Record deployment!

[Richard5]

It is still shark rate financing and to those that are using this alternative obviously have no other source of financing

The really sad thing is if these farms have to turn to this alternative and had a small amount of equity, there is a good change 50% won't survive and all equity is gone.

Maybe some of these operations should have looked at a wind down/sell off or write down of debts to try and minmize the loss going foward.

[Oliver88]

Here is the Input Capital president on BNN.
They put up $300 for inputs upfront and pay farmer $75 at time of sale.
There is a 6 year contract.

http://www.bnn.ca/Video/player.aspx?vid=337433

This sounds like a TERRIBLE deal.

[Klause]

I'm not saying it's good bad or otherwise...

Just playing devil's advocate.
So you get $375/tonne using your numbers, which are lower than what I understand they are... but anyway. That works out to $8.50 a bushel.

Guaranteed for 6 years.

If you took the money, put it into an investment, and you sold 6 or 10 bushels an ac of canola at $8.50 is that so bad?


We are looking at cash canola this fall being way under 375 a tonne with the massive US/SA soybean crop.


If canola were $500 a tonne, yes you would be selling for way less, but that's a risk you're taking in the market... and you can hedge that with calls/puts.


With our volatile market.... and no ability to deliver.... you basically have the cash in your pocket, and the headache of delivery is someone else's problem... Doesn't this SORTA sound attractive?



I know of at least one guy who took an Input deal simply to stash the cash.

[iceman]

Negative slider
A 50% survival rate would be at the low end of the scale.

A farmer who does one of these deals to help finance some land purchases will be the first to get culled.

It's just amazing how in a easy credit decade with increasing asset values they even lend out 1 mill let alone 80mil

Clear for departure

[iceman]

Klause $375 first year after that it's $72 per mt for the next 5 yrs.

Feel free to tell us how we can invest the cash to make more than that loss.

Late

[Oliver88]

There is no way to argue that Input Capital is a good deal unless you think canola will be in a long term bear market and average under $375/tonne for the next 6 years.

The best input financing program available is CCGA, second best would be secured line of credit.

[Richard5]

Input capital makes as much sense as those that use grain bags and never clean them up.

Took highway 5 home the other day from Saskatoon as I heard about this guy and grain piles and now bags that never cleans them up - Wow, what a waste