Livestock Marketing Association

ABOUT LMA

MEMBERSHIP

INSURANCE

POLICY

NEWS & MEDIA

EVENTS

FOR BUYERS

LMA STORE

LMA AUCTIONS


PRESS RELEASE

Producer Comments Needed for USDA Study on Payment Protection

June 14, 2019

When a livestock dealer’s check bounces, should the farmer or rancher who raised the cattle be able to get them back? 

USDA wants to hear from the livestock industry regarding potential changes to priority in livestock dealer default situations. The comment period is open through June 24.

While most people agree producers should be entitled to repossess livestock they sold and have not been paid for, too many sellers have learned the hard way that is not usually allowed under current law. Often times, when a dealer fails to pay, that dealer’s bank takes first priority in the cattle. The Eastern Livestock default in 2010 is the best-known example of this. Eastern owed approximately $112 million to creditors, and many sellers of livestock received less than 5 cents on the dollar from Eastern.

In the 2018 Farm Bill, Congress directed USDA to conduct a feasibility study on Dealer Statutory Trust, which has been proposed by members of congress to improve seller recovery. As a part of the study, USDA is seeking public comments.

A Dealer Trust would give unpaid sellers of livestock first priority to reclaim livestock. If the livestock are resold, to a feedyard for example, the buyer would still take clear title of the livestock as they do today. In this situation, the money the feedyard paid the dealer would be the trust assets held for the unpaid seller.

Modeled after the existing Packer Statutory Trust, a Dealer Trust would provide recovery in addition to the current USDA required bonds, which average a return on claims of only 5-15 cents on the dollar. A Dealer Trust would not create a separate pool of funds or mandate changes in day-to-day business.

LMA supports a Dealer Trust and encourages the whole livestock industry to participate in the USDA comment period. Producers selling through a livestock auction market are paid for their consignments through the market’s federally required custodial account regardless of if the market receives payment from the buyer. When there is a default in these situations, instead of making a small commission for their selling services, the market ends up like the ranchers who sold to the defaulting dealer directly: unpaid for the full price of the cattle.

Other organizations that support Dealer Trust, giving unpaid sellers priority in livestock and related proceeds/receivables, include National Cattlemen’s Beef Association (NCBA), American Farm Bureau Federation (AFBF), United States Cattlemen’s Association (USCA), American Sheep Industry (ASI), and numerous state producer groups.

To learn more, visit https://lmaweb.com/policy/. To submit a comment to USDA by June 24, go to  https://www.regulations.gov/document?D=AMS-FTPP-19-0037-0001.


About the Livestock Marketing Association

The Livestock Marketing Association (LMA), headquartered in Overland Park, Kan., is North America’s leading, national trade association dedicated to serving its members in the open and competitive auction method of marketing livestock. Founded in 1947, LMA has more than 800 member businesses across the U.S. and Canada and remains invested in both the livestock and livestock marketing industries through member support, education programs, policy representation and communication efforts.



RELATED PRESS RELEASES



November 2, 2023

Florida auction market bounces back after Category 3 hurricane

As Hurricane Idalia grew closer to Florida’s Big Bend on Monday, August 28 — just two days before it would hit land — many residents were prepping for the storm. But for Alvin “Ab” Townsend and his nephew Rick Greiner, there was a different kind of preparation taking place. Tuesday is sale day at their Townsend Livestock Market, and it was business as usual, despite the uncertainty of what might come. “I started calling some of our buyers,” Greiner says. “And as long as they were going to buy cattle, we were going to have a sale.” So, sell cattle they did. They got through 400 head before they needed to shut down and head home. Early Wednesday morning, the Category 3 hurricane made landfall. Greiner couldn’t get out of his house, but Townsend — along with his wife and sister — were able to drive to the auction market that’s been in the family for four generations. At first, he thought they were at the wrong place. “It didn’t look anything like our place,” Townsend says. “Everything was just on the dirt. The building, our pens, everything was just on the dirt.” Moving On  Before Wednesday had ended, the family had called John Kissee, regional executive officer at Livestock Marketing Association. As longtime members, as well as clients of the association’s Livestock Marketing Insurance Agency, they knew they were covered.  Kissee understood Ab and Rick would want to move quickly but took time to ensure all bases were covered, insurance-wise. Kissee called back the following day, as promised. He told them the tear down and clean up could begin after taking photos to document the damage. By Monday, excavators were scraping the slab where the auction market once stood. Greiner says they had no choice but to move quickly, and they had no intention of missing more than one sale day. They started getting pens up and brainstorming how they’d hold the following week’s auction with less-than-ideal infrastructure.  To be safe, they didn’t advertise. And yet, they still got 400 head. It went well and they doubled their numbers the following week. Of course, there were challenges to selling in such makeshift facilities — like the Tuesday it rained all day and there was no barn to offer cover. But Greiner says they remained grateful through it all. “You don’t have to look very far to see somebody who’s got it worse than what we had,” he says. “We’re just lucky to be back to work and selling good cattle for our good producers.” A Helping Hand Both men are quick to credit the role Livestock Marketing Insurance Agency played in their recovery efforts. “I wouldn’t want to imagine not having Mr. John to call,” Greiner says.  Townsend agrees. “The thing with insurance,” the third-generation auction market operator says, “is you don’t need it until something happens. But then when something happens you better thank the Good Lord you had it. Because what would we have done?” Not only did Kissee and the insurance adjuster make the process a breeze, but Townsend says it never felt like a business transaction. “They’re more than just a company,” he says. “LMIA is a group of people who cares.”