USDA sends livestock dealer trust feasibility study to Congress
USDA on Friday sent Congress a study to determine whether a Dealer Statutory Trust would improve the recovery of livestock sellers in a dealer payment default.
The study, required under the 2018 farm bill, was undertaken by the USDA Agricultural Marketing Service’s Packers and Stockyards Division.
“Based on its analysis of industry data, public input, and experience with the livestock industry, USDA finds that it would be feasible to implement a livestock Dealer Statutory Trust,” the Livestock Marketing Association, an industry membership organization, said in a news release.
“Under current law, farmers, ranchers, and livestock auctions have been devastated when livestock dealers default on payment,” LMA said.
“The sellers often do not have the ability to get the livestock back for which they were not paid and recover little from the dealer’s bond. While the Eastern Livestock default, which cost livestock sellers tens of millions of dollars, is the best-known example of this, the USDA report analyzes 82 additional dealer defaults occurring from Oct. 1, 2013 – June 30, 2019.”
LMA continued, “A Dealer Statutory Trust would give unpaid sellers of livestock the legal right to reclaim livestock or, if they have been resold, proceeds from livestock in the unfortunate event of a livestock dealer payment default. The USDA report finds existing statutory trusts in other segments of agriculture (sales of livestock to packers as well as poultry, fruit, and vegetable sales) are effective in improving financial recoveries and similar results could be expected under a livestock Dealer Statutory Trust.”
“We appreciate the in-depth analysis of USDA on this important issue,” said Livestock Marketing Association President Tom Frey. “These findings will be helpful as we work with Congress in 2020 to get livestock auctions and producers the increased certainty and predictability of payment they deserve.”
Creation of a dealer trust is supported by the livestock industry, including the Livestock Marketing Association, National Cattlemen’s Beef Association, United States Cattlemen’s Association, American Sheep Industry Association, and American Farm Bureau Federation. ❖