US officials investigate unpaid bills at cattle brokerage
The Grain Inspection, Packers and Stockyards Administration, or Gipsa, is investigating cattle brokerage Eastern Livestock Co., said Jay Johnson, a regional director for Gipsa in Des Moines, Iowa. Gipsa is part of the U.S. Department of Agriculture.
Eastern Livestock, which is located in New Albany, Ind., describes itself on its website as one of the largest cattle brokerage companies in the U.S. The company declined to comment when contacted Friday.
"Currently, Gipsa has investigators at Eastern Livestock," Johnson said. "There appears to be a significant amount that is owed for cattle to sellers in several states. The amount unpaid likely exceeds $10 million."
Cattle brokers buy feeder cattle, which haven't yet grown to full size, from ranchers, and through auctions, and sell them to feedlots where they are fattened before slaughter. Friday, auction yards were working to recall feeder cattle sold to Eastern Livestock, turning around trucks set to deliver them, said Mark Mackey, chief executive of the Livestock Marketing Association, a trade group for livestock auction markets.
He said association members started getting checks from Eastern Livestock returned and marked insufficient funds on Thursday. Mackey described Eastern Livestock as one of the largest feeder cattle brokerages in the U.S. operating in all 48 contiguous states. Checks have been returned in states from the East Coast through the Great Plains, but not in the Western U.S., he said.
Cattle traders said some buyers were staying out of the cash market for cattle because of the uncertainties connected with Eastern Livestock, while others were stepping in looking for potential bargains. As for cattle futures, traders didn't expect spillover at the Chicago Mercantile Exchange, saying the size of the potential unpaid bills wasn't big enough to affect the markets.
Mackey said the association will be watching the financial status of Eastern Livestock over the weekend and advising its members about what to do next.
Johnson, the official from Gipsa, asked any unpaid sellers to contact his office at 515-323-2579 to obtain bond claim information. He didn't expect to have further information on the investigation until next week.
-By Lester Aldrich, Dow Jones Newswires; 913-322-5179; email@example.com
(Tom Polansek in Chicago contributed to this story.)
(END) Dow Jones Newswires
November 05, 2010 15:28 ET (19:28 GMT)