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Recent Packer Bankruptcy Highlights
Producer Protections in Packers & Stockyards Act

DENVER (August 29, 2002) — A recent beef packer bankruptcy has highlighted the need for producers to act quickly in protecting their rights to payment for their animals, according to the National Cattlemen’s Beef Association (NCBA). The bankruptcy by Future Beef Operations has demonstrated that while producer protections exist under the Packers & Stockyards Act, certain timely actions must be taken by producers to initiate those protections.

Producers who have sold cattle to Future Beef but not been paid for them must act now to preserve the chance of being paid as the company moves through its forced liquidation, said Bryan Dierlam, director of Legislative Affairs for the NCBA.The U.S. Bankruptcy Court in Denver in early August ordered Future Beef to cease operations.

Dierlam said time is of the essence to preserve the right to the trust, which holds assets of the packer to protect unpaid sellers of livestock. Producers should contact attorneys for advice on the legal filings required to preserve their right to the trust.Filings for non-payment must be made within 30 business days of not receiving payment and 15 business days of being notified of a non-sufficient funds check.

"NCBA has been monitoring the Future Beef situation for quite some time and has been in regular contact with staff of Grain Inspection, Packers & Stockyards Administration (GIPSA) to ensure that sellers of livestock are protected in accordance with the law," said Dierlam.

According to Dierlam, USDA has indicated that certain information is extremely important to GIPSA if producers want to preserve their right to the trust. This information includes:

* Date the actual transaction took place
* Date the livestock were transferred to the packer
* Date payment was due to the producer
* Date final payment price was determined if sold on rail, yield and grade, or on a formula or other method of price determination.

These provisions were added to the Packers and Stockyards Act in 1976, at a time when some packers were going bankrupt and leaving producers unpaid for their livestock.Dierlam said this situation highlights the need for a dealer’s trust, something NCBA and the GIPSA staff have been pursuing through Congress for several years.

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