Kentucky Grain Warehouse Operators See Changes to Surety Bond Amount

The Kentucky legislature passed Senate Bill 153 on March 25, 2019, effectively updating the surety bond requirement for grain warehouse operators in Kentucky. The Kentucky Department of Agriculture previously based the surety bond amount on the warehouse’s bushel capacity, which is the maximum amount of grain the warehouse is able to store. With the passage of this bill, the surety bond amount is now based on the aggregate dollar value of the warehouse’s grain deposits and must between $25,000 and $1,000,000. These changes will go into effect on August 1, 2019.

How much does a grain warehouse operator bond cost?

The required bond amount for grain warehouse operators ranges from $25,000 to $1 million, depending on the operator’s aggregate dollar value of grain deposited in their most recently completed fiscal year. Grain warehouse operator bonds are subject to underwriting due to the amount of the bond required.

When a bond is underwritten, it means that the financial health of the applicant must be evaluated before they are issued a bond, with the biggest factor being the applicant’s credit. Those who can demonstrate good credit will be more likely to be approved for their bond and pay a lower premium—around 1-3% of the bond amount. It is still possible to be bonded with lower credit, but the applicant will have to pay a higher premium.

How to become a licensed grain warehouse operator in Kentucky

Along with submitting a surety bond to the Department, an application must be completed to become a licensed grain warehouse operator in Kentucky. This form requires the applicant’s business address and the grain capacity of their warehouse, as well as the type of business. Applicants will also need to answer questions pertaining to the details of their business, including if they buy grain from a producer, if they have a moisture meter, and if they are a federally licensed facility.

Once the application is complete, it must be sent to the Kentucky Department of Agriculture for license consideration. Applicants will also need to submit a financial statement and a licensing fee when they send in their application. The licensing fee is determined by the number of bushels purchased by the grain warehouse operator during the previous year.

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About the Author

Karie Schmitz
Karie is a senior at the University of Missouri - Columbia studying strategic communication with a focus in marketing. She is a member of the digital marketing department for, a leading provider of online bonding for clients nationwide.