Social benefits of Agricultural Bonds

Agricultural bonds are surety bonds that are taken out by agricultural dealers, packers and market agencies. They are required to do so as per the US Department of Agricultures and different state regulations. These bonds are also known as agricultural packers and stockyards bonds because these must follow the Packers and Stockyards Act.

What is the need for agricultural bonds?

Agricultural bonds are actually meant as a protection for the government, both federal and State, in agricultural transactions. These transactions include sale of agricultural produce and livestock. It imposes the rules and regulations clearly set out in the Packers and Stockyards Act.

There are three parties in an agricultural bond. The principal is the business, whether a dealer or an agency. The government is the obligee and the surety is usually provided by an insurance agency or a bank.

Usually the principal or the party that has to obtain the bond is a middleman, acting between the farmer and the government. These agencies sell agricultural produce to the government. In fact, if you have a business that sells agricultural products, this is the bond that you will require.

The bond also protects the farmer. As per the rules, it requires the principal to pay the right amount to the farmer. In short, the bond:

Ensures that farmers get their fair share in a transaction.

Ensures some protection for the government

Ensures compliance with the law in all agricultural transactions.

Brings a level of transparency to the agricultural business

Shows the level of ethical practices followed by the dealer.

It also means more business for the agency providing surety.

A Social Role

Agricultural bonds play a special role in our market and the society at large. By imposing the rule of law and ensuring that fraudulent activities are minimized as much as possible, it protects the small-scale farmer. For a sector that is often reeling under various factors, this security net is extremely vital.

In addition, the bond also specifies that the grade and quality of the produce be correctly specified. This ensures that agricultural produce are properly labeled when they reach the market. It brings a level of complete transparency to our agricultural practices. Because this is what America eats, this has a direct effect on our health!


Agricultural bonds were devised to ensure that all parties in an agricultural transaction have a safety net, including the government and the farmer. But it can have a far-reaching effect in bringing transparency to the way agricultural markets are run and the way we source our food.

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