Newco Grains--- CGC bond

[oneoff]

There is pertinent news on the Newco failure front that has affected some 150 plus farmers. That's up from the earlier 120 estimate. This doesn't include other businesses and bills from those not eligible for claims to the bond.

However; from the responses to previous postings on this topic; I sincerely wonder if the lack of full protection with CGC bonding is of any interest to but a few farmers. There is apparently the same low level of interest amongst the claimants. More important things to do? Lack of understanding? I give up.
Why waste anyone's time disseminating what will be shown to be important information?

[parsley]

Even if we get discouraged when there is little
response, we can still share our information with
a willing heart. Not begrudging. Willing makes us
feel good. It makes the reader feel good. I
appreciate the information you post, oneoff, and
the ideas you present. Even if we don't
thoroughly understand, or agree with each other,
as, for example, Will and I often don't, the ideas
are what makes for a good conversation that I
so enjoy reading over my morning coffee. Pars

[ColevilleH2S]

You have to remember the number of resposes to a
post is not a clear reflection of either interest in the
information, or the number of reads. Some days I
will read 50 posts on various sites and not respond
to a single one. Other days, I spill my guts;-)

[ColevilleH2S]

Alcohol consumption may be a determining
factor.Lol.

[Ronski]

I've sold over half of my feedgrain through Newco the last couple years. Fortunately for me last year I contracted, delivered, and was paid well before the wheels fell off. I'm not sure what/where I'm moving my grain this year (having an open market for milling grade wheat is going to change a lot).
I'm much more aware of the risk and may end up moving my entire crop though the traditional elevator system.
I've had a couple problems over the years, once with a neighbor hog producer (who made good as his cashflow permitted) and once with a feedlot that just about ended me. Both nice guys were trying hard, both within 6 miles of my place. If you can't determine your neighbor is credit worthy how can you determine if a broker 300 km away is?
It might be safer to deal with Viagra and take the dockage/grading/hauling issues. At least your cheque is good.

[oneoff]

I enjoy a good debate, conversation or even an argument. But when it appears that one is having those conversations with only oneself; then it is reason enough to spend time on other pursuits.
Thats why feedback or some sort of comment is essential so that a person knows they are not just being ignored.
Thanks for the comments.

Part of the Newco news is that it will now be late August before the CGC determines the percentage bond payout. I was told it may be about 95 to 97% the way it looks now. There is a class of claims that are being asked for further documentation; and of course in todays age; we have to give everyone more time than they probably deserve.

Spreading common information is a two way street. It would be productive if everyone told what they know; and express what they think; because this Newco case study is not the only example of farmers being initially stiffed with a 100% potential loss.
For instance in South Dakota; there is a recent news report that unsecured farmers got an 8% payout. And there are further South Dakota collapses that happened less than 2 months ago.

Are farmers ready to get credit applications; analyse the financial statements of brokers; and their buyers etc. This is about serious financial transactions; and farmers are obviously not up to speed.

As for dealing with Viagra or the supposed big line companies; just recall that there was a certain day in January a couple or three years ago when those cheques were at equal risk..

We live in more perilous times that we are willing to admit; or even know about.

[westsider]

I can not believe NEWCO is still in business! Sending out news letters, soliciting grain from growers, etc. Each and everyone of the growers that sells to this company going forward is doing every other grower in the industry a disfavor. As growers we are saying "It's O.K. Newco, you caused millions of dollars of hurt within our ranks, because of no other reason than your pure greed. But hey, here is my grain please don't let it happen again."

And the message we are sending to other buyers that it is OK to treat us like this is a travesty.

If you hear of any growers selling to these guys please post their name on this website. THESE GUYS ARE A JOKE!

[charliep]

A comment today from a broker is no one including (including the big grain companies) will speculate on this market. Farmers aren't selling. Grain companies will not make offers to end users unless they feel they can buy from farmers at a margin (want to back to back their sales). Feedlots aren't in a big hurry to lock in supplies (slower summer feeding period/shell shock prices/deferring fall placement decisions). ICE Futures Canada barley contract with limited volumes. More farmers wanting to deliver to grain companies for payment security.

