Food Process Company Bond - Statewide in Florida

Brief Summary

A Florida food processing company that buys crops, milk, livestock or other farm products directly from Florida producers and pays later needs a dealer in agricultural products license, and that license requires a bond to the Commissioner of Agriculture. The amount is not fixed. It is set by your own peak month of purchases, so a processor with a light peak month may qualify for the $5,000 minimum.

Florida treats a company that buys agricultural products from Florida producers for processing as a dealer in agricultural products under Chapter 604. Before FDACS issues the license, the processor must post a surety bond or certificate of deposit equal to twice the dollar amount handled in its busiest month of the prior 12 months, never less than $5,000. The bond is bound to the Commissioner of Agriculture and protects the farmers who sell to the processor.

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How to Apply for a Food Process Company Bond:

• Confirm no section 604.16 exemption applies, such as paying producers in cash at the time of purchase or buying under $1,000 in the peak month.
• Calculate twice the dollar value of Florida agricultural products bought in your busiest month of the past 12 months, or twice your estimate if you are new.
• Complete the surety application with the company's legal name, Florida address and financial information.
• Pay the premium and receive the original bond on the FDACS prescribed form, bound to the Commissioner of Agriculture.
• Submit the original FDACS-06302 application, the original bond and the license fee to FDACS.
• Renew the bond and license each year before the expiration date to avoid the late penalty.

Detailed Information About the Florida Food Process Company Bond:

Check the exemptions first

Section 604.16 exempts several kinds of buyers from the license and bond. A processor does not need this bond if it:

• Pays at the time of purchase with cash or a cash equivalent such as a money order, cashier's check, wire transfer, electronic funds transfer, PIN based debit transaction or credit card
• Operates as a bonded licensee under the federal Packers and Stockyards Act
• Buys less than $1,000 worth of agricultural products from Florida producers during its peak month
• Buys only from a producer that it owns, that owns it, or that shares the same owner

Farmers selling products they grew themselves are also exempt. Citrus other than limes, tobacco, sugarcane, tropical foliage, timber and forest products fall outside the Chapter 604 definition of agricultural products.

Who has to post it

Section 604.15 defines a dealer in agricultural products as anyone engaged in Florida in the business of purchasing, receiving or soliciting agricultural products from the producer or the producer's agent for resale or processing for sale. A food processor buying Florida produce, milk, poultry, livestock or other covered products on credit terms fits that definition. Section 604.17 makes it unlawful to do that business without a state license from the Florida Department of Agriculture and Consumer Services.

How the amount is calculated

Under section 604.20, the bond or certificate of deposit equals twice the dollar amount of agricultural products handled for Florida producers during the month of maximum transactions in the preceding 12 months. A new processor uses twice its estimated peak month. The minimum is $5,000. The FDACS application, form FDACS-06302, states that the bond will not be less than $5,000 nor greater than $100,000.

A processor that cannot bond the full amount can still get a conditional license by posting at least $5,000 and filing a notarized affidavit limiting its monthly purchases to half the bond amount, an affidavit that the excess purchases are exempt, or a second bond that brings the total to the required level.

License fee and term

The license runs for one year, matched to the effective period of the bond or certificate of deposit. Section 604.19 ties the fee to the bond amount, capped at $500, plus up to $100 for each additional location. The current FDACS form lists fees from $170 to $300 based on bond amount, plus $100 per additional business location. A late renewal adds a penalty of up to $100. FDACS will not issue the license until it receives the original application, the fee and the original bond.

How the premium is set

The surety prices the bond from the bond amount, the processor's credit and financial statements, and its record of paying growers on time. A claim on this bond comes from unpaid producers, so payment history matters to the underwriter.

Eligibility and Requirements for a Florida Food Process Company Bond:

• Bond amount of twice the peak month of purchases, at least $5,000, and not more than $100,000 per the FDACS application.
• Commissioner of Agriculture as obligee on a form prescribed or approved by FDACS.
• A certificate of deposit from an FDIC insured institution is accepted in place of a surety bond.
• One year license term matched to the bond's effective period.
• License fee based on bond amount plus a fee for each additional location.

Florida Food Process Company Bond FAQs:

Official and Additional Resources for the Florida Food Process Company Bond: