Livestock

Sellers’

Rights

Grain Inspection,

 Packers and Stockyards 

Administration

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, 

national origin, gender, religion, age, disability, political beliefs, 

sexual orientation, and marital or familial status. (Not all prohibited bases apply to all Programs.) Persons with disabilities 

who require alternative means for communication of program 

information (braille, large print, audiotape, etc.) should contact 

USDA’s TARGET Center at 202-720-2600 (voice and TDD).

United States 

Department of Agriculture

www.gipsa.usda.gov

What can USDA do about packers that do 

not pay for livestock?

USDA can notify the packer of its responsibility to hold subject assets in trust for the benefi t 

of unpaid cash sellers. USDA can penalize a 

packer for failing to pay for livestock, since that 

is a violation of the P&S Act. And, while these 

proceedings are in progress, USDA can also ask 

a court to enjoin a packer from future violations 

of the P&S Act. 

However, USDA cannot furnish you with a lawyer to collect payment for you. Nor can USDA 

compel a packer to pay you. 

What can courts do about packers that do 

not pay for livestock?

A district court of the United States (or a bankruptcy court if the packer is in bankruptcy) can 

order a packer to hold specifi c assets in trust for 

the benefi t of unpaid cash sellers of livestock 

who have given the required notices. The court 

can only order this upon receiving a written 

complaint. As an unpaid cash seller of livestock, you may fi le the necessary written complaint with the court.

What should you do after a court issues a 

trust order against a packer?

As an unpaid cash seller of livestock, you 

should petition the court to order payment from 

the assets held in trust. You should fi le this petition even if you already notifi ed the packer and 

P&SP that the packer failed to pay you. If you 

do not fi le a petition with the court, the court 

may order that the assets be distributed to other 

unpaid cash sellers who did fi le a petition.

Please direct comments or questions about this 

publication to:

United States Department of Agriculture

Grain Inspection, Packers and Stockyards Administration

1400 Independence Avenue S.W.

Washington DC 20250-3601

(202) 720-0219

www.gipsa.usda.gov

GIPSA Toll-Free HOTLINE

1-800-998-3447

This publication does not create or confer any rights for 

or on any person. Nor does it operate to bind the public. 

You can use an alternative approach, if the approach 

satisfi es the requirements of the P&S Act and regulations. 

See 7 U.S.C. 182 (a) (3) – (5), 191, 193-196, 224, 228a 

and 228b and 9 CFR 201.43, 201.99, and 201.200, which 

relate to the content in this publication. You may also 

want to see 9 CFR 203.15 and 203.16.

November 2008
What is the packer trust?

The packer trust is a statutory trust authorized 

in the Packers and Stockyards Act (P&S Act) 

to remedy the burden placed on public interests 

by packers’ inadequate financing arrangements. 

The trust protects certain livestock sellers by 

making their rights to specific assets of the packer legally superior to the interests of any secured 

lenders to whom the packer offered those assets 

as collateral for loans. 

Whose rights does the packer trust protect?

Cash sellers of livestock. If you (as a producer, 

dealer, or market agency) sell livestock on a cash 

basis, your rights are protected by the packer 

trust. A cash sale is one in which you do not 

extend credit to the buyer. The packer trust will 

not protect you if you extend credit to a packer 

in a writing which contains a trust waiver.

The prompt payment provisions of the P&S Act 

permit livestock buyers and sellers to agree, in 

writing, to payment terms other than those set 

out in the P&S Act. For example, if you sell 

livestock to a packer, you may agree, in writing, 

to give the packer time to cover a check that you 

know is not good or to allow the packer more 

time to make payment than permitted under the 

P&S Act. However, by agreeing to these terms, 

you may forfeit the benefits of the packer trust, 

since your written agreement may be considered 

an extension of credit rather than a cash sale. 

Read documents carefully before signing. Credit agreements have sometimes been included 

in small print on stockyard receipts, scale tickets, and other documents. Therefore, you need 

to carefully read everything before you sign. 

Never sign anything you do not understand, or 

you could, unwittingly, forfeit the benefits of the 

packer trust. 

How do you preserve your rights if you do 

not get paid? 

Notify both the packer and the nearest Packers 

and Stockyards Program (P&SP) regional office 

that the packer has failed to pay you for livestock. Your claim can be a letter, mailgram, or 

fax, but it must be in writing. If you do not give 

the required written notice to both the packer 

and P&SP, you will forfeit the benefits of the 

packer trust.

How quickly must you act to preserve your 

rights?

30 calendar days after payment was due. You 

must notify the packer and P&SP of your claim 

within the 30 calendar days immediately following the day the packer owed you payment. 

If you sold livestock to a packer on a live basis, 

the packer owes you payment by the close of 

the next business day following purchase and 

transfer of possession. If you sold livestock to a 

packer on a “grade and yield” basis, the packer 

owes you payment by the close of the next business day following determination of the purchase price. 

15 business days after payment instrument is not 

honored. You must notify the packer and P&SP 

of your claim within the 15 business days immediately following the day you receive notice 

that the payment instrument was not honored. 

If the packer gave you a payment instrument, 

you should properly present it for payment and 

receive notice that it is dishonored (for example, 

a bounced check), before you make this claim. 

Do not delay in giving written notice of your 

claim, or you will forfeit the benefits of the 

packer trust.

What information should you include in your 

packer trust claim?

Include the name and contact information of the 

packer, your name and contact information, the 

date of the transaction(s) in which the packer 

failed to pay you, the date your received notice that one or more payment instruments from 

the packer were dishonored (if applicable), the 

amount of money the packer owes you, and any 

other information necessary to support your 

trust claim.

What is a packer?

Under the P&S Act, a packer is someone engaged in the business of buying livestock in 

commerce for purposes of slaughter, manufacturing or preparing meats or meat food products 

for sale or shipment in commerce, or marketing 

meats, meat food products, or livestock products 

in an unmanufactured form, acting as a wholesale broker, dealer, or distributor in commerce.

Which packers are subject to the packer 

trust?

Packers whose average annual purchases of 

livestock exceed $500,000 are subject to the 

packer trust. If you cannot determine if a packer 

is subject to the packer trust, contact the nearest 

P&SP regional office for assistance. 

What assets of a packer are subject to the 

packer trust?

Subject assets include livestock a packer bought 

in cash sales, as well as inventories, receivables, 

and proceeds derived from that livestock. Other 

assets, such as plant equipment and buildings, 

are not subject to the packer trust.