Most people who work the land believe that their word is their honor. That’s a great thing about rural communities. When someone says he will do something or give you a payment, you assume his word is good. Unfortunately, that may not always be the case, intentionally or not.
Last month, Eastern Livestock Co., LLC, was forced into receiver-ship (see this month’s Farm Journal, page 46), leaving more than 700 producers in 30 states with bad checks for payments on cattle. It looks like some will receive only pennies on the dollar due to the company’s inadequate bond coverage. And even that could take some time. The advice to those impacted has been: Get an attorney.
While it’s just an abstract number to many, for those affected it could mean the end of their farm or ranch or other business. It’s a shame that so many people are affected, and an even greater shame that more trust in this industry is lost. There have been a number of cases where a corrupt person pulls the wool over someone’s eyes in a phony cattle investment scheme. But this is
different. This was a large, and at one time reputable, cattle buying company. If Eastern Livestock can go under, who’s next?
Each one of these events erode the foundation of trust. Maybe it’s time for cattle producers to be a little less trusting and see raising cattle as a business.
These are live animals, after all, that need to be delivered at certain times. Can you afford to wait an extra week or 10 days to make sure the check clears? As a business owner, is there a better way to ensure payment for cattle delivered? Should you start demanding cashier’s checks or bank drafts?
Maybe it’s also time to take a fresh look at the bonding requirements for the large-scale cattle buying companies. Current regulations require a bond value based on two days of average annual sales. That hardly seems adequate to cover what can be millions of dollars in annual transactions. In this case, Eastern had bonds totaling $875,000, which was within the current requirements. However, the investigation is now uncovering $88 million in bad checks.
What can you do to ensure you get money in the bank for your cattle? In “Bouncing Checks and Bad Guys” in the October 2010 issue of Beef Today, Sharla Ishmael looked at how to recover money if someone does write you a bad check. You can find a link to that story at www.BeefToday.com in the slide show on the home page.