New bill offers additional protection against livestock dealer default | Livestock, default | Michigan Farm News

New bill offers additional protection against livestock dealer default

Category: Livestock, Markets & Weather

by AFBF, Farm News Media

Hereford sale
Currently, sales to dealers are backed only by bonds. History has shown that bonds do not offer enough financial protection to livestock sellers from defaulted buyers, returning only 15 cents on the dollar to livestock producers.

Rep. Roger Marshall (R-Kans.) recently introduced H.R. 4058, The SALE Act of 2017, which would amend the Packers and Stockyards Act by establishing a dealer trust. The bill would make payment to livestock producers a priority in the event of dealer default on cash receipts from livestock, by establishing a dealer trust statute.

AFBF, the National Cattlemen’s Beef Association and Livestock Marketing Association have sent letters of support to Marshall and other members of Congress encouraging their support of the legislation. The bill has 28 cosponsors.

The current language in the Packers and Stockyards Act only protects sellers of livestock under certain buyer arrangements. In these arrangements, livestock producers are protected against default by a bond and custodial account when selling to a livestock market and by a packer statutory trust when selling to packers. Currently, sales to dealers are backed only by bonds. History has shown that bonds do not offer enough financial protection to livestock sellers from defaulted buyers, returning only 15 cents on the dollar to livestock producers.

A dealer trust statute, modeled after the existing Packer Statutory Trust, would place livestock producers that are unpaid at the front of the line to receive money before payment to other creditors for livestock and accounts receivable proceeds.

“Protecting the financial interests of our members has always been a top priority for Farm Bureau,” said Ernie Birchmeier, MFB’s livestock and dairy specialist. “Strengthening provisions of the Packers and Stockyards Act would help ensure that farmers who market livestock would be at the top of the priority list in the event that something goes wrong with ability of dealers and/or marketer to pay. It is the farmer’s livestock, and when they have entrusted it to licensed dealer/marketer, they must be protected. Too many times the owner of the livestock ends up on the short end of the financial payment, and we need to change that,” he said.

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Livestock DealerTrust