DENVER — At the National Cattlemen’s Beef Association‘s annual convention in Denver Feb. 4, industry experts discussed the future of trading feeder cattle in the aftermath of the bankruptcy of Eastern Livestock.
Background
Specifically, on or around Nov. 3, 2010, Eastern Livestock, a company based in New Albany, Ind., that bought and sold cattle in 11 states across the Mid-South, Midwest, and West, began issuing unfunded checks to cattle producers and livestock market operators.
According to USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA), Eastern owes more than $130 million to 743 sellers in 30 states.
GIPSA didn’t work
According to John Queen, co-owner of Southeast Livestock Exchange and past president of the National Cattlemen’s Beef Association, GIPSA “failed” producers.
Queen, who was financially impacted by the Eastern Livestock issue, said GIPSA’s failure to keep records or conduct consistent audits of Eastern Livestock led to serious financial devastation for many producers, truckers and livestock markets.
He said the first thing he did when the Eastern Livestock issue unfolded was contact his member of Congress to acquire from GIPSA a five-year auditing trail of Eastern. Queen said GIPSA finally reported to the House Agriculture Committee that it did not keep a “two-year” audit trail on anyone.
The only proof, Queen said, was a one-year annual report.
“Eastern has not been audited in last five years,” said Queen. “They were the largest in the country, folks. Where was our regulatory agency?
“If we are relying on our regulatory agency, as we should, to do its jobs instead of trying to rewrite the 2008 farm bill, we wouldn’t be in this mess.”
Queen said in 2010 that Eastern traded $3.9 billion worth of cattle, which is three times the amount traded in 2009.
“I’m no rocket scientist, but a fifth grader could tell that a three-fold increase in volume over one year is probably a pretty good reason to conduct an audit,” said Queen.
Heads should roll
“We need to step forward and ask for regulatory oversight. We need to ask for review of formulas. We need to find out why no audits were conducted of the largest livestock market in the country.
“If they can’t do audits of larger markets, then we need to ask that they be required to hire an independent audit company and then they (GIPSA) don’t have to worry about being held responsible for disasters like this.”
Many who were financially impacted will be forced to liquidate assets to financially recover from the Eastern fallout. Queen is one of those people.
Eastern’s bond was $800,000, which was inadequate.
