Cranston grain, Trevor Schulz, screws farmers

[poorboy]

The farmers that fail to deliver should also pay up.
They signed a contract and it doesn't matter if
they hailed out, drought, fire, snowed under, etc.,
they have a contract and should be penalized.

Amazing how many less than respectable
neighbors we have when money is involved.

Dont sign a contract if you are afraid of penalty.

[wd9]

And they brag about it at the coffee shop too.

[Agfinity]

What Mike2001 says is true.

Agfinity spawned from the death of a major, clumsy disaster. While Mitchell Grain, Newco and Cranston all faced different struggles in remaining profitable, one similarity was that they traded to the beat of the drum set by their most trusted brokers. When I started selling seed for Mitchell Grain in 2008, they and Newco were among Ag-Value’s top 3 customers. How did two of their top customers get driven into such humiliating financial ruin?

There are several reasons why these grain resellers are going out of business in rapid succession; one of them being that many of these companies have become reliant on trusted brokers to put on their sales. Using sales brokers to seize big opportunities and put on large, back-bending positions in markets that can rally against them in a heartbeat.

Now, I’m not saying Neil Slingerland of Newco, Gord Mitchell of Mitchell Grain, and Trevor Shultz of Cranston Grain aren't to be held responsible for bad trading and bad business decisions, but I do think it’s important to share that a large part of their financial ruin stemmed from trusting too much. It’s a shame that the best way to mitigate risk in the open market, is to mitigate trust. Agfinity is at fault for trusting a preferred buyer of ours more than we should have. Mike2001 is 100% correct when he says credit checks are useless. Without insurance, you would basically need to know your buyer’s sales position to know if they had an offside position in the market. We didn't know thatNewco was 60,000 MT offside. We weren't the sales brokers who helped trade them into that circumstance. Brokers that are aware of the sales that they've put on for a reseller, like Cranston, know when all hope is lost. That’s when it’s time to gut them and leave them to die, all while they get their customers out of harm’s way, ensuring other producers, brokers and truckers take the fall in their place. After all, a trusted broker can only remain trusted if they protect their own interests.

The industry is being forced to change. It’squite unfortunate that so many need to lose before these changes come to fruition. We need to do better for one another. If a company is facing hard times, we need to be sounding the alarm sooner. Agfinity failed to discover in time that Cranston had developed an off-side sales position. Only a trusted sales broker could have made that assumption. We discovered that things were suddenly not looking good for Cranston on December 11th. We immediately informed a few of our producers that we had brokered for, prior to October 30th, 2012. No losses are acceptable. Not even one load. We understand that. Though we have been continually striving to mitigate risk, it is not possible to eliminate it entirely without insurance. We, like Market Master, have our best interest in hand for the producer. We disclose all known attributes of our buyers before any deals are put in place. Is any one person to blame in the game of getting the best price for the producer? We for one admit that we are responsible, that we share in the blame. There is too much on the line to simply let price outweigh security. If producers choose to turn their backs on brokers, they have their right to do so. But our goal is to partner with you. We want you to succeed, to make as much money as you can in this business. Our goal isn't to make big margins or a “quick buck” off of you. We want the best deal for you, every time.


Though there remain a lot of reputable buyers in this market place, most aren't licensed and bonded anymore. Like the insurance programs Tom4CWB talked about, we too are looking to offer this insurance to our customers. Agfinity is in this business for the long-haul. In tough times, changes are made, and we’re dedicated to fighting for these changes with you.

If you have any ideas (in addition to the insurance) that can help protect farmers and creditors, we’d invite you to share them with us, by emailing info@agfinity.com,
calling us at 1-888-969-5552, or stopping by our office just west of
Edmonton at 15B Alberta Ave, #D, Spruce Grove, AB.Right across from the
Fountain Tire, and near the UFA.

If you’d rather market your grain through an indestructible power house, that will let their feedlots and grain companies bleed-out, but protect you and their interests at the loss of uninformed truckers, brokers and producers, we’d invite you to email Mike, at mstapleton@agvalue.com. He’s been in this industry for 14 years. He’s trusted by many and will get you top dollar.

[AgValueGroup]

We were alerted to this thread and after reading through believe there are some good constructive comments. We take exception to the above post however so we will try and clarify.

"Mitchell Grain in 2008 and Newco were among Ag-Value’s top 3 customers." - FALSE

" companies have become reliant on trusted brokers to put on their sales."- FALSE

"Agfinity is at fault for trusting a preferred buyer of ours more than we should have`- TRUE

`Agfinity failed to discover in time that Cranston had developed an off-side sales position`- TRUE

` Without insurance, you would basically need to know your buyer’s sales position to know if they had an offside position in the market.`- TRUE

``If you’d rather market your grain through an indestructible power house, that will let their feedlots and grain companies bleed-out, but protect you and their interests at the loss of uninformed truckers, brokers and producers, we’d invite you to email Mike, at mstapleton@agvalue.com. He’s been in this industry for 14 years. He’s trusted by many and will get you top dollar. - If you are not informed but selling grain for a producer then shame on you!

