Farmer fixed prices durum on july 9/07 for 5.87. He delivers today. He knows there is a 1.70 frieght and handling using my area that is what it is. Farmer unsuspectingly delivers more to fill his contract. When all is done he asks for a check and then finds his durum has graded feed. The feed discount is 5.26 per bushel. He delivered 20,000 bushels. Instead of getting a check he gets a bill for 21,800 dollars. Is there something wrong with this picture??? It is not me or anyone I know and I do not know if it has happened yet.
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Farmer owes CWB money after delivering durum
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In my mind, the farmer should know the grade upon delivering. From CGC site:
When you deliver to a licensed primary elevator
Get a ticket or receipt for each delivery.
For each load of grain delivered, the elevator operator must issue one of the following Canadian Grain Commission-authorized documents:
* A cash purchase ticket
* An appropriate elevator receipt (primary, interim or special bin)
A scale ticket is not an authorized document.
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This is the cost of doing buissness. If you are going to take the gamble on forward pricing before the crop is in the bin and quality and quantity is known. There are risks for loss as well as profit. I wonder if this farmer would be sending money back if the price of grain acctually fell and it turned to be a profit making gamble.
The way I look at it, is, tools are tools some times they do a good job for the task some times they don't. I hope said farmer hung on to some good durum so the profits in the good market will off set his losses on the not so good.
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Folks.,..
If this were Canola... we would not be having this discussion.
On Canola... IF I am honestly short production... by some weather problem...
OTHER than ripping off a grain co... to pocket extra income...
The Canola marketer will bend over backwards to work through the problem.
They want and need your business next year!
What is the CWB "Act of God Clause" about?
A rip off. These CWB people don't care or even want to work for my farm.
Other wise these feed/#4 Milling discounts on PPO's would not be there.
It should be a simple... if it doesn't make a milling grade... we won't accept it!
Pay $3/t and that is what the a big chunk "Act of God Clause" should be there for.
The CWB is not doing this business to HELP GROWERS.
THis is a scam... and a bad one at that... reminds me of the 1993 fusarium scam.
Theft is wrong... the CWB is doing the inexcusable... taking advantage of people who have been hurt,... kicking some grower who is down.
On election years they let folks out of contracts. Paid growers for positions that bought votes.
This system is corrupt. It is unfair. It MUST CHANGE.
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In this example, there is no mention of short production. Just delivery of low grade. Either the elevator company or the farmer made the miss grade and tried to get it into the quality of the contract.
The CWB does not see the grain, they do not grade it.
Once again this shows how valuable it is to know your quality before offering your grain for sale or accepting settlement.
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wmoebis,
An "Act of God" clause that covers the lack of delivery... is as important for quality as it is for volume. Weather causes both. Both must be considered.
Crop Insurance covers quality, most Canola Contracts cover quality, many IP contracts cover quality short falls. The CWB can easily cover off quality just as well as quality... I
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Not here to actually defend the CWB, but this scenerio is actually more an issue with the farmer not doing a proper job of ensuring what grade the CWAD is. Most of the line companies around here will look at blending grain up to help out with the situation.
Also a quick phone call to the local CWB rep, and they will help you figure out if you are better off to buy your way out of the contract or to just take the hit.
Lastly, why would anyone ever want to take an FPC out on Durum. That just guarantees that you don't make as much as you might get out of the pool.
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terralex,
We (And the CWB) should be striving to lower risk for growers... not make it worse.
PPO Fixed Price Contracts are designed to raise the risk to growers... and make Pools look good... no question.
The lesson to be learned... the CWB talks these contracts up... then the fine print and tricks kill you! Forcing people to price before quality is known... is a CWB trap with all the deadlines that are arbitary and make our risk increase.
Cash prices/delivery opportunities year around are needed.
The pool "protected at all costs" thing is absurd.
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My reason for initiating this post was to show the risk involved. Also to show some of the unfairness. Since number 4 and 5 durum can be delivered against the fixed price contract there should be in no way that the farmer should be in a negative situation after making delivery. A similar or worse situation will still be the case if he buys the contract out and delivers into the local feed market. It is the boards full responsibility to make the best possible return for the farmer in this case because they set the prices and the deductions for lower grades. The number 4 or 5 durum should still net him at least a competitive feed price, a difference of over 100,000 dollars. I believe grade discounts should be adjusted for the lower fixed price contracts.
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