Cranston grain, Trevor Schulz, screws farmers

[wd9]

Good to see some companies posting.

So a good question to ask is why did
Cranston take in grain in the amount of
hundreds of thousands of dollars yet did
not pay out a dollar? Its called paying
off all your debt by taking from farmers
who can't touch personal finances, only
your broke corporation. Banks however
can, so take from the dumb farmer to pay
the bank.

No amount of relationships and knowledge
is ever gonna help you see that one
coming if someone is out to cash cheques
from where the grain was delivered to
but not pay the one who shipped it.

Like i started this post. My business
will change for every load. I will never
trust anyone will pay me even for a
load. I will have sellers insurance on
everything. Or i will have the cash
cleared in trust.

Broker, aptly named. They make you
broker.

[Agfinity]

Let me begin this next post with an apology to Michael Stapleton and the members of the Ag-Value Group.

As a member of Agfinity, I was quick to defend our name, and did so through an implicit backlash at our competitors. I've been thinking about this issue a lot this evening, and, if you're willing to read it, I would appreciate the opportunity to clarify my thoughts. This time - with a slightly clearer mind.

Agfinity has spent a lot of time and effort on creating a good experience for our customers. I would even admit that we have taken a fair amount of pride in it. We realize, more than ever, that we are not impervious to the problems facing this industry. We don't have it all figured out. We don't claim to. With astronomical cash grain prices and unpredictable futures, it only takes a couple consecutive errors to put a grain company in jeopardy these days.
Somewhere along the way, key components of this industry have been stripped of their authority. These components deserve better. The truckers deserve better, the farmers deserve better, the buyers deserve better, and heck, whether I'm allowed to group them as a key component or not, the brokers deserve better. If we can't all work together, then one thing is for sure. There will be winners and there will surely be losers. We've lost our authority in these turbulent markets and we need to reclaim it.

Now, if you think this hyper-volatile market has shook things up, hold on to your seats. Similar to all markets, the cash grain market is interconnected, like a house of cards. A few cards have fallen from this house over the last few years. And unless we repair the foundation upon which we all make a living, it's not really a matter of IF, it's a matter of WHEN this house is going to come crashing down.
No, I'm not looking to preach a doom-and-gloom sermon. You hear and read that enough. My prognostication comes from a bad taste in my mouth due to the current selling system. Like many have vocalized in this thread, the system is failing us.

How come?

Brokers and resellers? ... Without them, sellers could definitely stand behind their own marketing decisions and work directly with the end-user. Competition, however, definitely helps keep values honest and fair. Nevertheless, at least buyers would see bigger profits, right? ... I may be wrong, but I'm pretty sure that even if you removed brokers and resellers entirely, the risks would remain just the same. You can add the number of feed grain eating cows, divide it by the price of corn futures, ask your neighbour's opinion, read a marketing article, carry the four, and you still would just be making an educated guess on whether an end-user was solvent or not.

Security? ... Yes. This is definitely part of it. Unless you get paid for your product before its taken away from you, you're assuming a level of risk. Until the more recent availability of insurance, unreliable bonds have been one of the only security nets for producers.

Logistics & Limitations? ... In my opinion, this is one of the system's biggest detriments. If a hyper-volatile fire is set, how can we ensure that every producer, trucker, buyer and broker are safely guided out of the burning house if there's only one little fire exit? ... Or no fire exit at all. While most haven't had to walk through a fire, volatile markets are turning up the heat. A crash can happen in a flash.
The minute Newco, Mitchell or Cranston sent out letters explaining their fragile circumstances, they were essentially signing-off on their eventual dissolution. But to jump over onto the other side of the fence, is it even fair to blame the sellers who didn't fulfill their contracts with any of these companies? In hindsight, were they just doing their due diligence and exhibiting good management skills on their part?
Since contracts are legally enforced, what rights do producers have to protect themselves when they see a red flag? What rights do brokers have on breaking contracts on behalf of their seller if there are only red flags? Ultimately, if your suspicion isn't correct, taking away grain in a rallying market is going to do its damage. That wouldn't be fun to have a new crop barley contract unfulfilled when the market has increased by $1/bu. Try just 50 loads of that. That's one quick way to lose $100K... Seems like we could all use some clarity here. I would be interested to know the figures behind these losses, as this system is operating more like a pyramid scheme than anything else.

