Be VERY careful to read what you sign!!

[FarmRanger]

This is an excerpt from a contract that a company actually expected me to sign. The name of the company was removed to protect the guilty.

________________________________________
“15. Breach of Contract.
a. If the Producer breaches this Contract by failing to deliver the Contract Tonnes of Barley at the times and of the Specifications stipulated in this Contract, the Producer agrees to pay to CMC, on request, damages for any portion of the Contract Tonnes of Barley not delivered to CMC. The damages shall be equal the difference between contract value and replacement cost of the Barley <b>plus liquidated damages in the amount of $75.00 per metric tonne representing a genuine pre-estimate of the administrative</b> costs and other costs associated with sourcing an alternate supply of Barley.
b. <b>If the Contract is breached by the Producer for any reason</b>, <i>XXXXX company</i> shall, in addition to other remedies available to it, be entitled to a temporary or permanent injunction to prevent further breaches of this Contract; or an order of specific performance.
16. Liability of <i>XXXXX company</i>. <b>Notwithstanding</b> any other provision of this Contract, <i>XXXXX company</i>, <b>shall not be liable</b> to the Producer for special or consequential damages arising directly or indirectly from (i) <b>any breach of this Contract, fundamental or otherwise,</b> or (ii) any negligence or other acts or omissions of <i>XXXXX company</i>.”
________________________________________

Is this a bad contract or what???? They even put in their own Quebec style notwithstanding clause that allows them to breach any fundamental part of the contract. Wouldn’t the agreed purchase price, or actually taking the grain be a “fundamental” part of the contract? Is this actually even a contract, as it totally removes the farmers ability to enforce the other side to live up to their obligations??

Needless to say, I won’t be signing it.

[ajl]

The great thing about the post CWB era is we go from being screwed
by both the grain companies and the Wheat Board to being just
screwed by the grain companies. These one sided contracts are
getting scarier all the time.

[boarderbloke]

Thanks, FarmRanger, good heads up.

[DogPatch]

This was likely the SAME contract that the CWB had to sign. With the "POOL" they knew that there would always be enough grain SOMEWHERE in Western Canada to fill the contract. NOW, who ever signs the contract, has to find the grain contracted in their own bins or else.

[sumdumguy]

Contracting unharvested grain is dangerous
business for both sides. Farmers who have
locked in a price are known to reneg when grain
prices rise and dump theirs and their neighbours
when prices decline. So you see the problem with
fixed price contracts. I believe that if you want to
sleep well at night, dont sell something you dont
own yet.

[cottonpicken]

It makes scence for them to do that.

And i hope to god people understand the risk side of
forward selling something like canola,losing the
crop,the price sky rocketing and them having to pay
the spread,driving prices higher.

[farmaholic]

FarmRanger: Is the capitalized acronym in
first paragraph of the contract and the
type of grain they are talking about
enough of a clue as to whose contract this
is? I didn't see the need to leave out
anything, I'm assuming this is a contract
available to anyone who would want to
contract grain to them.

[mbratrud]

Canola and Wheat can be hedged. The extreem risk of these contracts is Malting Barley (by far the worst IMHO) Flax and Durum. You could be playing with fire. Will only consider pricing these if a Historic price, contract with a company I trust and can work with. These dangers have always been there even when the friendly neighborhood CWB was there to protect us, or absorb these cost and dispurse them across to all farmers.

Another thing to remember you as a Farmer are always the first to know of your production problem. Be proactive do not wait until after harvest to say awww gee Mr. Grain Co, I can't fill my contract.

[mbratrud]

And Farmranger is right... ALWAYS NO MATTER WHAT READ YOUR CONTRACT. I like to have them faxed or emailed so I can look at at home v. in the buyers office, as they stare at me waiting to sign.

[wmoebis]

Does anyone know if the variety
declarations we sign are the same with
every company?

I wonder how many farmers even read them
and understand the ramifications of them.

[wilagro]

FarmRanger:Grain companies are doing what they have been doing for eons...and that is FLEECING DUMB FARMERS. Get over it and either sign or refuse to sign.
Why should they take all of the risk?...either you have the grain to fill the contract or pay the penalty.

Not much different than the Mafia or the drug dealer who gets shafted...comes the revenge if you don't settle up.

At least the CWB would sometimes forgive the farmer if they delivered most of what they contracted for or wait for the next crop year's production.

You are now dealing with the WOLVES and you are the INNOCENT LITTLE LAMBS...put up with it.

[BTO_farmall]

Now Yous Know Why Ain't Sign Contracts. Oh n' If'n Did Sign, Losed The Crop, Price SkyRocketed, Tell em' Ta Come on Down n' Collect The Spread, We'll Be Waiting!!!!!!!!!!!!! ))))))

[hobbyfrmr]

Thanks for the heads up Farm Ranger.
My guess is,CMC sands for Canada Malting
Company. No matter, if its offered to producers, it
is public domain.
You get fleeced if you don't read what you sign.
You can modify a contract, or write your own
contract, then have the two parties agree, and
sign.
I have been on both sides of selling to companies
and buying from farmers. I have to say I really
don't have much regard for any farmers' integrity.
Many buyers/companies have been burned for
millions and the farmers that flake on contract, for
a better price, walk away with more money
thinking they deserve it.
This is the reason why buyers have such a one
sided contract. I don't like it, I don't agree with it
and I would never sign that particular contract but
that is why it's like that.
I normally pre sell 20% of new crop production.
Last fall, the spot price from a reputable
competitor was $2.50/bushel more than my
contract. I delivered on the contract. Sold the rest
to competitor. It was pretty awesome, my
neighbour told me to sell only half, then, tell
contracted company I am short due to flooding
and use the act of God clause to get out of it.
Then, sell the other half to competitor. No one is
the wiser. A shining example of he way some
farmers think.

[hobbyfrmr]

It has been 6 years since I got burned, I should
really get over it! The trouble is, that "little" lesson
soured me on farmers.

[FarmRanger]

I've read small print before and noticed that contracts are usually one sided, and sometimes for good reason if farmers themselves have unscrupulously wiggled out of their end of the deal.
This contract was so outrageous, I'm not even sure if it should be called a contract, as only one side is actually obligated to it. Worse than anything I've ever seen. That being said, I doubt the company would ever exercise their full rights to "fundamentally" change the contract, as the fallout from doing so would do more damage than any short term benefit derived from doing so.

Like hobbyfrmr I've also delivered on contracts even when the price outside the contract was higher, but a deal is a deal. Period. Damned cheats and crooks wreck it for everyone.

And Wilagro, I'm not forced to sign the contract, but I can still grow the crop. This fall I can sell to anybody I want without the threat of a jail sentence.

All I wanted to do in the original post was warn everyone to a possible pitfall, not start a rant. Hopefully if enough of us refuse to sign these one sided "contracts", things will change.