Part Deux

[hobbyfrmr]

One off,

You can do an equifax search on buyers. The
accounts receivable insurance companies do a
credit check, fee for service and qualify the buyer
you want to sell to. If the company does not
qualify as a financially sound buyer, the insurance
company will not cover the trade.

I do agree with you the real fact of the matter is
the Canadian Grain Commission has failed to do
it's job, and following the trend of the times, no
CGC employees will be fired or reprimanded.
I have to know my sales are protected. My farm is
too small to lose money on someone else's
incompetence.

[oneoff]

But its that 10% deductible (cream off the top), plus the 1% plus premium that should have been all 100% profit(if there was any profit to be made)

Since few people's rates of return on investment is anywhere near that in the long haul; anyone could still get stung pretty hard; by a series of insolvent buyers (insured or not).


This is encouraging buyers to ignore their fundamentals; because someone else is covering their premiums.

And farmers are accepting any and all premium increases; and might as well budget in a 10% loss on those debts either through premiums or sucking it up as a cost of funding someone else's bad business.

You don't see buyers backing up a farmer's bad deal do you?

Don't be so desperate.

[hobbyfrmr]

The 10% loss is if the buyer defaults. Buyers
have to qualify for the insurance. If the buyer does
not qualify, then I do not sell to them. That is the
first line of defence. I guess you can say I am
over paying for peace of mind. I am satisfied with
my actions, I thought it would help other farmers
do the same.

[oneoff]

Everybody can qualify for insurance. Volunteer to pay a full premium equal to an insured 90% payout and everyone would qualify. Its all in the risk the insurance company anticipates; and the premium it sets to protect itself.

For instance, the old story I remember was that Lloyds of London would provide a policy for those concerned with the possibility of "accidental" pregancy.

Would that premium have been 1% or somewhat more?

I fully understand and sympathize with one's need to protect themselves from sellers default on payments due. Thats a real problem at the present time; and you ain't seen nothing yet. Just anticipate financial cliffs and the several countries which are obviously insolvent. Then the knowledge that they will bring down some more; and it does get scary. Simlarly one business failure; can bring down another in a snowball fashion.

And is that not a real situation that may well, some day be a real possibility.
But to roll over and take on the responsibility (on an industry wide basis) is but an invitation to no one getting paid on delivery; because it will be become standard practice for everyone to rely on the insurance coverage.

And that premium will come straight out of farmers pockets

And that premium will rise; because there is no incentive to pay on delivery; and the losses will be looked at by the insurance company on an industry wide basis.

And worst of all; you either quit asking for immediate payment or you will be the last person on the list to sell your grain.

So it just isn't those who are forced into the insurace coverage way of ensuring ONLY a PORTION of what we all deserve UPON DELIVERY. This sytsem guarantees any payment SOMETIME IN THE FUTURE AS DETERMINED BY A SELLER AND INSURANCE COMPANIES.

That money isn't owed in the future. So why is any farmer working to make that happen. Don't roll over and pretend that this is the answer to being paid.

[wd9]

Anyone used PayPal For grain sales ? Cheaper
then insurance.

[hobbyfrmr]

Wd9,
How does it work? If buyer through PayPal
defaults for..umm......$80,000, how do you,
collect? Is there some way for seller to prove the
money is truly in place?

[wd9]

No idea. It's why I asked. What ever happened to
the clearinghouse concept that Carmen Reid was
working on?

[oneoff]

Every so often a really really good idea floats to the top. Most of us have heard of eBay and Paypal and their combininations of business ideas have been phenominally successful.


Why you ask is this a topic that should be allowed to be in Commodity Marketing? Well I would suggest that is not just one idea but a host of simple workable checks and balances that give confidence and a system that just keeps reinforcing that confidence with one layer of protection after another.

But before the attention span is exceeded for the readers who can't tolerate any post more than a sentence in length, here is some information from the eBay site that is very pertinent

"Business Equipment Purchase Protection
In this article
How your purchase is protected
Quick answers about the purchase protection




eBay Business helps protect buyers against fraud and misrepresentation of items purchased through our Business Equipment Purchase Protection program.

How your purchase is protected
Your capital equipment purchase is protected for up to $20,000 or the equipment purchase price, whichever is lower. This program is free on all eligible capital equipment transactions completed on the eBay Business site with a final price of at least $1,000.

Quick answers about the purchase protection
Question
Answer

What does the program cover?
The program covers purchases of capital equipment against deliberate misrepresentation or fraud on the part of the seller. For example, you're covered if:

You pay for an item but don't receive it

You receive an item that has undisclosed damage, and the item was described as being less than 10 years old.

You receive an item that differs in type, make, or model from what was described in the listing.

Learn more about what's covered.

Additional eligibility requirements apply.

