Most livestock farmers rely on secured credit. Although a single bank may be the only creditor holding a consensual security interest in the farmer's assets, most states have statutory liens that benefit veterinarians, breeders, feed suppliers and other parties that contribute to the livestock production.
Agricultural lenders should familiarize themselves with both the UCC adopted in each state and the Federal Food Security Act, which provides federal protection to buyers of farm products. Actions lenders take to protect their interest under the Food Security Act will depend in part on whether the seller is located in an "clear title" or "notice" state.
While these regulations can be complex, given all that is at stake, participants in this industry would be well-served to full understand lien priority in the states in which they operate. Read more…
Reprinted with permission from Pork magazine (2010)