Why We Need Agricultural Bonds
Agricultural bonds are required of agricultural packers, marketers, and dealers as per state regulations and the US Department of Agriculture’s requirements. Since these bonds are meant to enforce the rules of the Federal Packers and Stockyards Act, they are also known as agricultural packers and stockyards bonds.
The principle here is the agricultural company, while the obligee is the federal or state government. The surety is the company that provides the bond.
But why are agricultural bonds needed?
To ensure that farmers get the right price: Farming is not always an organized industry. There are many independent farmers who operate on their own. As primary producers, it is critical that they receive the right compensation for their produce. The agricultural bonds ensure that agricultural firms will conduct their business honestly and pay fair compensation to the producer.
To enforce laws: The bonds specifies that the principal will comply with state regulations and theFederal Packers and Stockyards Act. By fixing clear penalties, the bond ensures that businesses follow the rules and regulations set under the law.
To ensure ethical practices: The national economy depends on all parties conducting their business in an ethical manner. The agricultural bond enforces this by ensuring fair compensation and honest trading practices. The bond makes it harder for businesses to deliberately swindle agricultural producers.
To operate: The fact is that one needs a bond because most agricultural producers will refuse to work with a business that is not bonded. The lack of bond denotes that the business is untrustworthy and hence, most producers will stay away.
To provide relief: What happens when a business is behaving in an unethical manner or committing a fraud? The agricultural bonds offer a way for producers to get compensation against their loss. They can raise a complaint and if found valid, they will be paid against the bond.