Agricultural Bond Overview
The agricultural bond is a type of bond required by many state governments of market agencies, dealers, and packers of agricultural products upon their licensure. Some of the states in which this bond is a licensing requirement are: New York, Florida, Louisiana, Utah, Georgia and others.
Alternatively, businesses that need this bond can also get licensed and bonded by the United States Department of Agriculture Grain Inspection, Packers & Stockyards Administration (GIPSA). Those bonded in such a way are typically exempt from having to become licensed and bonded on a state level.
This bond guarantees that the bonded parties will adhere to lawful trade practices, conduct business honestly, account for all proceeds from the sale of products, and make all due payments to the producers they have obtained products from. Specifically the bond guarantees compliance with the Federal Packers and Stockyards Act as well as with local statutes and regulations governing agricultural business in each state.
The agricultural bond is an agreement between the bond principal (the market agency, dealer or packer), the bond obligee (the local agency issuing business licenses to principals), and the surety bond company that vouches for the bonded business’s honesty and compliance with statutes.
If an agency, a dealer, or a producer fails to comply with said legislation, producers and buyers who deal with them can file a claim against their bond, and obtain compensation up to the full penal sum of the bond. If a surety compensates a claimant, the bonded business must then compensate the surety for its backing, which is why claims should always be avoided.
Since market agencies, dealers and packers have different obligations, some states may require different bonds, depending on the type of business, while others may have one and the same bond for all of these. If you are not sure what kind of bond you need, consult your local Department of Agriculture or Agricultural Commodities Commission.
See the sections below for more information about the agricultural bond, and instructions on how to get yours.
Agricultural Bond Cost
The cost of your agricultural bond is a percentage of its full amount. The full bond amount is the maximum amount of compensation a surety may extend to an obligee in case of a claim.
Most states that require an agricultural bond have no fixed amounts for these bonds. Instead, amounts are determined on an individual basis, often based on the highest monthly dollar value of business done or as determined by the obligee.
Typically, though, states have requirements for minimum and maximum possible amounts of a bond. For example, in Florida the minimum amount of a bond is $5,000 and the maximum $100,000.
Based on this amount, a surety will set a rate at which a bond may be acquired. This rate mostly depends on the personal credit score of an applicant. Other factors taken into account by sureties are:
- Personal and business financial statements
- Personal asset profile and liquidity
- Applicant work experience
If an applicant has a high credit score, they will typically be offered a rate between 1% and 5% of the full bond amount.
By getting your bond from Bryant Surety Bonds, you can be bonded at some of the best rates available. Our surety partners, who underwrite our bonds, are all A-rated and T-listed companies, which means they are among the most trusted and reliable sureties in the whole country. Through them, we have access to exclusive rates on all agricultural bonds.
Ready to get bonded? Submit your surety bond application form and let’s get started. If you have any questions, don’t hesitate to call us at 866.450.3412 anytime.
Bad Credit Bonds
If you have a low credit score, you may be discouraged about getting an agricultural bond. It’s a fact that many sureties will turn down bad credit applicants.
With Bryant Surety Bonds, you can get a bond regardless of your low credit score. Through our Bad Credit Program, at a slightly higher rate, you can get a bond just as easily as everyone else. No matter what your score, you will receive the best possible rate on your bond, supplied by the same expert sureties.
Agricultural Dealer License: Application and Renewal
Requirements for getting licensed as a public adjuster vary from state to state, though most of them are quite similar. Typically you will need to:
- Complete and submit your dealer license application form
- Submit an agricultural bond (amount determined on a case-by-case basis)
- Pay a licensing fee
How to Get Your Agricultural Bond
Apply online here for your agricultural surety bond. Just fill in and submit your surety bond application form. Once we process your application, we will get in touch with you with a free quote for your bond. Within a couple of days of getting bonded, you will receive your bond in the mail.
For more information or help with your application call us 866.450.3412 to speak to one of our surety experts.
