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California Handler of Farm Products Produce Dealers Act Bond
The California Handler of Farm Products Produce Dealers Act Bond conforms with the regulations of the Food and Agricultural Code, and it guarantees that a licensee will handle agricultural goods in a trustworthy and honest manner, as well as pay the entire amount for those items. This bond protects the obligee (the individual or organization that is obligated to purchase the bond) from monetary loss, dishonesty, false representation, and illegal omissions or actions on the part of the bond principal (the individual or organization that purchases the bond).
Applicants for a license who want to resale agricultural goods and will take custody of those goods from a producer or licensee are required to demonstrate that they are capable of doing so. The California Department of Food and Agriculture will have a financial guarantee in the form of the California Handler of Farm Products Produce Dealers Act Bond, which is required under Chapter 7, Division 20 of the Food and Agricultural Code of the state of California.
How it Works
This bond will safeguard the obligee from damages in the event that the principal either fails to pay the producer of agricultural goods on time and in full or violates any of the aforementioned code’s requirements.
If the principal is able to perform all of the specified obligations without committing any violations, the bond will not be considered valid. In the event that the reverse occurs, the obligee will file a claim against the bond in order to obtain reimbursement for the losses that were suffered. The obligee will be paid by the surety, but the principal is obligated to pay back the surety thereafter.
The United States government of Agriculture’s (USDA) Food and Agriculture Department does not have a set amount for this bond. Instead, the government merely states that the bond must be in a form and amount satisfactory to the director.
The department does stipulate, however, that the amount of the bond will be no less than $10,000 or 20% of the yearly dollar volume of business based on the product value returned to the farmer, whichever is larger. This requirement is in place to ensure that the bond is sufficient to protect the interests of both parties.
If the director believes it to be necessary, he or she has the authority to demand a larger sum for the surety bond. The sum of this bond is determined by a variety of different considerations. Nonetheless, the amount of the bond required to comply with the California Handler of Farm Products Produce Dealers Act Bond may under no circumstances be less than $10,000.
The cost of the bond will begin at 1% of the total bond amount for those people applying for licenses who have great credit ratings. Either $10,000 or 20% of the yearly dollar volume of the firm that is dependent on agricultural products will be required as the minimum bond amount.
The California Department of Food and Agriculture will decide the amount of the bond that must be posted.
The Division of Marketing Services of the Department of Food and Agriculture states that all applicants are required to comply with the following standards in order to be considered:
- An application form that has been filled out, or an agent application form.
- A designation form for officers of the company.
- Payment of all licensing payments, including the main amount, as well as any relevant conjunctive and agent fees.
- A replica of the organizational structure of the company.
- A surety bond under the California Produce Dealers Act if, during the previous four years, the director judges that the produce dealer has engaged in any of the following activities:
- Acted in a manner that exemplifies a lack of financial responsibility, such as, but not limited to, having past-due accounts payable, judgments of obligation, insolvency, or bankruptcy, as well as other similar actions.
- If a surety bond is not placed, it means that future financial responsibilities might not be guaranteed.
- In addition to that, the defendant violated Chapter 7 of the California Food and Agricultural code, which led to the termination of the defendant’s license.