AgValue Group 2001 Inc. has been in business for 12 years. Through those 12 years we are proud to say we have never had a producer NOT get paid in FULL. We would encourage any producer to ask the same question of their broker. It is through our relationships and daily monitoring of the markets, that we are able to avoid companies defaulting on payments. We do not feel it is our responsibility to manage other brokerage companies positions or risk in the market. There are always red flags before a company goes down...ALWAYS.

For that reason we did not have a single producer load of grain sold to Cranston Grain, Mitchell Grain or Newco Grain, nor did we have any truckers owed money when they went broke. This is called good management. Producers trust us to put them together with reputable buyers.

We are Cash Grain Brokers, as a broker we Trade from a seller to a buyer. The term SALES Broker does not even make sense.

Markets in the past 2 years are hyper-volatile and a buyer who was great to deal with 6 months earlier may not be stable now. Information like cattle on feed numbers, diversification, own the cattle or custom feeding, payment terms, outstanding payments, depth of position..... these are all ways a Broker can mitigate the risk for their clients. But you need to have the relationship in order to find out a good deal of this information. We are fortunate to have these relationships and they don`t come from ``letting them bleed-out``.

Ask your Broker these questions before signing, know where your grain is going.

We have no issue with our name being brought up in this discussion. We have done a better job than most at mitigating risk to our producer clients.

There are other Grain Brokers who had producers not get paid from Micthell Grain and from Cranston Grain, who took their responsibility very seriously. They actually paid the farmers themselves in order to preserve their reputation and relationships.

We would hope that any grain brokered to Cranston Grain will be treated in the same manner. The brokers who put the farmer in harms way should shoulder the responsibility and pay the producer what he was promised. If they do not, then what good is price discovery.

We will not be posting again but felt it necessary to clarify a fairly slanderous post from Agfinity.


Michael Stapleton
AgValue Group 2001 Inc.

[grainboy]

So if I have this right your tell me there was
brokers who paid a farmer when newco/Mitchell
went broke?

Who?

[wd9]

Good to see some companies posting.

So a good question to ask is why did
Cranston take in grain in the amount of
hundreds of thousands of dollars yet did
not pay out a dollar? Its called paying
off all your debt by taking from farmers
who can't touch personal finances, only
your broke corporation. Banks however
can, so take from the dumb farmer to pay
the bank.

No amount of relationships and knowledge
is ever gonna help you see that one
coming if someone is out to cash cheques
from where the grain was delivered to
but not pay the one who shipped it.

Like i started this post. My business
will change for every load. I will never
trust anyone will pay me even for a
load. I will have sellers insurance on
everything. Or i will have the cash
cleared in trust.

Broker, aptly named. They make you
broker.

[Agfinity]

Let me begin this next post with an apology to Michael Stapleton and the members of the Ag-Value Group.

As a member of Agfinity, I was quick to defend our name, and did so through an implicit backlash at our competitors. I've been thinking about this issue a lot this evening, and, if you're willing to read it, I would appreciate the opportunity to clarify my thoughts. This time - with a slightly clearer mind.

Agfinity has spent a lot of time and effort on creating a good experience for our customers. I would even admit that we have taken a fair amount of pride in it. We realize, more than ever, that we are not impervious to the problems facing this industry. We don't have it all figured out. We don't claim to. With astronomical cash grain prices and unpredictable futures, it only takes a couple consecutive errors to put a grain company in jeopardy these days.
Somewhere along the way, key components of this industry have been stripped of their authority. These components deserve better. The truckers deserve better, the farmers deserve better, the buyers deserve better, and heck, whether I'm allowed to group them as a key component or not, the brokers deserve better. If we can't all work together, then one thing is for sure. There will be winners and there will surely be losers. We've lost our authority in these turbulent markets and we need to reclaim it.

Now, if you think this hyper-volatile market has shook things up, hold on to your seats. Similar to all markets, the cash grain market is interconnected, like a house of cards. A few cards have fallen from this house over the last few years. And unless we repair the foundation upon which we all make a living, it's not really a matter of IF, it's a matter of WHEN this house is going to come crashing down.
No, I'm not looking to preach a doom-and-gloom sermon. You hear and read that enough. My prognostication comes from a bad taste in my mouth due to the current selling system. Like many have vocalized in this thread, the system is failing us.

How come?

