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Expert Surety Bonds Since 2004
Need assistance? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Expert Surety Bonds Since 2004
Alabama does not use one flat grain dealer bond figure. The amount is calculated from what you paid producers over the last twelve months, with a $25,000 floor and a $100,000 ceiling for each location. A quote here comes back fast, the bond is written on the Department of Agriculture and Industries form payable to the State of Alabama, and the annual premium is a fraction of tying up that much money in a cash trust fund instead.
Alabama grain dealers who buy from producers on anything other than immediate cash terms must file a surety bond with the Department of Agriculture and Industries for each separate location before a license is issued. Under Code of Alabama 2-31-4 the bond equals ten percent of the aggregate amount paid to producers for grain during the prior twelve months, rounded to the nearest $1,000, but never less than $25,000 or more than $100,000 per location. The license renews every year on or before October 1.
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Code of Alabama 2-31-4 sets the bond at ten percent of the aggregate dollar amount the dealer paid producers for grain during the twelve month period ending no more than 30 days before the license filing, rounded to the nearest $1,000. Two limits bracket that figure. The bond can never be less than $25,000 and never more than $100,000 for each separate location. A dealer who has been in business less than a year only has to meet the minimum in that first year. If you operate more than one buying location, each location needs its own bond.
Code of Alabama 2-31-2 excludes two groups from the whole article. Dealers who pay producers at the time of purchase in United States currency, check or the equivalent are not covered, so a pure cash buyer does not need the license or the bond. Public warehouses that are already licensed and bonded under Sections 8-15-1 and 8-15-7 are also outside the article. In addition, 2-31-4 waives the bond for a dealer who proves to the commissioner that it is licensed under the United States Warehouse Act.
Under 2-31-5 the bond is payable to the State of Alabama as obligee with the Commissioner of Agriculture and Industries as trustee. It is conditioned on the dealer complying with the grain dealer article, and it exists for producers who delivered grain to the dealer and were not paid. The surety's total liability is capped at the face amount of the bond. The bond cannot be cancelled during the license period without at least 60 days written notice to the commissioner. The application also notes that producer claims must be filed within 120 days of the transaction.
Section 2-31-5 lets a dealer file a trust fund agreement backed by cash or by bonds of the United States or the State of Alabama instead of a surety bond. The same amount rules apply, so most dealers find the annual premium on a surety bond far cheaper than parking $25,000 or more with the state.
The license is issued by the Department of Agriculture and Industries through its Gins and Warehouses Section at 1445 Federal Drive, Montgomery. Per the department's application, the filing fee is $25 for a dealer with no storage capacity, $50 per location for storage of 500,000 bushels or less, and $100 per location for storage over 500,000 bushels. The license runs through September 30 and must be renewed on or before October 1 each year under 2-31-3. Section 2-31-6 separately requires fire and extended coverage insurance on grain held for depositors, with a certificate of insurance filed with the commissioner. That insurance is a second requirement and does not replace the bond.
No. Code of Alabama 2-31-2 says the grain dealer article does not apply to persons who pay producers at the time of purchase in United States currency, check or the equivalent. The license and bond are aimed at dealers who take grain now and pay later, including deferred pricing and delayed payment contracts.
A dealer in business less than one year only has to meet the minimum, which is $25,000 per location. After the first year the amount is recalculated at ten percent of what you paid producers over the prior twelve months, up to the $100,000 cap.
No. Section 2-31-4 requires a surety bond for each separate location, and the $25,000 to $100,000 range applies to each one.
Yes. Section 2-31-4 waives the bond requirement on proof to the commissioner that you are licensed under the United States Warehouse Act. A public warehouse licensed and bonded under Alabama Sections 8-15-1 and 8-15-7 is outside the article entirely.
Yes. Section 2-31-5 allows a trust fund agreement backed by cash or by United States or Alabama government bonds in the same amount. Most dealers choose the surety bond because the yearly premium is far less than the capital a trust fund locks up.
The license expires September 30 and must be renewed on or before October 1 each year. The bond amount is refigured at renewal from the most recent twelve months of producer purchases.
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