Which items are eligible?
To be eligible, an item must be purchased on eBay Business in one of the following capital equipment categories:

Agriculture & Forestry > Tractors & Farm Machinery

Construction > Heavy Equipment & Trailers

Healthcare, Lab & Life Science > Imaging & Aesthetics Equipment

Industrial Supply & MRO > Forklifts & Other Lifts

Manufacturing & Metalworking > Manufacturing Equipment

Manufacturing & Metalworking > Metalworking Equipment

Printing & Graphic Arts > Commercial Printing Presses

Restaurant & Catering > Concession Trailers & Carts

How long do I have to submit a claim?
As soon as you notice a problem, contact the seller. Direct communication often resolves issues.

If you and the seller are unable to come to an agreement, you can file a claim.

You have 3 days from your receipt of the item to either contact the seller in writing or file your Business Equipment Purchase Protection claim. Your claim must be filed within 45 days of the listing end date.

Claims that involve undisclosed liens on the item or a stolen item can be filed up to 6 months from the end of the listing.

Who provides the coverage?
Claims filed with the Business Equipment Purchase Program are investigated and handled by a third-party claims adjuster. This third-party provider has been in business since 1953, pioneering unique insurance programs specifically for the auction industry."


End of Quote:

Some may pick out that the eBay seller covers the costs of any insurance premiums and it might be logically argued in the case of prairie farmers (the seller of his grain) should then be responsible for arranging the coverage and paying the costs.

BUT THIS ANALSIS IGNORES THE IMPOTANT OBVIOUS DIFFERENCE THAT IN eBAY TRANSACTIONS: THE SELLER HAS ALL THE BUYERS MONEY UPFRONT AND INITIALLY THE BUYERS GOODS IN HIS HAND. In the case of the farmer's grain; the seller has possession; and hasn't paid a cent and maybe can't/won't ever settle up.

BIG DIFFERENCE.

But the eBay and Paypal principles of buyer and seller "feedback" and "Buyer protection are good ones and could be simply adapted to our farmer payment situation.
If dealing through "brokers"

ie. a "broker" has been engaged and been given the authority to act on your behalf. The courts will/would point out to the farmer that the principle of "estoppel" surely applies (see another older topic for this explanation: or alternatively check out for yourself how this applies)

Thus I would argue that this "insurance" is then within the brokers juridiction and the that being a part of the "broker" or "grain dealers`` business; it should be legislated that that protection is in place one way or another; and paid by a negotiated or agreed agreement before any sale was allowed to be made.
Maybe the above farmers option should be rolled into the suggestion in the next paragraph; and then brokers, feedlots and seed growers would all be include in the definition of a `grain dealers: with no exemptions permitted.


A farmer selling his grain to any "grain dealer", transfer,process or primary elevator must deal through one "clearinghouse" ( maybe even the CGC back stopped and supported by the Federal government who would be responsible for collecting the "premiums" from the purchasers for the sole reason that they hold the goods and haven't yet paid. The sellers are the ones at this stage that are the security risk; and certainly not the farmers who have already lost possession of their grain and not yet been compensated in any way.

The CGC and Government are already setup; this simplifies the process and we should admit that farmers, on the whole, don't want that job and honestly would probably do a pretty bad job overall. That's not to say that the CGC and Government couldn't do with some significant retraining prior to being given those new responsibilities.

And to repeat, there are many that can attest that "eBay buyer protection plans" work like a charm for the automatic coverage for usually smaller purchasers, but I personally know its benefits for a $3100 purchase only a few weeks ago. When disagreements arise, you get deserved attention and suddenly everyone becomes a reasonable person and an amicable solution can be reached in hours.
And start thinking from the basis that unless you are a banker or a farmer ..........

The seller has every last cent of the purchase money, plus hasn't yet released the goods the instant the deal is made. AS FARMERS WE HAVE NOTHING BUT AN UNSECURED PROMISE and YOUR grain or "machinery" is gone and probably couldn't be retrieved.

.

The amounts covered are not necssarily limited to $2000 for most generally smaller ticket price items. The instance of $20,000 has been documented above for eBay "machinery purchases"; and a deal with someone like Atradius or their competitors might be negotiated for any protection willing to be paid for. And it shouldn't be for $350,00 coverage. The object is to get paid before/just after the first load leaves and not GET ON THE HOOK FOR A MONTH'S DELIVERIES.
How a system could work should be looked into by each one of us. And we should report back to others; because it just might be a workable template for the prairie farmer's grain deliveries.

There is even the possibility that it should be the alternative that the Federal Government should impose on the trade when the CGC bonding is wrapped up and replaced by something that has yet to be fleshed out.

And please tolerate the reposting of this as a new topic if this becomes buried in the Commodity Marketing Topic List.

[oneoff]

Prairie grain transactions are so out of sync with eBay and PayPal transactions ; that there is no way to even enter such a tranaction.

Lets try though

Ebay seller (ie. farmer) advertises 1000 bushels feed barley at Buy it Now`` $5.00 per bushel.

Puritone accepts offer.

