WASHINGTON, DC – A bill to protect ranchers and livestock auctions from dealer payment defaults has been introduced in Congress. The bipartisan Securing All Livestock Equitably (SALE) Act addresses the quick turnaround between the purchase and resale of cattle by dealers. It can leave sellers who originally owned the cattle with little recourse if a dealer defaults on a purchase since the livestock has often already been resold.
The SALE Act would establish dealer statutory trusts, which are similar to existing packer statutory trusts, to ensure that cattle sellers receive payment should a livestock dealer become insolvent.
It’s meant to be a mechanism for such cases as one that occurred last year in South Dakota. The financial collapse of a South Dakota feedlot left over 53 people in South Dakota, North Dakota and Montana with no payment and no cattle. Investigators said that Robert Blom, Corsica, was operating a Ponzi-like scheme in which he would resell the same cattle over and over again and collect feeding bills from customers on what often were non-existent cattle. Investigations and charges continue in the case.
“We greatly appreciate the leadership of Senators Jim Inhofe (R-Okla.) and Tina Smith (D-Minn.) in introducing the SALE Act. They are standing up for livestock farmers and auction markets to make sure we are paid for livestock,” said Tom Frey, Livestock Marketing Association (LMA) President. “This issue is the top priority for LMA in our lobbying efforts. Too many people have experienced the pain of a livestock payment default and not have the right to get their cattle back. It is time to correct this and the SALE Act is the fix.”
The 2018 Farm Bill contained a provision directing the U.S. Department of Agriculture (USDA) to conduct a study to determine the feasibility of establishing a livestock dealer statutory trust. The results of the study came out in December of 2019 and helped to establish the creation of a Livestock Dealer Statutory Trust.