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Another Cattle Fraud Case?


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#1 Tim/South

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Posted 23 March 2014 - 11:51 AM

From the Cattle Report that is pinned in this section. http://www.agcenter....ttlereport.aspx

 

I remember when Eastern went under. I had a friend who was a buyer for them. It really shook up the cattle industry for a while. Stockyards took a big hit financially. I have not been able to find a link to what is going on this time, or what company.

 

If wisdom is based on acquired knowledge from history, the livestock industry has failed its membership and its mission to learn from history -- thus allowing the repeat of obvious weaknesses in its structure. As if the pains of downsizing were not enough, structural defects in the ways cattle are traded, continue to plague the industry. The Eastern Livestock tragedy and resulting chaos is barely dimmed in our memory bank. The litigation from Eastern is still in the courts and may continue for years and now we hear of yet another crisis in payment and trade.

 

This past week checks began to bounce all over the State of Mississippi spreading to Alabama then other states across the country as one of Mississippi's large cattle operations seems to have failed. The saga like many before it has all the characteristics of a soap opera. Rumors spoke of a principal checked into a mental hospital, a affiliate with cooked books and a reported suicide, and the involvement of a Kansas feedyard and bank.

 

Some human actions will never cease. Among those are fraud, deceit, and human treachery. There remain easy pathways to make fraud within the industry much more difficult for perpetrators. Foremost among the solutions that provide a quick fix is mandatory animal identification. The current system allows cattle dealers the ability to sell to feeding firms large groups of cattle for targeted delivery dates and receive in return downpayment monies. In many cases those cattle are never identified by the owner's name, location and specific number of cattle. They are sold in load lots between the broker and feeding firm with only a delivery date.  As long as this structure is allowed, brokers can speculate by selling loads for future delivery and hoping to purchase them in the marketplace later at a reduced price. The problem is sometimes the broker is not financially able to support the risk and the market does not always go down when the broker suspects.

 

A national animal ID database would link purchases to specific groups of cattle and would confirm liens on those cattle and confirm they are sold and under contract. This would transition the industry to a system of trading real cattle and not over the counter, off the balance sheet, speculative positions that some people don't have the financial assets to support. Market makers who would like to place bets of the future direction of cattle prices have a facility called the cattle futures market where they can do just that but are subject to margin calls and supervision.

 



#2 Vol

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Posted 23 March 2014 - 12:03 PM

The Beef industry will most likely undergo extensive change with this second major fraud episode. I can see it now.....the US Congress will investigate, assign committees, regulate and a new set of thieves will be watching the money trail. Beef folks need to get ready for some major change in the very near future.

 

Regards, Mike


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#3 deadmoose

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Posted 23 March 2014 - 12:25 PM

More rules and regs are not the answer. Thieves and frauds are just that. More rules costing honest people money cannot change that.
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#4 Tim/South

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Posted 23 March 2014 - 12:27 PM

I agree with you Mike.

With the way cattle are traded now days I can see mandatory identification around the corner. It is cost prohibitive for us small guys to chip our cattle. I can see the larger buyers probably doing so. If the cattle could be tracked then those who were duped would have a chance of getting them back.



#5 deadmoose

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Posted 23 March 2014 - 12:29 PM

As always the person doing wrong is not the one punished.
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#6 Tim/South

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Posted 23 March 2014 - 12:33 PM

More rules and regs are not the answer. Thieves and frauds are just that. More rules costing honest people money cannot change that.

If we went back to hanging cattle thieves it would stop in short order. What these folks are doing is no more than high tech cattle rustling.

When Eastern went under the government froze and siezed their assets. Our local sale barn lost thousands of dollars.

What the government did not understand was there were thousands of cattle on feed and the feedlots needed to get paid. The government made things much worse in the way they handled things. A lot of people lost big money which could have been avoided had the government understood anything about the cattle business.


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#7 Waterway64

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Posted 23 March 2014 - 06:56 PM

Tim swift capital punishment in this country could slow down a lot more crime than just cattle rustling. Mel
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#8 Tim/South

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Posted 23 March 2014 - 08:20 PM

Tim swift capital punishment in this country could slow down a lot more crime than just cattle rustling. Mel

I could not agree more with your statement.



#9 RockyHill

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Posted 23 March 2014 - 08:36 PM

We had already sold our herd of cattle when Eastern went under.  That is where we had been selling for several years.  Knew a lot of people that got the bad checks but fortunately most everyone finally got their money.  The local attorney really pursued avenues that got the farmers taken care of.  Can't say for sure but I don't think the attorney got a huge cut of the farmers money.  Farmers aren't the only ones hurt in situations like that but a lot of the times they are the ones that get the least in the end.  Hope the Miss. people get help.

 

Shelia



#10 treymo

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Posted 11 April 2014 - 08:20 AM

Tommy, Grant, and his son are good guys. Just had a hell of a lot of irons in the fire. I think Grant is making the best of it though, dad still buys a lot of cattle from him.
Trey




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