Growers still calling for tighter terms

15 Mar, 2015 01:00 AM
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The licensing scheme proposal has been divisive, with the trade kicking back hard

A LEADING farm lobby group that threw out a controversial proposal to license grain traders in a bid to lessen producer exposure to trader insolvencies still remains in favour of the scheme, but has toned down its rhetoric.

Instead of a full-bore push for licensing, members of the Victorian Farmers Federation (VFF) grains group heard at the organisation’s annual conference at Lorne late last month that the group was also pushing hard to tighten payment terms in order to give growers earlier warning signals about potential non-payment.

Grains group president Brett Hosking said the lobbying of traders was having an impact, citing changes at grain buyers such as Emerald Group, which last August said it shortened its payment terms to 14 days as a result of feedback from the production sector.

The licensing scheme proposal has been divisive, with the trade kicking back hard against the proposal, saying it would add further regulatory costs with no reduction in risk to growers.

New Victorian Agriculture Minister Jaala Pulford, speaking at the conference, was lukewarm on the idea, saying she needed to be convinced the burden of putting regulation in place was balanced by cutting risk.

Grain Producers Australia (GPA) chairman and former VFF grains group president Andrew Weidemann said he felt there was scope within legislation to enshrine shorter payment terms.

“I think it is something that can be done and something that has real benefit.”

Insolvencies dominated debate, with the anger surrounding the string of grain trader collapses that left growers millions of dollars out of pocket still clearly on show.

GTA should liaise better with growers

There was discontent at the role Grain Trade Australia (GTA) plays in monitoring grain traders in some quarters.

Trudy Ryan, Manangatang, moved a motion that GTA oversee trade licensing and called on the organisation to liaise better with growers.

She said her family business had been impacted by insolvencies and in trying to recoup debts had tried to get help from GTA.

“We felt abandoned by GTA, we were just told there wasn’t much they could do.

“We lost money after doing all our due diligence and doing everything to reduce our risk, so I would like them to play a more active role in cutting down on these insolvencies.”

The motion was ultimately lost, with other members arguing it sent out a contradictory message.

Murtoa farmer Leo Delahunty said rather than put the issue in the trade’s hands, he supported further education for growers on risk management and the push for shorter payments terms.

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Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media
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READER COMMENTS

Jock Munro
16/03/2015 3:39:05 AM

It is rather ironic that VFF played a key role in the loss of the grower controlled single desk and now they are having trouble with the merchants who now run the industry!
Mark Hoskinson
16/03/2015 7:16:47 AM

Perhaps it would be simpler to have in place that a contract can only be written that has a financier's guarantee. That would weed out the non payers. No contract could be written that was not backed up with the ability to paid. Shorter terms are also a great idea as we farmers are the only ones left that give credit terms of 30 days after the end of the week of delivery. We don't get that any more.
hayseed
16/03/2015 8:18:00 AM

Just make every grain trader post a $100,000 bond to be held in trust. Straight away you'd find all illiquid traders would just shut up shop...
Bob
16/03/2015 9:11:51 AM

At the end of the day the day, the responsibility remains solely on us farmers. We are lucky to be able to choose who we sell our grain to, so... do we risk an extra $1/mt to sell it to Shoddy Co. or do we sell it a larger company (Graincorp, CHS, CBH, Glencore etc.) knowing that we will get paid on time. Caveat Venditor (Seller beware).
Clear Grain Exchange Team
17/03/2015 6:25:15 AM

On Clear you get paid within 7 business days, even less if the buyer pays early. You retain title of your grain until this full payment is received. It is held in bare trust (so legally yours) by the custodial company Perpetual. Once they receive the funds, Perpetual does an automatic swap of title to the buyer and funds to the seller. So you always have either the grain title or funds. Clear has now worked this way for 7 harvests. Completely agree with Leo that more education is needed for growers on risk management.
Jed
17/03/2015 10:10:27 AM

Clear, all well and good for you but first you have to have your grain delivered to Graincorp. What about all the other grains we produce and sell from on-farm storage. Most of us don't want to pay double handling and for the likes of oats, Graincorp does not receive it. So back to the drawing board and assessing risk.
Itsamonty
18/03/2015 8:49:24 AM

Ever heard of trade credit insurance or maximum liability insurance. The insurance company will give you an approved counter-party list. The insurance premium is also a tax deduction.
Jed
19/03/2015 5:48:34 AM

monty Insurance comes at additional cost and you have to be making money to pay tax and it is not for the full amount lost. Surely it is better to tighten the rules and make sure defaults can not happen rather than load the grower up with more risk reduction cost. We are paying to much now!

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