To quote Michael, "Information like cattle on feed numbers, diversification, own the cattle or custom feeding, payment terms, outstanding payments, depth of position..... these are all ways a Broker can mitigate the risk for their clients. But you need to have the relationship in order to find out a good deal of this information."
Ag-Value, without a doubt, has a handle on the cash grain buyers in this province. It would be a lie to say anyone else had more information. Nonetheless, as important as they are, I do question if these points of interest alone are enough to escape from a falling house of cards, unscathed. It is not our desire to see this industry fail. Nor do we want Ag-Value to have to compensate any of their clients in the future, or any other brokers or resellers for that matter.
It was uncouth for us to place irresponsibility on Ag-Value for not alerting us and others to the financial woes of a struggling cash grain buyer. We are their competitors. We understand that. I'd like to think that we would have been more vocal, but that's easier said than done. There's definitely a conflict of interest if you have relationship with both sides of a transaction. At least you'd think there would be...
Not including the losses that their customers may have experienced on ill-timed trades, Ag-Value has an impressive track record. And they've earned it. But, looking at the bigger picture, is this problem really just black or white? Is the secret simply exceptional management and a constant pulse on the buyer? If that's the answer to a risk-free trade, then maybe there isn't a problem after all. Who knows. Time will tell. And unless sellers finds themselves in the same boat, it's all too easy to look the other way. To take pride in our own relationships and decision making skills.

Though not completely necessary, I'd also like to shed some light on grainboy's question, from what we know, Quality Grain Brokers nobly repaid a sizeable amount to their customers that lost to Mitchell Grain. Though Quality Grain is another competitor, we agree that this act should be noted and applauded. And though it probably wasn't easy, they did it without exhibiting hatred and malice to the owner and decision maker, who, whether he meant to or not, abused their trust.
This noble act, as great as it was, in itself is circumstantial. How many times will a broker be able to pay for their buyers mistakes if this continues to happen? if buyers begin defaulting by the dozens?... Sounds ridiculous, but that's how dominoes fall. And until we demand change, it can be expected that history will repeat itself.

Regarding seller diligence, we agree entirely. Sellers need to ask more questions before signing their names to a contract. The brokers at Agfinity have never portrayed our buyers to be different then they are. Please ask us and any buyer the necessary questions involved in meeting your terms. We, as always, will tell you everything we know to be true. Who the buyer is; as well as their payment terms and attributes. Bonds are an increasing rarity. And until the entire market shifts to a risk-free system, we are here to help mitigate your risk as best we can.
Our relationships with our buyers are a big part of that, but producers need to also set their terms in order to reclaim their authority in the market place. If you're comfortable selling to a buyer without a bond, we have several great companies to connect you with. If you're not, we have several amazing bonded buyers too. And if you only want to do deals with guaranteed or insured payment, we're happy to make that happen, and will still strive to attain the best price possible.

We understand the mentality that has risen against brokers and resellers over the last several years. Your concerns are valid and you have every right to be distrustful of the system. When the cards fall, producers seem to end up at the bottom of the pile... But you know what, if we can't all work together, and share each others best interests, then what's the point?
You deserve security. You deserve great pricing. There's no reason you should have to sacrifice one for the other.
If good pricing doesn't matter, then competition is unnecessary. The open market comes with new risks, but also new opportunities. And good companies and marketing services are at your disposal. Feel free to use them. Producers shouldn't need to rely on one sole broker or buyer to manage their entire portfolio.
Putting your eggs in one basket can go two ways: Really Good OR Really Bad... Diversify. You deserve it. Same goes for truckers. If you only are hauling for one or two companies, will you be able to stomach the loss if one of them goes broke?

Someone should have to win your business every time. Often you will find the right opportunity yourself. Sometimes a grain company, reseller or broker will present you with the right one. Know your terms and stick to them! And if you believe that any one company can provide you with a dynamite, risk-free opportunity every single time, then by all means, you should give them the keys to your bins and head down south for the winter. Rumour has it, it's much warmer down there.

