Tester pushes for revisions to protect livestock sellers

by Ali Brennan, Belgrade News

Sen. Jon Tester, D-Mont. is throwing his support behind the Securing All Lives Stock Equitably Act, or the SALE Act, which is aimed at providing protections to livestock sellers when dealers default on their payments.

The act, which has versions currently in both the United States House of Representatives and the Senate, would amend the Packers and Stockyards Act, creating a Dealer Statutory Trust, giving sellers priority over banks or dealers in the sale process.

Currently, when livestock is sold at auction, the auction pays the seller right away. The dealer then can leave with the cattle, and is required to post mark the check for the cattle by the end of the next business day. This leaves the auctions out of luck if a dealer defaults on the cattle. It also means that the bank that was used for the sale has the rights to the cattle, not the auction house which has already paid for them. Likewise, if the seller hands over their cattle to a dealer without an auction, the same rules apply to when the check has to be handed over, potentially leaving them in the same predicament.

But the SALE Act would change this process, requiring the cattle to be held in a trust until the seller receives full payment, giving relief to the sellers.

“Montana’s ranchers deserve better,” Tester said. “They shouldn’t be risking their livelihood every time they head to the auction block. It’s important that both parties put politics aside and work together to fix this broken system to give sellers security when the go to sell their livestock.”

The bill is getting local industry support.

“I think it’s a good deal for us auctions and producers together…This would just ensure that the livestock auctions for those particular sales would be reimbursed. It gives us some security that we are going to get paid,” said Jerry Olson, owner of Headwaters Livestock Auction just outside Three Forks.

While Olson says he hasn’t been stuck with any big deals that have gone awry yet, he has been stuck with some smaller problems.

“I got stuck with some sheep that we never got paid for,” said Olson. “I’ve been stuck with some smaller deals that I never got paid for but never a large deal. We tend to know everyone that we work with, but if anybody new comes in we usually talk to the banks.”

He did recount an instance where sellers were left empty handed.

“Eastern went belly up and it was a big outfit…I think when it was said and done, the sellers only got paid five percent. That would be like you working for a couple years and not getting paid in the end.”

Eastern Livestock failed almost ten years ago, with its CEO Tom Gibson sent to federal prison for fraud. In the wake of its failure, the company left some 740 sellers out some $130 million, according to the Grain Inspection, Packers and Stockyards Administration.

Olson supports the SALE Act because he says it would provide more certainty by closing the loophole that allows the potential for a deal to stiff auctions or sellers in the first place.

The bill is in the beginning stages of legislation in both the House and the Senate. However, its fate is tied to the Farm Bill. In the Farm Bill is a provision for a feasibility study to look at how the trust would work and to gauge its efficacy. The Farm Bill is a hot point of contention in Congress at the moment. While versions have been passed by both the House and the Senate, they are dramatically different. As a result, members from both houses of Congress are currently hashing out the differences before the bill can be sent to the president. Without the Farm Bill’s passage, the SALE Act cannot move forward.

It has the support of trade associations across the industry, including the U.S. Cattlemen’s Beef Association.

“As a producer, you want to be paid and not worry,” said Lia Bondo, the spokesperson for the U.S. Cattlemen’s Beef Association. “The Packer’s and Stockyards Act periodically needs to be modernized and this is an instance where that is the case.”

Livestock sellers will have to wait for relief yet, since the feasibility study will have to take place before the bill to be passed.