Agriculture And Dairy Bonds

Learn more about Agriculture And Dairy Bonds

What is an agricultural bond?

Agricultural bonds (also known as agricultural dealer bonds) are legally binding agreements between three parties: an agricultural business (dealers, packers, and market agencies), the local government agency responsible for regulating the sale of agricultural products, and a surety company.

The government agency is the Obligee and establishes the obligations that the agricultural business (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the agricultural business.

Why do you need an agricultural and dairy bond?

Agricultural bonds and dairy bonds are required for agricultural businesses and milk handlers to comply with U.S. Department of Agriculture and state regulations. When the surety company issues the bond, they provide the government agency a guarantee that the customers of an agricultural and dairy business will receive payment for financial losses resulting from a violation of the statutes and regulations set forth by the government agency.

If the agricultural business fails to meet the obligations set out by the government agency, the surety pays out any damages up to the bond amount. The agricultural business is liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.

How much does an agricultural bond cost?

Agricultural surety bond costs vary depending on the total bond amount and the premium rate. The government agency sets the required bond amount. This may be a predetermined amount or a sum based on total business volume. The surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium.

Premium rates for agricultural bonds typically range between 2% and 8% of the total bond amount. During the application process, the surety company evaluates your credit score, financial strength, and industry experience. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing an agricultural bond. EZ Surety still offers competitive rates to individuals with low credit scores or other financial issues.

Below are the lowest premiums EZ Surety has issued for agricultural surety bonds in popular states.

  • EZ Surety has issued agricultural bonds in the State of Florida for premiums as low as $165.
  • EZ Surety has issued agricultural bonds in the State of Georgia for premiums as low as $100.


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