Implications.

1) Grain companies more tempted to do unit train business off west coast to Japan or south to the US. Smaller local livestock type feed business may suffer.

2) Volatility in the market will reek havoc on any end user or merchandiser who doesn't understand and/or manage price risk. Speaks to some of the issues you have raised oneoff. 2008 took down a couple of major ethanol companies.

3) Potential large loses/financial pain as the livestock industry right sizes to the feed availability. Losses speak to potential challenges in getting paid regardless of due diligence.

It will be a time of being aware of who you deliver to and their ability to pay.

[oneoff]

From the farmer's perspective..........payment needs to be immediate since the grain is gone from the hands of the farmer as the truckers lights disappear within minutes. A contract should be completed for feed grains when a certified scale net weight is available (or a certified scale weight at unload). For sales in Western Canada this typically is all completed within a few hours at a feedmill or feedlot. Quality agreement should be agreed/ disagreed at unload. Any longer period beyond a day for cutting the cheque is an unwarranted delay.

Any disagreements on quality or weight could then be brought to light within hours; and cheques or deposits made within the same time frame. This would prevent getting behind with multiple loads and still no payment received by the farmer.

It is BS to be putting up with 10-20 working day payment schedules; plus postal delays and 5 day cheque clearing on top.

And price volatility can be a good thing for farmers. Just who in the industry doesn't want ups and downs so they can make some real money over and above handling and elevation.

Blending and contracting and taking advantage of farmers needing cash flow, pending payment of chemicals and inputs from the same firms as the grain purchasers; need to clear out old production and offering reduced prices during times contracted production is being accepted are some of the areas where I suspect grain buyers have the highest margins.

[oneoff]

The industry needs to look after being fully bonded. The grain purchasers need reserves or bank credit to conduct their business as they see fit.
And don't try to suck farmers into being responsible for how some other person wants to run their business. Else we might just demand some say in how those businesses are run.

[Burbert]

What was that old saying "There's a sucker
born every minute" Go comedian framers
goo, you've now got a level playing field!

[Ronski]

Its weird, I did a quick google search on newco and got 3 results. 1. various threads from Agri-ville on this issue. 2. Newco website and 3. Grainscanada.gc.ca saying that as of May11 there were no longer licensed.

Did this not make any newspapers? Either there is only 1 farmer involved (oneoff) or its being buried? I would definately consider it newsworthy and I'm getting curious about what actually happened.
It could be as simple as shuffling paperwork and the bond was temporarily suspended due to banking issues. (It doesn't sound like that though).

Anybody have actual knowledge? I'm going to check with Newco when I get back to Alberta but there are always at least 2 sides to a story.

Thanks

[hobbyfrmr]

ok the cat is out of the bag, dont sell to these guys for the sake of risk.
Next step. Google, how to do a credit check on a company. then PAY to do the credit check on next buyer of your grains. Farmers are so cheap, they wont spend $250.00 on a credit check on a company they plan to sell to, then wonder why they get burned for tens of thousands. Oh well, blame the others.

[hobbyfrmr]

http://sbinfocanada.about.com/cs/management/a/
creditcheck.htm

[oneoff]

And I haven't seen the newspaper coverage other. That is probably a story in itself.
And it isn't one person who is still currently out of pocket their full amount due. It is 150 souls who have filed as claimants to the CGC.
And either everyone of those 150 who reads agri-ville is either too ashamed to speak up; or for whatever reason don't realize that other brokers, even licenced companies, truckers and yes even the Canadian Grains Commission didn't see this coming.

And what is horribly wrong is that there isn't one iota of evidence that anything is seriously being considered to prevent a reoccurence.

And just maybe Newco better protected its customers than a whole lot of brokers; feed users and traders who haven't yet got themselves into various financial predicaments. That should be troubling to everyone else.