An Insight into the Agricultural Surety Bonds
Surety bonds are used to guarantee the performance and financial responsibility of a business or person. Businesses with activities involving agricultural products may be required to be bonded by their clients or respective government authorities. If the business fails to comply with the terms and conditions of the contract or regulations, the bond will protect the harmed parties from financial loss up to full bond amount.
Some of the major types of agricultural bonds are:
Warehouse bond: A warehouse bond is a kind of agricultural surety bond that protects an individual or business keeping goods in a storage facility against financial losses. If the owner of the warehouse fails to meet their obligations, the business owner or individual can ask for compensation from the surety company.
Dealer bond: A dealer bond is an assurance to the customers that the dealer is financially secure. It protects the consumers from unfair trading practices and defaults by the dealer of agricultural products and services.
Fuel tax bond: Fuel tax bond is a guarantee of credit or refund of excise taxes on fuel used on a farm for farming purposes. The claim can be raised by the owner, tenant, or operator of a farm.
One can find a large number of surety bond companies offering agricultural bonds. The bond amount is generally determined by the type of agricultural products and the volume of annual business the applicant conducts. It is advisable for the applicants to verify their required bond amount with the state or client prior to bonding.