Brokers and resellers? ... Without them, sellers could definitely stand behind their own marketing decisions and work directly with the end-user. Competition, however, definitely helps keep values honest and fair. Nevertheless, at least buyers would see bigger profits, right? ... I may be wrong, but I'm pretty sure that even if you removed brokers and resellers entirely, the risks would remain just the same. You can add the number of feed grain eating cows, divide it by the price of corn futures, ask your neighbour's opinion, read a marketing article, carry the four, and you still would just be making an educated guess on whether an end-user was solvent or not.

Security? ... Yes. This is definitely part of it. Unless you get paid for your product before its taken away from you, you're assuming a level of risk. Until the more recent availability of insurance, unreliable bonds have been one of the only security nets for producers.

Logistics & Limitations? ... In my opinion, this is one of the system's biggest detriments. If a hyper-volatile fire is set, how can we ensure that every producer, trucker, buyer and broker are safely guided out of the burning house if there's only one little fire exit? ... Or no fire exit at all. While most haven't had to walk through a fire, volatile markets are turning up the heat. A crash can happen in a flash.
The minute Newco, Mitchell or Cranston sent out letters explaining their fragile circumstances, they were essentially signing-off on their eventual dissolution. But to jump over onto the other side of the fence, is it even fair to blame the sellers who didn't fulfill their contracts with any of these companies? In hindsight, were they just doing their due diligence and exhibiting good management skills on their part?
Since contracts are legally enforced, what rights do producers have to protect themselves when they see a red flag? What rights do brokers have on breaking contracts on behalf of their seller if there are only red flags? Ultimately, if your suspicion isn't correct, taking away grain in a rallying market is going to do its damage. That wouldn't be fun to have a new crop barley contract unfulfilled when the market has increased by $1/bu. Try just 50 loads of that. That's one quick way to lose $100K... Seems like we could all use some clarity here. I would be interested to know the figures behind these losses, as this system is operating more like a pyramid scheme than anything else.

To quote Michael, "Information like cattle on feed numbers, diversification, own the cattle or custom feeding, payment terms, outstanding payments, depth of position..... these are all ways a Broker can mitigate the risk for their clients. But you need to have the relationship in order to find out a good deal of this information."
Ag-Value, without a doubt, has a handle on the cash grain buyers in this province. It would be a lie to say anyone else had more information. Nonetheless, as important as they are, I do question if these points of interest alone are enough to escape from a falling house of cards, unscathed. It is not our desire to see this industry fail. Nor do we want Ag-Value to have to compensate any of their clients in the future, or any other brokers or resellers for that matter.
It was uncouth for us to place irresponsibility on Ag-Value for not alerting us and others to the financial woes of a struggling cash grain buyer. We are their competitors. We understand that. I'd like to think that we would have been more vocal, but that's easier said than done. There's definitely a conflict of interest if you have relationship with both sides of a transaction. At least you'd think there would be...
Not including the losses that their customers may have experienced on ill-timed trades, Ag-Value has an impressive track record. And they've earned it. But, looking at the bigger picture, is this problem really just black or white? Is the secret simply exceptional management and a constant pulse on the buyer? If that's the answer to a risk-free trade, then maybe there isn't a problem after all. Who knows. Time will tell. And unless sellers finds themselves in the same boat, it's all too easy to look the other way. To take pride in our own relationships and decision making skills.

Though not completely necessary, I'd also like to shed some light on grainboy's question, from what we know, Quality Grain Brokers nobly repaid a sizeable amount to their customers that lost to Mitchell Grain. Though Quality Grain is another competitor, we agree that this act should be noted and applauded. And though it probably wasn't easy, they did it without exhibiting hatred and malice to the owner and decision maker, who, whether he meant to or not, abused their trust.
This noble act, as great as it was, in itself is circumstantial. How many times will a broker be able to pay for their buyers mistakes if this continues to happen? if buyers begin defaulting by the dozens?... Sounds ridiculous, but that's how dominoes fall. And until we demand change, it can be expected that history will repeat itself.

Regarding seller diligence, we agree entirely. Sellers need to ask more questions before signing their names to a contract. The brokers at Agfinity have never portrayed our buyers to be different then they are. Please ask us and any buyer the necessary questions involved in meeting your terms. We, as always, will tell you everything we know to be true. Who the buyer is; as well as their payment terms and attributes. Bonds are an increasing rarity. And until the entire market shifts to a risk-free system, we are here to help mitigate your risk as best we can.
Our relationships with our buyers are a big part of that, but producers need to also set their terms in order to reclaim their authority in the market place. If you're comfortable selling to a buyer without a bond, we have several great companies to connect you with. If you're not, we have several amazing bonded buyers too. And if you only want to do deals with guaranteed or insured payment, we're happy to make that happen, and will still strive to attain the best price possible.