But deal is they use PayPal, or maybe certain money orders (althogh Buyer Protection may then be forfeited by Puritone) to transfer $5000 to farmers account. Are you starting to catch on that Puritone doesn`t pay upfront to anybody, so at best this contract is going to end with the farmer paying the listing fees etc and Puritone gets a deserved stike for an unpaid transaction.

Now what `Buyer protection `should kick in. The buyer renigged, and it would be pretty twisted to claim he deserves any compensation. The farmer seller might file an ùnpaid strike`to warn others and Puritones eBay rating would fall a bit.


Thats extremely useful to warn other farmers about experiences other have had with that buyer; but for that farmer seller it was all a very bad experience except for the comfort in realizing the bastards didn`t get to steal 1000 bushels of barley.

Maybe that was extremely important.


Now lets say the tranaction wasn`t posted on eBay and the seller wished to be paid through Paypal. So if the money was sent to PayPal by Puritone; and is in the farmer`s account, then what problem is forseen by the farmer. Well thats a case of possession is nine tenths of the law; and the farmer is a whole lot better off than being out the grain AND not being paid for it

[dave4441]

Here's the problem oneoff. 99.9 percent of the
grain that is bought is paid for properly. To think
the retain industry needs to be loaded up with
costs, to protect 100 percent of the sales, 100
percent of the time is an dumb. Sucks when you
are part of the percentage that has a loss, I get
that, but this is business and nothing is perfect.
No other business in Canada is given any
protection on AR. The other issue is that farmers
often will not generally allow any cost or levy to be
charged to them for this guarantee. When's the
last time you paid for your chemical or fuel when it
was delivered? Should the agri retailer demand
100 percent payment up front. Maybe in some
cases and I would think a discount would be in
order. Negotiate your payment up front and don't
be afraid to taken discount as well.

[oneoff]

Here's the problem oneoff. 99.9 percent of the
grain that is bought is paid for properly. To think
the retain industry needs to be loaded up with
costs, to protect 100 percent of the sales, 100
percent of the time is an dumb. Sucks when you
are part of the percentage that has a loss, I get
that, but this is business and nothing is perfect.
No other business in Canada is given any
protection on AR. The other issue is that farmers
often will not generally allow any cost or levy to be
charged to them for this guarantee. When's the
last time you paid for your chemical or fuel when it
was delivered? Should the agri retailer demand
100 percent payment up front. Maybe in some
cases and I would think a discount would be in
order. Negotiate your payment up front and don't
be afraid to taken discount as well.

I speak with 100% certainty for myself only.
Maybe credit applications are not in use where you come from. Maybe your coop and line elevator company doesn`t push that paper. But I sincerely doubt it.
Maybe no one in your area noticed that accounts at the machinery dealer are paid for by plastic with a different logo than the dealership; and almost all transactions elsewhere are on a dozen different credit cards. Otherwise why does consumer debt increase every year; and is at an all time high. Maybe there is a country or province without debt; but they are indeed an extreme rarity.

None of those statistics necessarily means any person or entity is on the right path.

And if you don`t conform, there are difficulties for persons to get their first cellular phone contract even though they could write a cheque for a substantial portion of the companies shares. And the person with no credit history; (and coincidentally no debt history) condemns themselves until they change their ways. In my books those rare persons are found to be the most trustworthy.

If you do not forward contract; take payment terms as spelled out to you; do exactly as you are required to do; and as you are told; and conduct your deliveries and marketing at the convenience of your limited purchasers; you have limited your opportunities as a supplier to when none other can be found.

And if that is how it is `paid for properly`; then I am happy for you.

I offer 100% payment up front; and only when the retailer refusers does this not happen. You are correct that a discount should apply in such cases. And I find that that is best how to never be required to fill in any credit application; which I never have and never intend to do.
The fact is that retailers are more and more turning their accounts receivable over to businesses strictly in the financial field. Over that I have no control; but have you noticed the last time when being not being first asked what charge account you wished to use.

Outside of debit cards; people don`t tend to carry but enough money for the smallest purchases. Not my choice though.
And when your long term return on investment or capital (especially in real terms) is of the order of a few percent; you can not continue to lose 10% on what you bargained for as well as pay for insurance and bonds that some other business man really need to cover their poor financial decisions and inadequate financial foundations.

[TOM4CWB]

Oneoff

We have set up PayPal accounts to accept payment.
They are simple to set up and low cost. Visa and
Mastercard are also alternatives. OR... just require a
Bank Draft... OR just sell and be paid for one load at a
time for domestic sales. When dealing with Cargill... I
consider the transaction as risky as dealing with PayPal
or Visa. I may consider a lower price from them...
simply because of PAYMeNT security. We all have
different thresholds for risk... and are rewarded many
times if high risk sales work out. Then there is a pool
of funds from these sales... that then give confidence
in doing more high risk transactions.

I do NOT consider it reasonable that the taxpayer
should be on the hook for the risk of these high risk
business decisions.

Cheers