Packers and Stockyards Act Bond
Packers & Livestock Bonds, 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 Packers & Stockyard Bond or Packers & Livestock Bond 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 Packers & Livestock Surety Bond or Packers & Stockyard Surety 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.
Packers & Stockyard Obligee Divisions Contact Information
1400 Independence Ave., SW
Washington, D.C. 20250-3601
Telephone: (202) 720-0219
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