The Packers and Stockyards Act includes provisions aimed at protecting the financial interests of livestock and poultry producers. Under the act, the inventories and accounts receivable of a packer or live poultry dealer: but not livestock (e.g., cattle, pigs, sheep) dealers such as auction houses: must be held in trust for unpaid cash sellers when the packer or poultry dealer fails to pay due to bankruptcy or other financial difficulty. In such situations, the seller is to be paid with these assets before other creditors. USDA for several years has been seeking an amendment to the act extending this protection to those who sell to livestock dealers, which, the Department says, have caused a significant amount of unrecoverable losses for livestock producers.
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