Agricultural & Employment Law Firm

Frequently Asked Questions

Agricultural Law

Federal Food Security Act

What is the Federal Food Security Act?

Section 1324 of the Federal Food Security Act of 1985 provides that buyers of farm products can purchase produce free and clear of any security interest of a bank or lender. Prior to the Act’s enactment, a secured lender having a secured interest in the borrower’s farm products could enforce a lien against a purchaser of those products even if the purchaser did not know that the sale of the products violated the lender’s security interest in the product. The result left the purchaser of farm product liable to the seller and to the secured lender when the seller failed to repay the lender.

However, an exception exists which allows states to create a ‘central filing system,’ to provide a practical method for purchasers to discover whether any security interest exists in the farm products. The current Act protects purchasers of farm product by allowing a purchaser to register within the central filing system to avoid the exposure to double payments to a lender and seller. By registering, the secured lender is deemed to have been placed on notice that the farm products have been sold to the buyer and, in turn, the buyer eliminates the risk of having to pay the grower as well as the secured lender.