We understand the mentality that has risen against brokers and resellers over the last several years. Your concerns are valid and you have every right to be distrustful of the system. When the cards fall, producers seem to end up at the bottom of the pile... But you know what, if we can't all work together, and share each others best interests, then what's the point?
You deserve security. You deserve great pricing. There's no reason you should have to sacrifice one for the other.
If good pricing doesn't matter, then competition is unnecessary. The open market comes with new risks, but also new opportunities. And good companies and marketing services are at your disposal. Feel free to use them. Producers shouldn't need to rely on one sole broker or buyer to manage their entire portfolio.
Putting your eggs in one basket can go two ways: Really Good OR Really Bad... Diversify. You deserve it. Same goes for truckers. If you only are hauling for one or two companies, will you be able to stomach the loss if one of them goes broke?

Someone should have to win your business every time. Often you will find the right opportunity yourself. Sometimes a grain company, reseller or broker will present you with the right one. Know your terms and stick to them! And if you believe that any one company can provide you with a dynamite, risk-free opportunity every single time, then by all means, you should give them the keys to your bins and head down south for the winter. Rumour has it, it's much warmer down there.

Look at the time. It's 3:30am. I would be sleeping, but I care too much to let you think we don't.

Jared Seitz
Agfinity Inc.

[mbratrud]

I would like to think that this was a trading error that resulted in a hole Trevor could not recover from and that he has personally not gained a thing and lost a lot financially and integrity wise. I like Trevor, I have not dealt with him since his Scoular days but he always seemed like a good guy. And hopefully if he is reading these messages he will bring himself to set the record straight.

Now all personal business aside, this kind of stuff needs to stop. Farmers need to stop selling to entities that are not bonded. If a broker offers you a price, make your acceptance pending approval of buyer and credit. I have often asked companies for financial references or even a copy of their financial statements before I sell to them if they are not bonded. If the won’t provide you with the information and your not positive of their financial situation don’t sell to them.

I am a fan of the insurance programs, but we need to go further, some of what is going on is a criminal act. If Trevor Schulz intentionally took product without any intention of paying, while securing his personal finances including paying for his trading errors there should be a Criminal investigation for fraud.

Licence and Bonding is there to protect sellers, it forces buyers to prove that they can meet their commitments, but don’t kid yourself it has its flaws as well. Ever waited for a Grain Receipt companies will play games to keep onside with Bond Requirements.

I live by a few rules personally:

1. Never send more than one load at a time to someone you don’t know or haven’t done business with.
2. Always demand your grain receipt, don’t let a day go by without insisting on your official grain receipt bonded or not.
3. Never sell to someone with a Net 30 Day pay period (to me this indicates they are running too close to the wire.) 2 WEEKS IS MORE THAN ENOUGH. That’s what operating lines are for if they can’t meet a banks requirements they shouldn’t meet yours
4. Never defer with a non bonded company and if you do defer insist on the deferred check being sent to you right away. DO NOT let them send the check at the deferred date.
5. Do your best to talk to your buyer directly on the phone at least once before shipping regardless of whether or not it was a brokered transaction, ask about their process.
6. Do your best to haul your grain yourself or hire your own truck. Anyone who won’t let you deliver your own grain isn’t worth dealing with. Understanding of course you may be paid a reduced rate if the broker has negotiated a back haul.
7. The unfortunate thing about these rules is sometimes you turn down an extra dime because the transaction fails the acid test so to speak, but you will get paid.
8. Be business like think about what a Car Dealer, Input Dealer, or Banker would require the $ of business you are about to do. If you are going to sell $100,000 worth of Grain, treat that transaction with the respect it deserves.

Finally even the strongest company can fail for reasons out of their control volatile markets in a struggling livestock sector have burnt many in the past and will in the future. Special crops and crops that can’t be hedged properly can be very difficult to trade. A small mistake can be made ugly in a very short time. As Farmers we need to mitigate our risk the best we can by treating our transactions with more respect.

Thats my 2cents

[oneoff]

You'd almost think that there aren't any grain buyers who have their finances in order enough to make reliable payment on delivery. Sure that involves reserves in bank accounts; or adequate lines of preaaranged credit or other financial arrangements for liquidity. That should not have to be a farmers business unless we want to take on every trouble that belongs to someone else. That attitude will not have happy ending in the long run.

Just why isn't it in buyers court to make sure he has the risk insurance in place for himself.

Farmers are being brain washed into picking up the pieces after someone else's failures in their business enterprise.

[oneoff]

That 20 plus working days payment schedule isn't in my books ever again. That applies to pulse plants who will some day sting some farmers for some big bucks. I'd understand if owners sold other assets than the limited company; but smart businessmen pretty well would usually be quick to protect the rest of their wealth.

It is good to hear that a rare few are honorable business persons. Too bad they couldn't be given deserved credit for their honorable actions. But hardly anyone will share their names with the public.

May he thieves and crooks at least get some punishment in their next life.