By SUSAN TEBBEN
Glasgow Daily Times
Efforts to compensate for losses from the bounced checks and bankruptcy litigation of Eastern Livestock Inc. are continuing. This time, hopefully, with the help of new legislation in the Kentucky congress.
The Kentucky Senate Agriculture Committee will vote Thursday on proposals written by committee chairman David Givens, R-Greensburg, and others trying to help farmers get back the money they lost in the Eastern Livestock fallout that cost ranchers as much as $130 million. Part of the money was lost locally, at Edmonton Cattle Co., LLC., which was owned by Eastern.
When the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration (GIPSA) filed an administrative complaint on Nov. 19, the Kentucky Department of Agriculture revoked Eastern’s license to operate in the state. The complaint was filed after Eastern allegedly began issuing unfunded checks to producers for livestock purchased on or around Nov. 3, according to a release by the attorney general’s office published in a previous Daily Times story.
“It’s been an ongoing debate for three months now to do something to prevent a similar situation,” Givens said. “We have seen no avenue other than the court system.”
Courts have been involved from the beginning and the latest is the bankruptcy of Tom and Patsy Gibson, owners of Eastern.
On Jan. 19, the Gibsons filed for bankruptcy. Gibson stated his income from Eastern in 2009 as approximately $115,000 and approximately $106,000 in 2010, according to appointed trustee James Knauer, a partner in the firm of Kroger, Gardas & Regas, LLP, of Indianapolis.
On Jan. 20, the Federal Bureau of Investigation seized about $4.7 million dollars in bank accounts of Gibson at Your Community Bank in New Albany, Ind. where Eastern is based.
Knauer has been granted permission by a U.S. bankruptcy judge to immediately settle (by cancellation or otherwise) forward purchase contracts for Eastern Livestock, according to the Livestock Marketing Association.
Local farmers, including Chad Withrow of Glasgow, are still waiting for answers. Withrow lost $8,100 when he sold cattle at the Edmonton market.
“I received notice from a bankruptcy court in Indiana that I had until May 2 to get the proper paperwork in and I got a sort of survey from the Kentucky Attorney General’s Office asking if I would be willing to testify,” Withrow said.
He said he would be willing to testify in the case.
Though the livestock markets are not his only source of income as a teacher for Barren County Schools, he still had to sell more cows to try to compensate for the money lost and he knows he is not alone.
“There’s a lot of people, for me this is a hobby, but for a lot of people this isn’t just something they do on the side,” Withrow said.
These farmers are the ones Givens and his fellow committee members are attempting to help with legislation which he hopes will hit the Senate floor mid-week next week and move on to the House of Representatives.
The important part of the proposal is providing clarity of definitions of the components that go into the livestock trade, including the Kentucky Department of Agriculture, the livestock markets, the stockyards — which are overseen by the USDA — and the farmers.
“We need to put in place safeguards,” Givens said. “We need to charge the Department of Agriculture under the authority they already have to supervise.”
Supervision will not mean disrupting regular business that has been working well for years, Givens said, adding that he firmly believes the crisis with Eastern was an anomaly.
Givens said the proposals also put into play other market players in the livestock industry, including buying stations such as the Edmonton market and market groups. He also received input from farmers and livestock markets before the bill was drafted.
Eastern Livestock has operations in 11 states across the Mid-South, Midwest and West, including Kentucky. GIPSA estimates that Eastern Livestock owes money to more than 750 sellers in Kentucky and 29 other states.