Many cattle producers still make deals using "faith and a handshake," just as they've done for decades.
The collapse of a Midwest cattle brokerage that owes Texas ranchers and hundreds of others nationwide as much as $130 million could put some ranchers out of business.
Federal agriculture officials filed a complaint last month against Indiana-based Eastern Livestock Co., accusing it of bouncing checks for livestock purchases and failing to maintain an adequate bond to cover its debts.
The company owes money to about 740 ranchers in 30 states, according to USDA. The average loss of about $175,000/rancher is enough to put some out of business, says David Scott, president of the Texas and Southwestern Cattle Raisers Association. Many ranchers, unaware that Eastern's checks were no good, tried to pay bills and ended up writing bad checks themselves.
Eastern made money mainly by buying calves throughout the South and selling them to feedlots in big cattle states, including Texas and Oklahoma, where they were fattened for slaughter. Federal regulations require such companies to have sufficient bond to cover two days of business activity.
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