Livestock Packers and Stockyards Bonds
Livestock Packers and Stockyards Bond Information
The U.S. Department of Agriculture requires that livestock market agencies, dealers and packers post surety bonds to ensure ethical business practices, compliance with regulations, and proper fund disbursement. The bond is required pursuant to the Packers And Stockyards Act, 1921, as Amended and Supplemented.
What Does the Bond Protect Against?
If the principal sells on commission, the surety bond ensures that the principal lawfully pays the gross amount, less lawful charges, for which all livestock is sold for the accounts of others by the principal. If the principal buys on commission or as a dealer, the surety bond ensures that principal shall lawfully pay the purchase price of all livestock purchased by principal for his/her own account or for the accounts of others, and principal must safely keep and properly disburse all funds. If others clear through the principal, the surety bond ensures lawful payment of the purchase price of all livestock purchased by principal’s clearees for their own accounts or for the accounts of others and safekeeping and proper disbursement of all funds handled by principal or clearees for the purpose of paying for livestock purchased for the accounts of others. Lastly, if the principal buys as a packer, the surety bond ensures lawful payment of the purchase price of all livestock purchased for purposes of slaughter by principal for his/her own account.