"Contract squeeze worries farmers " is the WP headline

[AlbertaFarmer5]

And as for expecting the elevators to take on some of the risk, I absolutely disagree.
They need to work on predictable margins. A business working off of a very small margin of a very huge and volatile market can't take on unlimited risk. If the margin is 50 cents, and the market moves $10 as it recently has, that would be 20 times their cashflow, that is going out of business scale. As a farmer, if the price doubles, it is only double your cash flow on those bushels only. Can you imagine the calamity of a major elevator company going broke from speculating on the weather?
As a small producer, I've had cheques of a few hundred thousand at a time, and I sleep well at night waiting until I finish delivering so we can paper blend the grades/moisture etc and pay it all at once.

With feed grain brokers, and feedlots, and hay buyers, hay brokers, and best of all, horse hay people, I'm paranoid to send more than one load at a time for fear of someone going bankrupt. I was selling through Newco grain shortly before their problems, I was caught in the Cranston Grain default( Newco caused Cranston, and as I understand, both were technically speculating), how many feedlots and pulse processors and brokers have gone bankrupt and left the farmer hanging? Most of these have infinite risk, and no way to cover it. Fortunately, our elevator companies don't and can't get into that position.

[the big wheel]

Nobody in the system is working to give you
The most money. They all work to look after themselves
You ve just done a lot of writing to
Prove how we re brainwashed into thinking everyone
Else being protected is good for us all
The time. Well it’s not. A lot of farmers will be
Down the road due to this. I wonder who’s worried
About what they can pay? Oh right no one because
Banks etc are all secured. Don’t you get it
Everyone is secured and looked after except
For one individual in the current system.

I ve had act of god peas and flax in the past, flax wiped
Out by frost and peas by hail both contracts voided
Nobody is out any money. The elevator wouldn’t be out anything
The buyer simply deals with the
Free market to get grain then. Tell me the problem
With that? There is no problem except we’ve just moved
The production risk to the buyer instead of us producers. They
Might have to pay more or they may even pay less to buy
The available grain. So what?

Nobody said if you had a contract and had the grain
That you could simply walk away. No you shouldn’t
Be able to. So that ends your discussion there.

Nobody seems to want to answer who’s responsible
For the under valued canola that got sold last fall?
The buyers deal with the elevator companies directly
So are they listening to the elevator companies,
Stats Canada or who when determining how much
Canola there is? Who puts out the number to the
World as to how much canola we have? Because I don’t
Know of a farmer that didn’t know last year that
There wasnt a big supply out there. And why did
The prices stay so low because that’s all that was offered
In the contracts and the contracts were the only way
To get rid of your canola so we basically secured screwing
Ourselves out of 8 to 12 bucks a bushel. But this is a different
Topic than contracts for not having the grain.

[the big wheel]

Nobody in the system is working to give you
The most money. They all work to look after themselves
You ve just done a lot of writing to
Prove how we re brainwashed into thinking everyone
Else being protected is good for us all
The time. Well it’s not. A lot of farmers will be
Down the road due to this. I wonder who’s worried
About what they can pay? Oh right no one because
Banks etc are all secured. Don’t you get it
Everyone is secured and looked after except
For one individual in the current system.

I ve had act of god peas and flax in the past, flax wiped
Out by frost and peas by hail both contracts voided
Nobody is out any money. The elevator wouldn’t be out anything
The buyer simply deals with the
Free market to get grain then. Tell me the problem
With that? There is no problem except we’ve just moved
The production risk to the buyer instead of us producers. They
Might have to pay more or they may even pay less to buy
The available grain. So what?

Nobody said if you had a contract and had the grain
That you could simply walk away. No you shouldn’t
Be able to. So that ends your discussion there.

Nobody seems to want to answer who’s responsible
For the under valued canola that got sold last fall?
The buyers deal with the elevator companies directly
So are they listening to the elevator companies,
Stats Canada or who when determining how much
Canola there is? Who puts out the number to the
World as to how much canola we have? Because I don’t
Know of a farmer that didn’t know last year that
There wasnt a big supply out there. And why did
The prices stay so low because that’s all that was offered
In the contracts and the contracts were the only way
To get rid of your canola so we basically secured screwing
Ourselves out of 8 to 12 bucks a bushel. But this is a different
Topic than contracts for not having the grain.

