Rancher Discusses Losing Money With MF Global

Dec 14, 2011
Originally published on December 14, 2011 6:12 pm
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When the giant trading company MF Global went belly up, more than a billion dollars of its clients' money was declared missing. A lot of that money belonged to ranchers and farmers. They're big customers of MF Global, investing in futures contracts to hedge against losses, in case the market for their crops or livestock goes south. Now those farmers and ranchers can't get their money back.

Tim Rietzke is one of them. He's a cattle rancher in Coldwater, Kansas, and he joins us now.

Thanks for being with us, Mr. Rietzke.

TIM RIETZKE: Yeah, you're welcome.

NEARY: So, how much money of yours is tied up in this whole MF Global mess?

RIETZKE: I had about $30,000 in my hedge account when MF Global declared bankruptcy.

NEARY: Are you getting any information now from MF Global about what happened to that money or when you might be able to get access to that cash?

RIETZKE: You get no information from MF Global whatsoever. So, every evening when I come in, I just Google MF Global news and try to get all the latest information on it.

NEARY: So there's no one that you can get in touch with at MF Global that can help you out of this at all or...

RIETZKE: Oh, no. If you do, you're going to get a busy signal. If you do, you're on hold until you give up basically.

NEARY: How is this affecting the way you're doing business right now? Are there things that you cannot do that you would be doing?

RIETZKE: Well, much like a household budget, if you had $30,000 in the bank and all of a sudden that money disappeared, it would change your personal life. And it changes your business life much the same. Let's say in the ranching business you wanted to buy some replacement females or breeding stock or a pickup, now you're not sure what should I do. I don't want to put myself in a bind and have to borrow more money.

So, the uncertainty really is the worst thing. And, as you know, any business hates uncertainty.

NEARY: Yeah. How do you feel about investing in the futures market now?

RIETZKE: Oh, I have no confidence whatsoever in it and I don't see how anybody could because, basically, what happened, Lynn, is that I had a segregated account with MF Global. They were the brokerage. And with the stroke of a computer key, somebody hit enter and my money went to cyberspace somewhere and I have no confidence that that couldn't happen at any other brokerage.

NEARY: Segregated account, meaning this is the account that MF Global was not supposed to dip into in any way?

RIETZKE: That's correct. And one of the selling points of using the futures market to mitigate risk was that no one had ever lost money in segregated accounts.

NEARY: So is this going to change the way you run your ranch in the future? I mean, are you going to have to find a new way of doing business?

RIETZKE: Well, sure. You - I think a lot of people, probably even people listening to your program today, think that - well, these people, if they're gambling, you know, it's like, don't gamble with money you don't have. Well, this is just the opposite. Most people are familiar with the oil market, how it goes up and down. Well, the cattle market, grain markets do exactly the same thing.

So when you find a price that you're happy with and maybe you can lock a profit in, you hedge that product through the Chicago Mercantile Exchange. And to do that, you have to have a brokerage and MF Global was the brokerage that cleared my trades.

So it's not gambling. It's just the opposite.

NEARY: Yeah.

RIETZKE: Actually, we were trying to mitigate risk.

NEARY: Tim, just give us a sense of the size of your ranch and, you know, what is your business like?

RIETZKE: Of course, we're prejudiced, but we think we have a beautiful ranch. The cattle are handled just like they were a lot of years ago, all by horseback. Really, I guess if you came out here, you would think that you had gone back in time, but in our county, there are only 1,900 people. There is no stoplight. It's an hour to fast food any direction. It's an hour to Wal-Mart in any direction, but we like that.

NEARY: Do you feel that that way of life is threatened because of this?

RIETZKE: Yeah. I mean, I guess it's hard to explain, but a lot of people out here still do business with a handshake. So in other words, I'm going to buy hay from somebody and he said, okay, I'll sell you hay for $100 a ton and you shake hands, they deliver the hay and you write them a check.

And I don't need to give him down money. I don't need to write a contract. And there's still an enormous amount of business done in our area just like that. So this is really a different part of the world. When I had a hedge account to protect my prices, I didn't want to invest in European sovereign debt. I didn't want to invest in MF Global. I had nothing to do with their business.

They just stole my money. And that's the bottom line. And now, I have to figure out how to get it back.

NEARY: That's Tim Rietzke, who raises cattle in Coldwater, Kansas. Thanks so much for being with us, Mr. Rietzke.

RIETZKE: Yeah, you're welcome. It was nice to be with you. Thanks for asking me. Transcript provided by NPR, Copyright NPR.