USDA comment period on livestock dealer trust closed |

USDA comment period on livestock dealer trust closed

Livestock producers who sell to a dealer are not protected by a trust, as they would be selling through an auction market, though a Dealer Statutory Trust comment period closed June 25, that could lead to changes that would protect sellers.

Chelsea Good, vice president of government affairs, industry affairs, and legal for the Livestock Marketing Association said Eastern Livestock Company, LLC’s recent bankruptcy is a widely-known example. Based in Kentucky, the cattle brokerage company doing business in 11 states, closed in 2010. However, the former owner and former chief executive officer were sentenced in 2013 in the multi-million dollar check-kiting scheme that affected about 200 livestock sellers. Good said producers sold to Eastern and were paid with bad checks. Some sellers knew the location of the cattle they sold either off the farm or at a buying station, and were able to get them back. Good said sellers’ only recourse otherwise was a bond claim, worth 5 cents on the dollar.

“That’s the problem we’re trying to tackle with this dealer statutory trust,” Good said.

Packers, sale barns, and dealers all fall under the Grain Inspection, Packers and Stockyards Administration and are all bonded, though sale barns have a custodial account, and packers have the Packers Statutory Trust.

In late 2015, a livestock dealer in Nebraska, Charles Leonard, purchased cattle and then resold them to a feedyard. His checks to the original sellers were not honored by the bank. If a dealer trust had existed, the unpaid sellers would have had priority in the livestock or proceeds from those livestock rather than the dealer’s lender.

A bill in Congress was presented to create a dealer trust, Good said, though the farm bill language prompted Congress to ask the USDA to complete a feasibility study. Findings will be reported back to Congress.

“It is our hope, and that of many of the producer groups we work with, that this will lead to the creation of a statutory trust,” Good said.

Good said LMA would like to see the trust established immediately but said realistically, she anticipates the feasibility study to be returned to Congress by December before Congress could introduce and pass such a bill.

“The more producers that learn about the topic and engage with their members of Congress and their state associations about this being a good thing, the closer we get to the finish line,” she said.​ ❖

— Gabel is an assistant editor and reporter for The Fence Post. She can be reached at or (970) 392-4410.


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