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No Money, No Sale, Says MBP Resolution

co-operator staff / Brandon

Three resolutions aimed at protecting ranchers in the event of a dealer bankruptcy were the subject of debate at the recent Manitoba Beef Producers annual general meeting.

The first, which called on MBP to lobby for laws making the transfer of ownership of cattle or commodities incomplete until payment is made in full, passed easily with little discussion.

A second calling for increased oversight of dealer licensing and bonding, as well as audits and revocation of licences in the event of insolvency, was defeated.

Tim McMechan, who earlier this year lost a load of cattle amid the collapse of G&M Trucking, said that the current licensing system allows dealers handling millions of dollars worth of cattle every year to operate with security guarantees amounting to four to six cents on the dollar.

He called the claims by dealers that requiring greater bond coverage would be too expensive and reduce competition a frivolous excuse.

Questionable

Rick Wright, who serves as head order buyer for a division of Nilsson, questioned whether more government regulations were needed, and said that the resolution might open up a can of worms.

If you deal with reputable people that you know and have done business with in the past, your risk is going to be minimal, said Wright, adding that it s very difficult in the livestock business to secure a substantial bond.

If you chase that carrot, that extra little better deal, the higher the risk, obviously.

Interlake producer Larry Clifford said that asking for more government regulation was a risky manoeuvre, because you just might get it.

If you make it too strict, you re going to lose an awful lot of the competition, he said.

Fred Tait said greater government oversight of dealer licensing and bonding could be compared to patching holes in the fence so that cattle don t stray.

There are risks in the system, and we have to plug those loopholes, he said.

Chuck Gall spoke in support of the resolution, noting that some dealers at his local auction mart don t pay for days on end.

If any one of those dealers had a heart attack I m not saying they re bankrupt or anything their estate is in limbo, he said. When it comes to millions of dollars, we have to protect the farmers.

Insurance

A third resolution calling for MBP to examine an insurance program to protect beef producers in event of a dealer bankruptcy was passed by a narrow margin.

Kim Crandall said that having insurance might backfire by encouraging sellers to take greater risks in the belief that any losses would be covered by the system. Still, he added that he was in favour of MBP examining the issue.

If a seller is dealing with a questionable dealer, he might be willing to stick his neck out just a little bit farther because he knows that he ll get 80-90 per cent of his money back, he said. It s a slippery slope.

Wright said that checkoff funds established by Ontario and Alberta to protect producers are very difficult to access in the event of a bankruptcy, and require that losses be reported within 72 hours.

Due to that tight window for reporting a default, some sellers are still unable to collect on a claim.

There s a lot of money in those funds, and very few payouts, he said, adding that most payouts are due to packer bankruptcies.

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If you chase that carrot, that extra little better deal, the higher the risk, obviously.

rick wright

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