Look at the time. It's 3:30am. I would be sleeping, but I care too much to let you think we don't.

Jared Seitz
Agfinity Inc.

[mbratrud]

I would like to think that this was a trading error that resulted in a hole Trevor could not recover from and that he has personally not gained a thing and lost a lot financially and integrity wise. I like Trevor, I have not dealt with him since his Scoular days but he always seemed like a good guy. And hopefully if he is reading these messages he will bring himself to set the record straight.

Now all personal business aside, this kind of stuff needs to stop. Farmers need to stop selling to entities that are not bonded. If a broker offers you a price, make your acceptance pending approval of buyer and credit. I have often asked companies for financial references or even a copy of their financial statements before I sell to them if they are not bonded. If the won’t provide you with the information and your not positive of their financial situation don’t sell to them.

I am a fan of the insurance programs, but we need to go further, some of what is going on is a criminal act. If Trevor Schulz intentionally took product without any intention of paying, while securing his personal finances including paying for his trading errors there should be a Criminal investigation for fraud.

Licence and Bonding is there to protect sellers, it forces buyers to prove that they can meet their commitments, but don’t kid yourself it has its flaws as well. Ever waited for a Grain Receipt companies will play games to keep onside with Bond Requirements.

I live by a few rules personally:

1. Never send more than one load at a time to someone you don’t know or haven’t done business with.
2. Always demand your grain receipt, don’t let a day go by without insisting on your official grain receipt bonded or not.
3. Never sell to someone with a Net 30 Day pay period (to me this indicates they are running too close to the wire.) 2 WEEKS IS MORE THAN ENOUGH. That’s what operating lines are for if they can’t meet a banks requirements they shouldn’t meet yours
4. Never defer with a non bonded company and if you do defer insist on the deferred check being sent to you right away. DO NOT let them send the check at the deferred date.
5. Do your best to talk to your buyer directly on the phone at least once before shipping regardless of whether or not it was a brokered transaction, ask about their process.
6. Do your best to haul your grain yourself or hire your own truck. Anyone who won’t let you deliver your own grain isn’t worth dealing with. Understanding of course you may be paid a reduced rate if the broker has negotiated a back haul.
7. The unfortunate thing about these rules is sometimes you turn down an extra dime because the transaction fails the acid test so to speak, but you will get paid.
8. Be business like think about what a Car Dealer, Input Dealer, or Banker would require the $ of business you are about to do. If you are going to sell $100,000 worth of Grain, treat that transaction with the respect it deserves.

Finally even the strongest company can fail for reasons out of their control volatile markets in a struggling livestock sector have burnt many in the past and will in the future. Special crops and crops that can’t be hedged properly can be very difficult to trade. A small mistake can be made ugly in a very short time. As Farmers we need to mitigate our risk the best we can by treating our transactions with more respect.

Thats my 2cents

[oneoff]

You'd almost think that there aren't any grain buyers who have their finances in order enough to make reliable payment on delivery. Sure that involves reserves in bank accounts; or adequate lines of preaaranged credit or other financial arrangements for liquidity. That should not have to be a farmers business unless we want to take on every trouble that belongs to someone else. That attitude will not have happy ending in the long run.

Just why isn't it in buyers court to make sure he has the risk insurance in place for himself.

Farmers are being brain washed into picking up the pieces after someone else's failures in their business enterprise.

[oneoff]

That 20 plus working days payment schedule isn't in my books ever again. That applies to pulse plants who will some day sting some farmers for some big bucks. I'd understand if owners sold other assets than the limited company; but smart businessmen pretty well would usually be quick to protect the rest of their wealth.

It is good to hear that a rare few are honorable business persons. Too bad they couldn't be given deserved credit for their honorable actions. But hardly anyone will share their names with the public.

May he thieves and crooks at least get some punishment in their next life.

[wd9]

Should a broker be legally and
financially responsible to ensure the
seller gets paid?

[mbratrud]

Obviously the broker’s accountability will be determined by future business I would imagine. An honorable broker would be bending over backwards to help you and should not be taking any commissions IMHO. Do you have unloads WD9?

[wd9]

Nope. Couldn't get anything.

[oneoff]

About another 20 working days (Feb 28/2013) heralds a red letter day for Newco Grain. On that day Newco Grain is to receive some $600,000 of money due to it by parties that Neil Slingerland has claimed is owed.

By my calculations there are in the order of some 130 farmers who were stuck with approximately 5% discounts on what was to be 100% CGC bonds that turned out the Federal Government cheques did not cover.
Again by my calculations; those 130 farmers are owed approximately $150,000 which would cover their principal which remains at substancial risk of not being paid if that $600,000 does not get paid or is not applied to straightening up with those patient farmers.

I encourage each and everyone of those farmers; as well as Neil Slingerland to also circle Feb.28/2013; BECAUSE SHORTLY THEREAFTER I (and hopefully ever last farmer owed and everyone of their supporters) WILL PLEASANTLY ASK FOR THEIR MONEY FOR THE LAST TIME.

These non payments can end relatively pleasantly or otherwise as far as I am concerned. I'm hoping for the best on Feb. 28 and I can't see why all the other farmers in the same boat wouldn't feel exactly the same.

It also wouldn't hurt if those who didn't get stuck with Cranston Grain or any other defaulters; would lend some support to guys like wd9

to collectively help themselves in the long run.

This ain't the last round of getting stiffed; and insurance or not farmers are giving their grain; their premiums and their time and their money when all that should should have been fully paid for at the time of delivery.

We are not set up to be bankers; and we shouldn't be covering someone else's bad decisions or gambles. A contract is a contract; and a persons word and bond is all important.... else more of the foundations of our society mean nothing.

[hobbyfrmr]

"It also wouldn't hurt if those who didn't get stuck with Cranston Grain or any other defaulters; would lend some support to guys like wd9 "

ummmm....anyone suggested looking Accounts Receivable Insurance yet?


Uggggh....Ground Hog Day....the movie with Bill Murray in it.

[oneoff]

Your solution isn't nearly a 100% answer hobby. It might form the basis of about the one and only government handout that is essential for confidence in the economic system of the whole country.
The insurance companies don't cover but a few buyers and certainly not every commodity. To the contrary it is only a small portion.

So I'd hazard a guess that more and different risk management tools are necessary for that eventuality. And you can be so well protected that you'e still losing money on the overall operations just from your risk management system. Can't we remember the lesson of the CWB depressed farm income coincided with decades of any profitabily tied to off farm income and government payments. Sometimes its best to self insure and take your own precautios as best you can. The sytems that would work aren't palatable to thos ewho resist change. And that includes powerful insurance companies and bankers who see this as big opportunities for themselves; even though they may be the root cause of present problems.

The shoe is on the wrong foot to. If you are willing to cover someone else's insurance obligation; do you not also realize that your physical product must have even greater worth than paper money.

Then, just why shouldn't the buyer take out insurance on farmers as sellers. Then everything would be doubly covered and none of these 90% (or less) payouts would ever happen.

And is insurance free; or do we all jump with glee at losing 1% premiums or 10% deductables when long term profit margins may be a fraction of that deductable which we then apparently see as an insignificant amount?

And does anyone really believe that in the long run; any insurance company operates at a loss. The absolute only time insurance makes sense is if someone can not afford the risk of taking a loss (or if the taxpayer is picking up a big share of the premium). And for any respectable red-neck Conservative; that last thought should be quite repulsive.

[wd9]

Quote i heard is $250 for $50,000 of
grain. Hope our profits are better then
that!

[hobbyfrmr]

Wd9, the quote you heard is from whom? The
insurance company? Or......people talking?

Profit is only profit when you get paid. When you
do not deposit the cheque....well I don't know the
exact term, I think it becomes accounts
receivables, for as long as you are trying to collect
. I think hiring a collection agency, or lawyers to
recover the non payment is slightly more than
$250.00. I don't know any solid facts about
collections.

[wd9]

From market master. Don't get me wrong but that
is cheap insurance. They are going direct to
insurance company.

Like I said, it's changing how lots of people are
doing business.

[hobbyfrmr]

If you feel administrative enough,you can do the
a/r insurance yourself.
If not, I suggest selling feed grains through
brokers like market master who are incorporating
this risk management tool.