Target prices

[GOODRUM]

Let's try something different

Most of us have eeked out a extra nickel or dime using a target price agreement and felt pretty good about it, it's a pretty good tool.
What if we were to pull all our TPA's that we have for $9.50 or $10 canola and replaced them with $12 TPA's ?
Realizing that it would take more than a few to get there attention but if even 25% did this I think it would improve our price.
Let's use this tool to OUR fullest advantage and we can maybe take a step by saying "these prices are bullshit"
Let's take away there security of having access to a guaranteed quantity at a predetermined price.
Don't set target prices for 50 cents above these prices , go for $12 or more,
Is this worth a shot?
How many would agree to do this? Let's get something going here that involves ONLY actual producers , no pos middleman of any kind. We have communication like I would have never imagined and don't need any leeches to feed on us.
Ok this is getting way more than I typed in the last 15 years
Sure that there is some haters out there ready to bash but I'm interested in hearing about the negatives too,
Possibly too much idle time last few weeks , and canola still at 13 !

[wmoebis]

I recall target of $8 peas a few years ago. When it hit they called it in, I met a guy at elevator that had $10 target that they called at the same time. He also sold an extra car at the same time for same $10. They were short for train and willing to pay.
Peas were $7.50 at the time.

[monte]

Good discussion topic Goodrum,

I have thought about this before as well...how can we together move the market prices higher.

The problem is that we need a very large percentage of farmers to have the discipline to pull together with market power.

This is almost impossible to gain the cooperation necessary, everyone has their own challenges and must take care of their own family and operation first.

Good idea and I am hoping we can delay any grain sales until the prices move higher.

Have a good thanksgiving everyone.

[farmaholic]

GOODRUM you're making alot of sense. But do think there are way too many who need cash flow, but if everyone did it.....!

I don't like those kinds of contracts, I know of a guy who commits the same grain to more than one company. I wouldn't do it. I also don't like basis contracts, you commit yourself and tonnes to one company (maybe you only have one viable option but if you have afew close by?), what incentive is there for them to raise their prices if they know the grain is coming up the driveway sooner or later? Same with futures first.
But hey if its working for you who am I to judge. Fixed price contracts are a different story as far as I'm concerned, if you're satisfied with the price and there are no UNKNOWNS(grades, basis, futures)....sign away.

[oneoff]

A very good idea; but you might be suprised that a very few producers actual operate using such a method.

Its called market dicipline and putting resources into storage; refusing forward contracting (with abandon) and not aiming for 100% a sold position by end of harvest.

No wonder the agriculture industry sees farmers run on debt; depressed prices and payment deadlines.

Its about accepting being helpless and doing next to nothing about it. Not only does it not gain that majority much; the rest are usually dragged down to their level.

Bring on the comments and attacks on these thoughts and facts.

[GOODRUM]

My guess is the spike we had last week was short lived partly due to the fact that there was enough TPA's around the $9 to keep the system satisfied for now.
If there was NO TPA's at this price and only $12 ones , what would of happened ?
I currently don't have any TPA's and because of this no expected short term cash flow either, but with a weak crop accepting these current offered prices isn't going to meet COP.
So is it better to be in arrears with the bins full or empty??
Let's stop filling the crusher requirements at these prices, pull the current TPA's and replace them with $12 ones.
The "fat cats" sitting in the offices would surely notice if the cheap supply that is guaranteed in writing disappeared.
Tuesday morning pull any existing TPA's !
It's won't take long , just a phone call. Flood the grain merchants with higher TPA's.
Or even get organized on here and boycott a specific company for a week or two,
I recall something like this with gas stations a few years back.

[bucket]

If you have built the bins and they are full of good grain, the graincos should be forced to use the market to buy grain.

TPAs keep them out of the market.

They are currently using the FX as wiggle room with a zero basis to pick up higher priced tagets on wheat.

Now if you were to look at vancouver selling prices they have alot of room to pick up targets to 8 bucks. Never hurting their bottom line and never using the market.

Mostly why it is dysfunctional system in Canada.

There is no risk for a grainco. Farmers built the storage for them and pay the cleaning and freight to the port. TPAs well under actual selling prices at those ports. What risk does a grain company have. They use force majeur clause if the railways don't perform.

[oneoff]

Time to do something in a different way? Will the silence be deaening?

[bucket]

I have witnessed 5 area farmers build bins.

Collectively they have built the equivalent of a concrete.

They are no closer to the rails and doubled their hauling.

I think if farmers could use those sidings abandoned and put up the bins there, partner with a producer car broker, hire a manager. The farmer could put a run on the competition.

I know it's been done with wooden and it may be a step backwards but the current system isn't working.

Then we would just have to test the government's resolve to standing up for farmers by making the railways service those points again.

Build overhead bins, train pulls in. 10 minutes 6 cars are full and released.

Start the process over with the grain stored at site instead of at farmers yard.

I think cp workers would do it. No unhooking. Have a smoke while the cars get loaded.

[farmaholic]

Oneoff, I've said it myself. Quit "dumping" grain..... cheapens it for everyone. Problem is not everyone has the financial strength. Some tough grain, out of binspace, needs money, split grain bags, mega farms that are highly leveraged and don't mind operating on razor thin margins, etc etc etc....

Look, I'm not trying to deny the other player's the ability to make money. They already have elevation charges, blending opportunities and some people get duped.

[farmaholic]

Bucket, there is no appetite to move away from the system that has evolved, especially from the railroads. All the old inefficient wooded and even some of the newer style are gone or sold to others and some replaced by concretes with the help of former SWP equity holder's money. Railroads now get to drop unit trains at one point instead of stopping every 8 or 16 miles to drop off a few cars, they won't want to stop at Producer car loading sites. It has become a much more efficient system but with the costs largely borne by the Producer and deteriorated public highways.

[GOODRUM]

We don't actually know how long it would take for a reaction to this, possibly may even shorten the time till we can get back to making a buck.
I have no idea how many tons they have guaranteed at $9 but they know exactly.
Pull your TPA's , it's not like I'm asking you too dump a bucket of ice water on your head!
Let's raise some uncertainty in there supply.
Things are all screwed up , let's learn from the fert companies , even if there is no shortage of product , all you need to do is start some rumours.

[oneoff]

I'm in a hurry right now

But everyone should just ask themselves how the current grain sales system is cheating them.

[GOODRUM]

Oneoff, not sure what your after? Your good with things the way they are?

[oneoff]

Oh.. to the contrary.

Booking your place in line some weeks ( which can be months; hell maybe even the next crop year) would seem to be guaranteeing agribusiness that you work on their schedule. I've been much less guilty than most.

Monopolies such as railways that can't/won't deliver service need to be straightened out in short order; by their regulators.

When this next economic downturn comes....will maybe be a good time to make begin working on that move.

There is growing dissent which isn't publically recognized by incumbent politicians.