Producer Comments Needed for USDA Study on Payment Protection

When a livestock dealer's check bounces, should the farmer or rancher who raised the stock be able to get them back? The U.S. Department of Agriculture 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 2018 Farm Bill, Congress directed USDA to conduct a feasibility study on a 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.

The American Sheep Industry Association, the Livestock Marketing Association and others support a Dealer Trust and encourage the 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 stock.

Click Here to learn more.

Click Here to submit a comment to USDA by June 24.

Source: LMA