How does it work now that companies are also the buyer since they are
Crushing the canola? When they buy a bushel of canola does
That immediately determine the price they get for the
Crushed canola oil? Or are they buying the canola and then
Speculating on the oil part after? Because in the one scenario there
Is a definite advantage to them buying canola the cheapest they can
Obviously. And that’s what needs to be shown to us. Did they buy all
This cheap canola and then sell the oil at the much higher world price
Of oil?

Didn’t mean to hit like. Lol

[the big wheel]

And to get back to topic I m not saying gov should
Subsidize people out of this I m saying this should
Never be the way it is in the first place. Some people
Gambled because of the losses we ve had in the past
This isn’t the first year of drought programs have been
A disaster for most farms with multi year losses. So
People are desperate. People that have had good crops
Speak pretty smugly about other peoples situations that
They know nothing about because they ve had good weather.

Interesting though if our government is saying they will
Pay for this aren’t they admitting the programs
We have won’t work.
Lmao!

We ve had 3 years bad crops here no one has collected
From agrishitability anything meaningful so people were put
into situations where they almost had to gamble.

[ErgotErnie]

I agree big wheel that’s where not having a good farm support program from our government has failed the producers in areas where year after year has been a loss. But there is also lots of farmers that are complaining about these forward contracts that have signed up and will also be the ones flipping iron every year and be the first ones outbidding the neighbor’s on land rent . They signed the deal they knew the risk and now should live with the outcome.

[Blaithin]

Blaithin, You are getting hung up on grain companies role as middlemen. Consider if that buyer mr farmer sold to is a a feedmill. They expect delivery of the contracted number of bushels in a specific time period for that $11.00. If farmer does not deliver the contract they have to go to the market and purchase those bushels for the “$20.00 market price. Why should the the mill have an added $9.00 cost per bushel to meet their needs they had covered with the contract. No different for an export company. They expect delivery for the agreed upon contract and it is not the company fault if the producer defaults

The point is it is the farmer who took the risk selling something he did not have and had no guarantee to getting.

Furthermore selling physicals is not the only option farmers have to lock in price or profit

Thank you. That example is more clear.

[dmlfarmer]

I am interested in knowing how many farmers who feel forward pricing contracts should be cancelled or penalty free would feel the same way if the roles were reversed and the inputs you contracted were not delivered. For example, you contracted fertilizer in the fall for future delivery. By spring the fertilizer price has doubled, and suddenly the supplier says he can not deliver leaving you scrambling to secure your fertillizer needs at double the price. How many farmers would walk away saying oh, no problem, cancel the contract and I expect nothing in compensation for the added costs of having to pay double what I had planned.

I have a feeling that the same farmers who have no qualms about reneging on a delivery contract would be the first in line to sue a company that could not supply contracted inputs.

[LQQKY]

You need to take a marketing course Blaithin.

[Old Cowzilla]

Grain co's make money on volume farmers on price . The way things look around here neither will be pricing any new 1/2 tons. This hurt will last a lot longer than a year if it's anything like we went through in the eighties.

[bucket]

I am interested in knowing how many farmers who feel forward pricing contracts should be cancelled or penalty free would feel the same way if the roles were reversed and the inputs you contracted were not delivered. For example, you contracted fertilizer in the fall for future delivery. By spring the fertilizer price has doubled, and suddenly the supplier says he can not deliver leaving you scrambling to secure your fertillizer needs at double the price. How many farmers would walk away saying oh, no problem, cancel the contract and I expect nothing in compensation for the added costs of having to pay double what I had planned.

I have a feeling that the same farmers who have no qualms about reneging on a delivery contract would be the first in line to sue a company that could not supply contracted inputs.

Apples and oranges....fertilizer is still being made in a drought , rain snow cold hot etc

...the only pricing mechanism is what they can get away with...

Pick another anology

[Blaithin]

You need to take a marketing course Blaithin.

Probably. But it’s not like I really use it anywhere. It would broaden my conversation ability but really, marketing is dull to me and the conversations are usually tense and pessimistic. I’d much rather learn and talk about cows 😂

[jazz]

I am having a tough time drumming up sympathy for the aggressive forward contractors. Somebody has to explain to me the benefits of doing that?

The price is almost never higher in the fall vs the spring. Bills to pay? You can get a million dollar cash advance from CCGA and FCC and big banks have programs as well. My input line at Nutrien isnt due until Feb 15, so theres no rush in that program. Limited delivery space? I dont see any terminals lined up any more, they can move everyone through at reasonable pace especially if you sell more into the spring time frame. Storage? Well bags still work and I think storage is one of the best investments you can make anyway.

The forward contracting appears to be the reason guys dumped cheap crop last yr before the winter run. So a double whammy.