Public Affairs
WASHINGTON, Sept. 28, 2023 – The U.S. Department of Agriculture (USDA) entered into a stipulation agreement with Salem Livestock Inc. (Salem) on Aug. 23, 2023, for alleged violations of the Packers and Stockyards (P&S) Act. Under the terms of the stipulation, Salem waived its rights to a hearing and paid a civil penalty of $5,500.
An investigation by USDA’s Agricultural Marketing Service (AMS) revealed that Salem operated with custodial account shortages on May 31 and June 30, 2021, of $1,187,353 and $964,800, respectively. The custodial shortages were due in part to the market failing to reimburse the custodial account by the close of the next business day for the market owners' and employees’ purchases and failing to reimburse the custodial account for uncollected receivables by the close of the 7th day following the sale. AMS also found Salem misused custodial funds by issuing payments to its line of credit and deducting bank fees directly from its custodial account.
A custodial account is a trust account designated for shippers’ proceeds from the sale of livestock in trust for sellers. Failure to reimburse and debit the custodial account properly is a violation of the Packers & Stockyards Act and regulations.
The P&S Act authorizes the Secretary of Agriculture to assess civil penalties up to $33,896 per violation against any person after notice and opportunity for a hearing on the record. USDA may offer alleged violators the option of waiving their right to a hearing and enter into a stipulation agreement to resolve alleged violations quickly.
For further information about the Packers and Stockyards Act, contact Dora Malykin, Packers and Stockyards Division, at (202) 720-7051 or by email at dora.malykin@usda.gov.
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