Agricultural dealer bond

An agricultural dealer bond is a type of surety bond required by certain state governments. It is designed to protect buyers of agricultural products from financial losses in case a licensed agricultural dealer fails to carry through on a deal or violates any laws related to agricultural transactions.

The agricultural dealer bond acts as a guarantee that the dealer will abide by the terms and conditions of their licensing agreement, pay the producers or suppliers for the agricultural products they purchase, and comply with all relevant laws and regulations. If the dealer fails to do so, and a valid claim is filed against the bond, the surety company that issued the bond will compensate the affected parties up to the bond's predetermined amount.

Example farm field

Who is supposed to get the bond?

  • Packer if the average yearly livestock purchases surpass $500,000. 
  • Market agencies that act as a clearing agencies
  • Market agencies that sell livestock on commission
  • Livestock dealers or market agencies that buy on commission