Livestock Dealer Bond
Livestock Bond, or Packers & Stockyard Bond Agencies and dealers must provide and maintain a surety bond as a measure of protection for livestock sellers against non-payment. The size of the bond is based on the volume of business, generally an average two days’ business with a minimum of $10,000 bond. Packers whose annual livestock purchases exceed $500,000 are also required to be bonded.
(Custodial Trust) Accounts Agencies must maintain a separate bank account for custodial funds named a “Custodial Account for Shippers’ Proceeds”. The commission firm or auction market acts as a fiduciary depositor to the account, and the funds in the account are trust funds for the benefit of livestock sellers or consignors (“shippers”). Custodial accounts must be maintained in FDIC-insured banks to protect each seller the commission firm or auction market owes for livestock up to $100,000, in the event that the bank fails before the commission firm or auction market can issue payment. A common alternative is to provide a Livestock Bond or Livestock Dealer Surety Bonds in lieu of a Custodial Account.
Packer and Poultry Trusts In the event of a failure to pay for livestock or poultry, packers and live poultry dealers are required to hold assets — inventories, proceeds, and proceeds receivable — in trust for the benefit of cash sellers and poultry growers. In lieu of a trust a Livestock Surety Bond or Livestock Dealer Bonds may be offered as an alternative.
Solvency Market agencies and dealers must maintain a solvent financial condition to remain in business a common requirement is a Packers & Stockyard Surety Bond or Packers & Livestock Surety Bond. The Secretary of Agriculture may, after notice and hearing, issue an order suspending insolvent market agencies and stockyard owners for a reasonable specified period. If the Secretary finds any packer is insolvent, she/he may, after notice and hearing, issue an order requiring the packer to cease and desist from purchasing livestock while insolvent.
Livestock Dealer Bond Obligee Divisions Contact Information
1400 Independence Ave., SW
Washington, D.C. 20250-3601
Telephone: (202) 720-0219
FAX: (202) 205-9237
or via e-mail
EASTERN REGIONAL OFFICE
75 Ted Turner Drive SW, Suite 230
Atlanta, GA 30303
States Covered: AL, AR, CT, DE, FL, GA, LA, ME, MA, MD, MS, NH, NJ, NY, NC, PA, RI, SC, TN, VT, VA, WV, and the Territories of the U.S., including Puerto Rico
MIDWESTERN REGIONAL OFFICE
210 Walnut Street
Des Moines IA 50309
States Covered: IA, IL, IN, KY, MI, MN, MO, ND, NE, SD, OH, WI
WESTERN REGIONAL OFFICE
One Gateway Centre
3950 North Lewiston, Suite 200
Aurora, CO 80011
States Covered: AK, AZ, CA, CO, HI, ID, KS, MT, NV, NM, OK, OR, TX, UT, WA, WY