MF Global's Collapse Has Ranchers Steamed

Pete Bonds, a 59-year-old Texas rancher, doffed his cowboy hat and stepped to the microphone. He wanted to tell an executive from CME Group, owner of the world’s largest futures market, what he thought of the $100 million fund set up to help protect ranchers and farmers from another collapse like commodities broker MF Global’s last October.

To Bonds and other members of the National Cattlemen’s Beef Assn. gathered in Nashville’s Gaylord Opryland Resort & Convention Center on Feb. 3, the protection fund that CME Chief Operating Officer Bryan Durkin was there promoting amounted to little more than a pile of chickenfeed. All it takes is some “third-grade math,” Bonds told Durkin, to understand that given its limit of $25,000 per individual account, the fund would cover only farmers with about 1,200 feeder cattle—a fraction of a typical rancher’s herd. More than half the cattle sold in 2010 came from feedlots with a capacity of at least 24,000 cattle, according to the Agriculture Dept. (Farmer cooperatives will be eligible for as much as $100,000 in the event of a brokerage failure.)