License & Permit
Milk Handler Bond
A bond some states require of milk dealers and handlers to guarantee they pay dairy farmers for the milk they buy.
- Required by
- State agriculture departments and milk marketing boards
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
The bond promises the state agriculture department that the dealer will pay producers on time for milk purchased. If the dealer defaults, the state takes claims from farmers and collects from the surety. In New York, a dealer can file a bond, a letter of credit, or join a state security fund.
Who needs it
- Milk dealers and processors buying from farms
- Milk handlers and haulers who take title to milk
- Cheese and dairy plants buying raw milk
What the underwriter looks at
- Volume and value of milk purchased
- Financial statements
- Payment history with producers
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
How is the bond amount figured?
Usually on the dealer's milk purchases. In New York, a dealer bonding instead of joining the security fund posts 40 times its average daily purchases from its two highest months.
Are small dealers exempt?
Sometimes. New York can waive the bond for dealers buying under 100,000 pounds of milk a month.
Can a cooperative use this bond?
Rules on cooperatives vary by state. Ask us and we will check your state's law.