abb/viterra

[malleefarmer]

Presume growers pay this fee via some charge or fee in canada?
And we will follow suit here

SASKATOON, Saskatchewan, July 3 (Reuters) - Viterra (VT.TO) plans to insure against weather-related crop disasters in South Australia if it completes its acquisition of Australia's ABB Grain Ltd (ABB.AX), the Canadian grain handling and farm supply company said on Thursday.

The grain volume insurance, contingent on the ABB acquisition, would begin to pay out in case of a 33 percent drop in average annual South Australian grain production and would be fully paid out with a 65 percent drop in production. The maximum payout would be A$27 million ($21.7 million).

Viterra already has grain volume insurance for its current operations.

The combined company would remove a fee ABB currently charges farmers in difficult crop years for variations in grain volumes.

The two companies have also revised the storage and handling fees ABB charges farmers and will announce details if the acquisition completes.

Viterra has agreed to buy ABB in a $1.2-million cash and shares deal. The deal requires regulatory, shareholder and court approvals.

[stubblejumper]

This is insurance the company uses to protect it from small handling years. It has nouthing to do with producers.

[malleefarmer]

not passed onto growers then at all?

[agstar77]

No, it comes out of thin air? Probably bought it from AIG.

[charliep]

As indicated, not a direct farmer program but rather a risk
management tool to help Viterra (and all the earlier versions before
that including United Grain Growers) survive through years of lower
handling because of issues like drought. Handled volume makes a
big difference to a grain company's profitability. Not 100 % certain
but I think a weather based product.

[agstar77]

Something like pooling?

[charliep]

Who picks up the risk in pooling?

[agstar77]

Same ones who pick up the risk for Viterra.

[gregpet]

What if I choose not to deliver my grain to Viterra since there are many other viable and possibly more profitable options? Then I do not pick up that cost because I have the freedom to chose where I sell my grain. I am not held hostage by Viterra.

[charliep]

The initial topic was weather risk and the need to manage risk around
reduced handle/production. Farmers take on crop insurance to look
after the risk of lower production. Viterra looks after their risk with an
insurance/derivative product.

I struggle to see how price pooling helps in that it is simply an average
price minus costs.

[stubblejumper]

gregpet sorry to break your balloon but all the major grain handling companies ues insurance

[Burbert]

Wow, what a brilliant new age idea. A tired old/lazy company, now attempting to take farmers hostage. Good luck Auz, this company is soooooooo poorly run, they now want to lock you in and force you to deliver. This is the same company that is knocking down elevators in Canada, cause they refuse to sell them to others that might compete with them. This is called SENERGY, a hard hitting business ethic that puts Viterries first, and leaves all to suck wind in the dust. Yup, look forward to great, things with Viterries. All I can say is better youss than usessss. Shake of the head, seeing is believing...........

[stubblejumper]

sory burbert but viterra probibly has the best record of selling closed facilities to producers. Most of the companies demolished elevators before anyone realized they were closed.

[gregpet]

Sorry stub, I guess since I am trapped in the CWB bubble the bursting of the balloon would be a best case scenario.

I wonder if the small independents carry this insurance?

[Burbert]

Hve no fear, Viterra will run the Auz operation, into the dirt. Their track record, is poor indeed, here in Canada. No wait, they were called Agiecore, then Agiecord/Unknighted, then Viterra. Same tired uninterestin people runinn the business, bound to flopp. They beeter by all the insurances that they kin git, cause they are the bottom of the heepppp....