Agricultural bonds are yet another form of surety bonds that provide a financial assurance to all included groups. Many people have a misconception about investing in agriculture as an industry. They believe that any investment they make in this sector will not be as profitable, if at all, and may well lead to a loss in case the weather turns bad and damage the crops. This is another aspect of agriculture which indeed does have a role to play, and also why those working in the fields need a financial backing for their effort. Agricultural bonds are what define the conditions for this bond.
Just like all other surety bonds, agricultural bonds too have three groups coming together in an agreement: the farmers, the vendors, and the surety company that helps both sign the bond. Surety company mostly provides backup to the farmers in case their crops don’t yield well and leave them short of funds. The vendors thus are saved from incurring any loss by investing their money on the farmers. In any instance the farm produce is not as good, the surety company ensures that the vendors get back all they put in securely.
A number of condition govern how a surety company issues agricultural bonds to the farmers. The location of their farm, distance from the city, type of crop, weather conditions, quality of ground, quality of seeds, etc. play a major role in determining how much they are willing to cover the farmer. No one wants to make a loss without doing a proper evaluation, and that is also the same thing that surety companies do before laying down a bond.
Conditions that govern the issuance of an agricultural bond
- All the concerned groups, including agricultural packers, marketers, shippers, and dealers have to secure agricultural bonds while complying with the U.S. Department of Agriculture’s guidelines and regulations.
- The bond value must be double the dollar value of the conducted business.
- The price an applicant pays as interest is calculated on the basis of his/her credit report
- Any complaint must be filed within six months of the sale/delivery of the agricultural produce.
- The agricultural activity must be performed in accordance with Florida state rules and regulations
For information on the conditions that govern agricultural bonds, one can always approach a surety company that deals in these bonds. Many online websites too can lend their assistance in this regard. One must always compare a few of such firms first before selecting the one that offers the best return on investment, while providing optimum security to all the parties involved.