1. Every person subject to the provisions of this chapter shall, before receiving a license, provide a satisfactory bond in an amount designated by the state veterinarian.

2. Notwithstanding the provisions of subsection 1 of this section, a licensee may substitute in lieu of any bond required therein a certificate of deposit issued by an institution insured by the federal deposit insurance corporation or the federal savings and loan insurance corporation or a bank irrevocable letter of credit, or any combination thereof, or any instrument of financial security approved and authorized by the Packers and Stockyards Administration of the United States Department of Agriculture. Letters of credit shall name the director of the department of agriculture or his designated representative as beneficiary, and be submitted in a form established by rule or regulation. The director of the department of agriculture or his designated representative may refuse to accept a letter of credit in lieu of the bond required by this chapter if the director finds that the issuing bank is or may become insolvent, or for any other reason may be unable to honor the terms of the letter of credit. The director may require an issuing bank to submit evidence of its financial condition, and the director may seek the cooperation of the division of finance in evaluating the financial condition of an issuing bank. In the event that the licensee entered into a trust fund agreement, the beneficiary of a letter of credit or the pledgee of a certificate of deposit shall be in accordance with the federal Packers and Stockyards Administration Act. In any situation wherein a trust agreement is entered into, the state veterinarian shall be the trustee on a letter of credit.