John McQueen: Industry let down by GIPSA, Fifth Third Bank | TSLN.com

John McQueen: Industry let down by GIPSA, Fifth Third Bank

Katie Micik

DENVER (DTN) – The livestock marketing committee of the National Cattlemen’s Beef Association is forming a task force to investigate solutions to the financial risks highlighted by Eastern Livestock Company’s bankruptcy.

The committee also directed NCBA staff to work on getting a congressional oversight hearing into the Grain Inspection, Packers and Stockyards Administration (GIPSA) handling of its auditing and bonding responsibilities.

After Eastern’s bank accounts were frozen last fall, the cattle brokerage which bought and sold cattle around the country collapsed. GIPSA stated that Eastern owes more than $130 million to 743 sellers in 30 states. Fifth Third Bank has also alleged Eastern may have had as much as $2.5 billion in fake transactions in which no cattle were actually traded.

The cattle brokerage’s bankruptcy shined a bright light on issues within the industry – checks, paperwork and regulation – and the number of people hurt by the failure makes those issues hard to ignore, NCBA Chief Economist Gregg Doud said.

“That’s what the staff has been asked today is to work with our states to come up with a group of people that can begin to address those issues,” Doud told DTN after a committee meeting Friday, Feb. 4, during NCBA’s annual convention. “I think the key point here, as you’ve seen today, is this is much more complex and much more complicated than most people realized going in. There are not easy answers to these questions. It’s going to take a lot of thought.”

He said NCBA staff will be reaching out to their state organizations, which will nominate people to the task force. They will meet and discuss the issues and hopefully present some policy resolutions at the summer meeting. Educating cattlemen on the issues is also a goal, which is why the meeting featured a panel that included representatives from several livestock markets and auctions hurt by bad checks from the cattle brokerage as well as a representative from Rabobank to discuss electronic payment methods and a vice president of a surety company to explain bonds.

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DENVER (DTN) – The livestock marketing committee of the National Cattlemen’s Beef Association is forming a task force to investigate solutions to the financial risks highlighted by Eastern Livestock Company’s bankruptcy.

The committee also directed NCBA staff to work on getting a congressional oversight hearing into the Grain Inspection, Packers and Stockyards Administration (GIPSA) handling of its auditing and bonding responsibilities.

After Eastern’s bank accounts were frozen last fall, the cattle brokerage which bought and sold cattle around the country collapsed. GIPSA stated that Eastern owes more than $130 million to 743 sellers in 30 states. Fifth Third Bank has also alleged Eastern may have had as much as $2.5 billion in fake transactions in which no cattle were actually traded.

The cattle brokerage’s bankruptcy shined a bright light on issues within the industry – checks, paperwork and regulation – and the number of people hurt by the failure makes those issues hard to ignore, NCBA Chief Economist Gregg Doud said.

“That’s what the staff has been asked today is to work with our states to come up with a group of people that can begin to address those issues,” Doud told DTN after a committee meeting Friday, Feb. 4, during NCBA’s annual convention. “I think the key point here, as you’ve seen today, is this is much more complex and much more complicated than most people realized going in. There are not easy answers to these questions. It’s going to take a lot of thought.”

He said NCBA staff will be reaching out to their state organizations, which will nominate people to the task force. They will meet and discuss the issues and hopefully present some policy resolutions at the summer meeting. Educating cattlemen on the issues is also a goal, which is why the meeting featured a panel that included representatives from several livestock markets and auctions hurt by bad checks from the cattle brokerage as well as a representative from Rabobank to discuss electronic payment methods and a vice president of a surety company to explain bonds.

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