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NCBA Seeks More From GIPSA
Former NCBA President Says Industry Let Down by GIPSA, Fifth Third Bank
Katie Micik DTN Staff Reporter
DTN/The Progressive Farmer, 02/07/11
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 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 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.
FULFILLMENT OF RESPONSIBILITIES
Southeast Livestock Exchange co-owner John Queen, a former NCBA president, said he thinks the cattle industry was let down by two parties in the Eastern Livestock Bankruptcy: GIPSA and Fifth Third Bank, which was Eastern's main lender.
He said the bonding formulas provide inadequate protection and should be reviewed. Jim Odle, general manager of Superior Livestock, said he agrees the current bonding levels aren't sufficient but he's wary that revisions may be prohibitively expensive for small livestock markets and dealers.
The bigger issue, Queen said, is that GIPSA didn't audit Eastern Livestock in the last five years.
Queen said he was audited by GIPSA immediately after Eastern Livestock's checks started bouncing to make sure his business was still solvent. According to the bankruptcy petition, Eastern Livestock owes Southeast Livestock Exchange $774,513.45. He said it usually takes three days to complete an audit.
"They were the largest in the country, folks," he said. "Where was our regulatory agency? The thing is they won't challenge the big guy but have no problems auditing the small guys."
I think this is very ironic and comical-- that the group (NCBA) that has been fighting against USDA and GIPSA oversight the hardest-and against giving GIPSA back some of its original powers, as Congress ordered them to do-- is now blaming them for not enough oversight- and looking for ways to get them to do more :???:
Something I've seen for years- those that bench the loudest about too much government are the ones that scream the loudest blaming government and wanting government to fix it and take care of them when its their teat in the wringer-- and they are the ones on the short end of the stick ... :wink:
