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Broad Opposition to “Dealer Trust” Bill by Livestock Groups

published: May 30th 2018
source: Livestock Marketing Association

Opposition to a bill currently pending in Washington D.C., specifically H.R. 4058 or the “Securing All Livestock Equitably” or SALE Act of 2017 is growing among livestock producers, financial organizations, auction market owners and livestock dealers.

Recently a group of Texas livestock market owners and livestock dealers representing the Texas Livestock Marketing Association traveled to Washington D.C. to express their opposition. They met with members of Congress and their staff to discuss a number of issues facing the livestock industry including why they are opposed to the proposed Dealer Trust.

The officers, directors, staff and legal consultants of LMAT have determined that this legislation is fundamentally flawed and will cause more problems than it will solve. It is not the right answer to solve payment recovery in cases of dealer default. LMAT is concerned that it will result in less credit from traditional secured lenders to the livestock industry. The bill would change lien priority in default situations, giving the trust priority over the secured lenders. The precedent of eliminating the first lien rights for lenders has led the Agriculture and Rural Affairs Committee of the Texas Bankers Association to oppose the bill. These lending issues will have a negative impact on producers, dealers and livestock markets that rely on lenders to finance their operations.

Another concern is that every buyer of livestock could be considered a “dealer” because the Packers and Stockyards Act definition of ‘dealer’ is vague and open to broad interpretation. Since there is no clear test to determine who is a dealer under current law, it is impossible to know exactly who is subject to the proposed Dealer Trust. Likewise, if the trust is created the issue of who has clear title to livestock is not resolved.

A growing number of groups across several states are now joining in opposition to H.R. 4058. They include the Ag and Rural Affairs Committee of the Texas Banker Association, a group of Alabama livestock market owners, dealers and order buyers, Texas and Southwestern Cattle Raisers Association, Independent Cattleman’s Association of Texas, Louisiana Livestock Marketing Association, Texas Cattle Feeders Association, Superior Livestock Auction and Livestock Marketing Association of Texas.

 

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