The middlemen use GAFTA-style contracts to trade grain.
Why shouldn’t farmers?
That’s the thinking behind a new exchange and training program that trader and entrepreneur Darhl Vercaigne of White City, Sask., is building.
GAFTA is the Grain and Feed Trade Association, a 135-year-old organization based in London that offers training, standardized contracts, dispute resolution and other services for the agricultural commodities business.
Most professional grain traders have received GAFTA training and all are familiar with GAFTA contracts.
Among its activities, the organization holds annual training sessions for the Winnipeg grain trade, with one scheduled for early January.
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“What kind of supply chains would he (the farmer) like to participate in if he had the knowledge and tools to (choose),” said Vercaigne, who is developing the Value Chain Management Exchange (VCMX) and organizing a GAFTA training session in Saskatoon Jan. 19-20.
“I’d like to not have to deal with the status quo middlemen all the time, (but) how do I get at these export markets and do it in an efficient, safe and secure manner.”
Vercaigne thinks GAFTA-backed contracts between farmers, small merchants, shippers and buyers could be exactly what many want.
That’s why he’s setting up his exchange and trying to form a membership that will trade grain on a footing that’s level for everyone.
Vercaigne’s initiative is an attempt to take GAFTA-style trading to the beginning of the value chain, where farmers reside. GAFTA governs how contracts will be defined and how disputes will be resolved but leaves the specifications up to users.
Contracts can be specialized to fit all the players involved. Rather than just a buyer and seller, these kinds of contracts can also involve shippers, inspectors and agronomists.
He said this makes them different from futures contracts because those are standardized for specifications and delivery points.
It’s also different from grain company and grain marketer contracts because those are “buyer’s” contracts, which are set up “in the buyer’s interest.”
Vercaigne’s Jan. 5-6 course in Saskatoon will present his ideas on how trading works now and how he thinks it can be made to work better in the future. The Jan. 19-20 session will provide training from GAFTA.
ed.white@producer.com
