Title 7 — AgricultureRelease 119-73

§196 Statutory trust established; livestock

Title 7 › Chapter CHAPTER 9— - PACKERS AND STOCKYARDS › Subchapter SUBCHAPTER II— - PACKERS GENERALLY › Part Part A— - General Provisions › § 196

Last updated Apr 6, 2026|Official source

Summary

Packer must keep any livestock bought in a cash sale, and any inventory, money owed, or money made from the meat, in a trust for sellers who have not been paid in full. This stops packers from using those animals or the meat as loan collateral. Packers with average annual purchases of $500,000 or less are exempt. A payment is not counted if the seller got a payment instrument (like a check) that is later dishonored. If no payment instrument was received, the unpaid seller must act within 30 days after the final payment date under section 228b, or if a payment instrument bounces, within 15 business days after being notified. To preserve the trust, the seller must give written notice to the packer and file that notice with the Secretary. Cash sale: the seller did not expressly extend credit to the buyer.

Full Legal Text

Title 7, §196

Agriculture — Source: USLM XML via OLRC

(a)It is hereby found that a burden on and obstruction to commerce in livestock is caused by financing arrangements under which packers encumber, give lenders security interest in, or place liens on, livestock purchased by packers in cash sales, or on inventories of or receivables or proceeds from meat, meat food products, or livestock products therefrom, when payment is not made for the livestock and that such arrangements are contrary to the public interest. This section is intended to remedy such burden on and obstruction to commerce in livestock and protect the public interest.

(b)All livestock purchased by a packer in cash sales, and all inventories of, or receivables or proceeds from meat, meat food products, or livestock products derived therefrom, shall be held by such packer in trust for the benefit of all unpaid cash sellers of such livestock until full payment has been received by such unpaid sellers: Provided, That any packer whose average annual purchases do not exceed $500,000 will be exempt from the provisions of this section. Payment shall not be considered to have been made if the seller receives a payment instrument which is dishonored: Provided, That the unpaid seller shall lose the benefit of such trust if, in the event that a payment instrument has not been received, within thirty days of the final date for making a payment under section 228b of this title, or within fifteen business days after the seller has received notice that the payment instrument promptly presented for payment has been dishonored, the seller has not preserved his trust under this subsection. The trust shall be preserved by giving written notice to the packer and by filing such notice with the Secretary.

(c)For the purpose of this section, a cash sale means a sale in which the seller does not expressly extend credit to the buyer.

Reference

Citations & Metadata

Citation

7 U.S.C. § 196

Title 7 — Agriculture

Last Updated

Apr 6, 2026

Release point: 119-73