW, however, any disputes regarding responsibilities for seed clean out are governed exclusively by contracts between the producers of the seed and conditioners or processors of the seed.
(7) “Conditioner” means any person, firm, company, or other organization that receives seeds from a consignor for drying or cleaning.
(10) “Dealer” means any person other than a cash buyer, as defined in subsection (4) of this section, who solicits, contracts for, or obtains from the consignor thereof for reselling or processing, title, possession, or control of any agricultural product, or who buys or agrees to buy any agricultural product from the consignor thereof for sale or processing and includes any person, other than one who acts solely as a producer, who retains title in an agricultural product and delivers it to a producer for further production or increase. For the purposes of this chapter, the term dealer includes any person who purchases livestock on behalf of and for the account of another, or who purchases cattle in another state or country and imports these cattle into this state for resale.
(19) “Producer” means any person engaged in the business of growing or producing any agricultural product, whether as the owner of the products, or producing the products for others holding the title thereof.
(22) “Seed” means agricultural seed, flower seed, vegetable seed, other crop seed, and seeds, as defined in chapter 15.49 RCW.
(23) “Seed bailment contract” means any contract meeting the requirements of chapter 15.48 RCW.
(24) “Seed clean out” means the process of removing impurities from raw seed product.
No person may act as a commission merchant, dealer, broker, cash buyer, or agent without a license. Any person applying for such a license shall file an application with the director prior to conducting business pursuant to this chapter. No application shall be considered complete unless an effective bond or other acceptable form of security is also filed with the director, as provided under RCW 20.01.210, 20.01.211, or 20.01.212. Each license issued under this chapter shall require renewal on or before the renewal date prescribed by the director by rule. License fees shall be prorated where necessary to accommodate staggered renewals of a license or licenses. The application shall be accompanied by a license fee as prescribed by the director by rule.
Commission merchants, dealers—Bonds.
(1) Before the license is issued to any commission merchant or dealer, or both, the applicant shall execute and deliver to the director a surety bond executed by the applicant as principal and by a surety company qualified and authorized to do business in this state as surety. The bond shall be to the state for the benefit of qualified consignors of agricultural products in this state. All such sureties on a bond, as provided in this section, shall be released and discharged from all liability to the state accruing on such bond by giving notice to the principal and the director by certified mail. Upon receipt of such notice the director shall notify the surety and the principal of the effective date of termination which shall be thirty days from the receipt of such notice by the director, but this shall not relieve, release, or discharge the surety from any liability already accrued or which shall accrue before the expiration period provided for in this subsection.
(2) The bond for a commission merchant or dealer in hay, straw, or seed shall be not less than fifteen thousand dollars. The actual amount of such bond shall be determined by dividing the annual dollar volume of the licensee’s net proceeds or net payments due consignors by twelve and increasing that amount to the next multiple of five thousand dollars. The bond for a new commission merchant or dealer in hay, straw, or seed shall be subject to increase at any time during the licensee’s first year of operation based on the average of business volume for any three months. Except as provided in subsection (3) of this section, the bond shall be not less than ten thousand dollars for any other dealer.
(3) The bond for a commission merchant or dealer in livestock shall be not less than ten thousand dollars. The actual amount of such bond shall be determined in accordance with the formula set forth in the packers and stockyard act of 1921 (7 U.S.C. 181), except that a commission merchant or dealer in livestock shall increase the commission merchant’s or dealer’s bond by five thousand dollars for each agent the commission merchant or dealer has endorsed under RCW 20.01.090. A dealer who also acts as an order buyer for other persons who are also licensed and bonded under this chapter or under the packers and stockyards act (7 U.S.C. 181) may subtract that amount of business from the annual gross volume of purchases reported to the director in determining the amount of bond coverage that must be provided and maintained for the purposes of this chapter.
(4) The bond for a commission merchant handling agricultural products other than livestock, hay, straw, or seed shall not be less than ten thousand dollars. The bond for a dealer handling agricultural products other than livestock, hay, straw, or seed shall not be less than ten thousand dollars. The actual amount of such bond shall be determined by dividing the annual dollar volume of the licensee’s net proceeds or net payments due consignors by fifty-two and increasing that amount to the next multiple of two thousand dollars. However, bonds above twenty-six thousand dollars shall be increased to the next multiple of five thousand dollars.
(5) When the annual dollar volume of any commission merchant or dealer reaches two million six hundred thousand dollars, the amount of the bond required above this level shall be on a basis of ten percent of the amount arrived at by applying the appropriate formula.
Claims against commission merchant, dealer.
(1) Any consignor who believes he or she has a valid claim against the bond of a commission merchant or dealer shall file a claim with the director.
(2) In the case of a claim against the bond of a commission merchant or dealer in hay or straw, default occurs when the licensee fails to make payment within thirty days of the date the licensee took possession of the hay or straw or at a date agreed to by both the consignor and commission merchant or dealer in written contract. In the case of a claim against a limited dealer in hay or straw, default occurs when the licensee fails to make payment upon taking possession of the hay or straw.
(3) Upon the filing of a claim under this subsection against any commission merchant or dealer handling any agricultural product, the director may, after investigation, proceed to ascertain the names and addresses of all consignor creditors of such commission merchant and dealer, together with the amounts due and owing to them by such commission merchant and dealer, and shall request all such consignor creditors to file a verified statement of their respective claims with the director. Such request shall be addressed to each known consignor creditor at his or her last known address.
(4) For claims against a bond that have been filed by consignors prior to the sixty-day deadline established in RCW 20.01.250, the director shall investigate the claims and, within thirty days of verifying the claims, demand payment for the valid claims by the licensee’s surety. The director shall distribute the proceeds of the valid bond claims to the claimants on a pro rata basis within the limits of the claims and the availability of the bond proceeds. If a claim is filed after the sixty-day deadline established in RCW 20.01.250, the director may investigate the claim and may demand payment for a valid claim. The director shall distribute the proceeds of any such payment made by the surety to the claimant on a first-to-file, first-to-be-paid basis within the limits of the claim and the availability of any bond proceeds remaining after the pro rata distribution. All distributions made by the director under this subsection are subject to RCW 20.01.260.
Dealers, cash buyers, livestock dealers—Recordkeeping—Carrying identification and health documents.
Every dealer or cash buyer purchasing any agricultural products from the consignor thereof shall promptly make and keep for three years a correct record showing in detail the following:
(1) The name and address of the consignor.
(2) The date received.
(3) The terms of the sale.
(4) The quality and quantity delivered by the consignor, and where applicable the dockage, tare, grade, size, net weight, or quantity.
(5) An itemized statement of any charges paid by the dealer or cash buyer for the account of the consignor.
(6) The name and address of the purchaser: PROVIDED, That the name and address of the purchaser may be deleted from the record furnished to the consignor.
A copy of such record containing the above matters shall be forwarded to the consignor forthwith.
Livestock dealers must also maintain individual animal identification and disposition records as may be required by law, or rule adopted by the director.
When dealer must pay for products delivered to him or her.
(1) Every dealer must pay for agricultural products, except livestock, delivered to him or her at the time and in the manner specified in the contract with the producer, but if no time is set by such contract, or at the time of said delivery, then within thirty days from the delivery or taking possession of such agricultural products.
(2) Every dealer must pay for livestock delivered to him or her at the time and in the manner specified in the contract, but if no time is set by such contract, or at the time of said delivery, then within seven days from the delivery or taking possession of such livestock. Where payment for livestock is made