Leading Hoses to Water......

[oneoff]

In an effort to not offend those who see my posts as not "commodity related"; I have just posted a very important piece of information that affects at least 120 producers and quite probably several other businesses and their customers and so on around and around.

For those who care to look more than half way down the page of topics in commodity marketing; and pay particular attention on the right hand side of the page where the date and time of the last post for each of the topics is located.

Since this is "breaking news" and was just posted this evening of Nov 30; it is relatively easy to locate what I am referring to.

It is worth looking for and is indeed food for thought for all of us.

[oneoff]

That should be "Leading Horses to Water.....

[ColevilleH2S]

This should have been titled "wild goose chase" It took me awhile to find it so I'll spare everyone else, and just re-post the damn thing.
---------------------------------------
Posted by oneoff;

The open letter copied below was addreesed to the creditors of Newco Grain early this evening. It is this type of disclosure that should be given in circumstances where other people's money becomes at risk; because it is where other peoples business becomes the business of hundreds of others; directly and indirectly affected. Hopefully all the parties can both learn and benefit from open dialogue and some understanding. And I again repeat that smugness on the part of anyone in this day and age is also categorized by other more descritive terms that convey the intent more poignantly.


" To the creditors of Newco Grain Ltd. (NGL):

We are writing to you to give you a brief update as to the affairs here at NGL. In the past 6 months we have been in touch with you to the best of our ability by phone, but we cannot maintain that anymore. From now on we will communicate on a regular basis by email.

We at NGL are committed to repayment of our debts and appreciate your patience as we work through the problems that we are facing.

The situations we are in at the moment are as follows:

- One of NGL’s accounts receivable in the amount of approx $672k is 60% collectable by February 28, 2013, according to creditors proposal and the remaining balance scheduled for collection in equal monthly payments for the seven months leading up to September 30, 2013. This is in debt review so it is based on the fact that the client gets refinanced.

- Also for long term account receivable NGL is working to collect approx $367k over 8 years.

- The land that NGL owns has equity in the amount of approx $200k. At the moment we have an expression of interest on it. If this proposal goes forward this money will be distributed pro-rata to creditors.

- We are currently communicating with and in the process of retaining a third party to assist in formulating a formal proposal to deal with all outstanding amounts.

Again, thank-you for your patience and we will keep you updated.


Neil Slingerland

1-800-661-2312
neil@newcograin.com

[hobbyfrmr]

One off,

Good luck with that.

[sumdumguy]

Accounts Receivable - the further out you go, the
less of a chance you will get paid.

[oneoff]

I know I know

But I only present this information as food for thought and lessons for everyone.
We are all in this together and the agriculture industry has got this issue as one of its major problems which has and will ruin and seriously harm all those who get caught up in its web; both past present and especially future.

[redbaron]

We have a similar situation in MB with Puratone. Here
again unsecured creditors like farmers delivering grain
to the feed mill are left out. Those hauling till days
before the filing of the bankruptcy are left in the cold.
After are secured by the receiver. One individual
farmer is out $300,000. Best yields in wheat here, best
prices and look what can happen.

[oneoff]

Farmers Get off your asses and get some momentum going. Not one of us is smart enough to avoid these losses. 100% payment is the objective.

I guarantee these situations will personally visit you sometime in your future, or maybe many times in your careers........or as most know its already happened to some extent.

[wmoebis]

I refer you to sec. 4.0, 4.1, 4.2 on page 41.


http://www.agr.gc.ca/info/consult/cgc-ccg/pdf/compas_cgc-ccg_e.pdf

the Assisstant Commissioners were a very valuable tool and should have never been done away with, but expanded on. Obviously the CGC employees can't fill thier shoes.

[sumdumguy]

Oneoff, we have been around for awhile. Been
schnookered by freight forwarders and logistic
expert. Never to the extent of $300,000, but I
agree, a workibg solution is in receivable
insurance. I am a little hesitant of the state of the
insurer. The deals are big and the risky buyers
are many. My question is how will these
companies be able to insure the buyers? They
will have to be huge and have extensive credit
data, to be able to respond quickly enough to
close a contract.

[TOM4CWB]

SDG/Oneoff;

There is huge risk in selling to those whom you don't
have a PERSONAL long term relationship with.

When I buy products off kijiji... I provide a bank draft
with no questions asked IF I buy a product. Same goes
for sales to unknown folks... and NO ONE is insulted.
These are local transactions... but private folks are
normally reasonably upfront honest meaning we get
what we expected on sales or purchases.

I do not see why grain sales in the domestic market
should be any different.

One LOAD at a time with the cheque cut at time of
delivery. CASH the CHEQUE the DAY of delivery. I ask IF
there is money to cover the cheque... if it is not a bank
draft. It is very unusual for people to lie about this
when you look them STRAIGHT in the EYE and ask.
People are NOT offended but honest folks expect this
as a reasonable business minimum to cover risk.

Normal operating process... if you expect to be paid.

Offering 'Credit' to a buyer we do not have a long term
deep rooted relationship with (IE LAND backed security
to cover risk)... means very high risk.

Cheers

[TOM4CWB]

USING a Credit Card like Visa/Mastercard is another
alternative. If folks DO NOT take Visa... IT IS A
OBVIOUS sign they are high risk. VISA is a risk
management tool on either side of a transaction and
provides a high certainty of transaction security.
Consider this option... IF you are prone to large
domestic transactions.

[oneoff]

Excellent ideas tom; but we both know that blank cheques and exchanging credit card codes and their numbers doesn't fit in with standard business practices of say interprovincial feed grain sales or pulse crops for example.

The problems as presented to the seller (farmer) are as you know;

The buyer looks you back in the eye (if you can see him 300 to 3000 miles away and says, it hasn't been weighed yet; the final dockage hasn't been determined; the grade at unload is obviously unknown; it takes time for the trucker to submit this information; his dispatcher has to get it to our accounting, cheques and paperwork takes some time; payment nust be mailed and transferred and banks take time to clear payments. This all has to be be done to protect myself as seller..... and oh by the way; our contract involves more than this load; as buyer I've been stuck by disreputable farmers and you should understand that the standard period for payment is at least 7 to 20 Working days and I'm not esponsible for any delays caused by third parties, acts of god, flood, wars and uprisings.

You are absolutely right about the importance of immediate payment;and you will never get to that point by rationally arguing the concerns listed above by the garain dealer.

Tom...The fact remains that your common sense solutions are not industry practice; and that will willingly never never change .

If farmers are willing to assume the risk of bankers and financiers; then we must act like bankers and financiers. Otherwise we insist on exchange of "coin of the realm" for our loads of production being hauled away.

And the vast majority of farmers do not have a backbone (or brains)necessary to back up that demand.

[oneoff]

Its as simple as Not having payment in hand and having Lost sight of your product equals Risk.

[TOM4CWB]

Oneoff,

We will ALL pay much much more... if you want EVERY
transaction covered for the sale of Graded grain with
official CGC paperwork. If no official CGC paperwork...
there is NO way to stop fraud.

So.... there must be limitations on the security. If you
are selling interprovicially... deal with an insurable CGC
licensed buyer. SIMPLE. Or take the risk yourself...
because I truly believe it is unfair to ask me or
Canadian Tax payers to pay if things go sideway on
you.

If the buyer, you are selling to, is unstable enough that
you are worried about the last 10 percent of your
payment... perhaps that is good... that you limit
sales... and keep the funds on a VERY short leash and
current. I do NOT believe it is fair to ask my family to
pay the risk premium on that sale to you.

Cheers