Protection available to Livestock Sellers

Robert J. Melchior
(Market Coordinator for the Northeast Sheep and Goat Marketing Program at Cornell University from 2000 until his death in 2002)
Updated 09/13/2012

State and federal government programs are in place to provide some protection to livestock sellers. Usually these include licensing and record keeping requirements for dealers and other livestock buyers and in some cases may include some limited bonding.

Details on some of these programs are included in the links listed below. It is important to note that these provisions are no substitute for prudence when making a sale. Know your buyer, inquire about his reputation in the trade and avoid extending credit. For your own protection, obtain receipts if at all possible. Regardless of whether you have received a receipt it is important that you notify  Sources of information include your state or regional Packers and Stockyards representative, your state agriculture department, and other producers who have worked with the buyer. These considerations should be made for commission sale barns as well.

You deserve prompt and certain settlement for your livestock production. Even if the packer and/or dealer you sold to has filed bankruptcy or is suffering financial difficulties resulting in delayed or non-payment for livestock and poultry transactions, the Packers and Stockyards (P&S) Act of 1921 may be able to offer you some protection. The P&S Act has authorized and established trust protection for producers who have done business with packers and dealers whose average annual purchases of livestock who have inadequate financing arrangements. The producer must be a cash seller of livestock (a cash seller is a seller who expected to be paid promptly and did not knowingly extended credit).  The packer must have average annual purchases of livestock that exceed $500,000. In these specific cases the Act establishes that the producer has rights to specific assets of the packer that are legally superior to the interests of any secured lenders to whom the packer offered those assets as collateral for loans. However, in order to preserve your rights for compensation you need to file timely written notice of your claim against the regulated entity who owes you. This written notice must be provided to GIPSA and the regulated entity who owes the seller or grower within a specified period after the transaction date(s). For more information visit the Livestock Sellers Rights under the Packers & Stockyards Act This website also has lists of markets, dealers, and packers that are bonded under the ">USDA Packers and Stockyards Program.  The GIPSA Toll-Free HOTLINE is 1-800-998-3447

Packers and Stockyards Act

Prompt Payment for Livestock Purchases (pdf) Programs: Packers & Stockyards Programs (pdf)

Eastern Regional Office for Packers and Stockyards
75 Spring Street, Suite 230
Atlanta, GA 30303
Telephone 404-562-5840
FAX 404-562-5848
Contact them to find out about field representatives closer to you.

States often have additional programs to try to protect livestock sellers.  For example NYS Department of Agriculture and Markets requires the licensing of all dealers who buy or receive farm products from New York producers in excess of $10,000 annually to re-sell at wholesale. Licensed dealers are required to file security in the form of a bond or letter of credit with the Department. Supplemental financial coverage is provided by the Agricultural Producers Security Fund, which is funded by the licensed dealers. Producers are provided further protection through a provision of the Article 20 Law, which authorizes a statutory trust (replaces the producer lien, effective July 20, 2005) in the event a dealer defaults in payment.
New York: