Due diligence | Bad deals spur reminders to take precautions when buying and selling hay
Members of the Canadian Forage and Grasslands Council received unwelcome news in October while attending the World Dairy Expo in Madison, Wis.
Some Canadian hay sellers had not delivered on commitments to U.S. customers.
“It really concerns us that there are Canadian companies that are involved in these kinds of practices in the U.S. and in other parts of the world,” said CFGC executive director Wayne Digby.
Complaints prompted the organization to issue a news release warning hay buyers and sellers to protect themselves against fraud. It is a warning to be taken much more seriously because demand for hay has surged in the wake of drought conditions in Eastern Canada and parts of the United States.
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The federal government leans heavily on producers to “take one for the team” and risk their livelihoods without any reassurance of support.
“Canadian hay sales, from our perspective, have been excellent. There seems to be real good demand for product,” said Digby.
“I think the biggest challenge with our hay exporters is trying to make sure they’re meeting the needs of existing customers.”
Demand exceeds supply in many cases, but it is hard to determine how much hay is being sold locally as opposed to more distant customers.
The council’s general advice to buyers includes getting independent references about the sellers, carefully identifying the product, asking for and seeing feed quality tests and reporting any perceived fraud to the RCMP.
Digby said members of his organization sign a code of ethics, which is one indication of honest dealings. The list of members is available on the CFGC website.
“And there’s many that are marketing who are not members that are still very reputable businesses,” he added.
The code, in part, commits members to:
- Maintain the highest standards of business.
- Actively promote and encourage the highest level of integrity within the forage and grassland industry.
- Be fair and respectful to everyone in business or professional relationships.
- Adhere to honesty in advertising concerning forage products.
- Observe all provincial and federal laws and international regulations pertaining to forage production,
processing and handling.
Alberta Agriculture has a prominent fraud alert on its website for hay buyers and sellers. It warns that sellers may be contacted by “fraud artists” who pose as buyers and issue overpayments via cheque or money order.
“Before completing transactions or issuing refunds for overpayments, have your bank verify that the cheques or money orders you have received are valid,” it advises.
As well, buyers should look at the feed before buying, and sellers should ensure they get payment before the feed leaves their possession.
Digby said modern technology makes it easier for sellers to provide potential buyers with analysis and photos of the feed.
Complaints can be filed to police online or by calling 888-495-8501.
- Are they other farmers or are they brokers?
- If you are selling directly to other farmers, will they be hauling the product themselves or will this be done by a third party?
- Where will this load be delivered?
- Get part of the payment before the product leaves your yard.
- Do not ship the second load before the first one is paid for.
- Detailed product description, such as type of product, weight and quality.
- Purchaser’s name, full mailing address and phone numbers.
- Specific address where product is to be delivered.
- Payment amount.
- Terms of payment, such as paid in advance or cash on delivery.
- Have shipment weighed and send completed invoice with trucker.
- Have purchaser sign for each load.
- Have trucker bring back the payment, or the balance, for each load delivered.
- Contact the buyer immediately if a payment is not made on time. Stop any further shipments to the buyer.
- Are they other farmers or are they brokers?
- If trucking is included, will they deliver the product themselves?
- Is the shipping rate reasonable?
- Visually appraise the product and ensure it is in good condition.
- Make it clear to the seller that any load of lesser quality than what you agreed to buy will be refused and returned at their expense.
- Be prepared to make a down payment but do not put more than half down.
- Detailed product description, such as type of product, weight and quality.
- Seller’s name, full mailing address and phone numbers.
- Your name, full mailing address and phone numbers.
- Specific address where product is to be delivered.
- Payment amount.
- Terms of payment.
- Each truckload must be weighed.
- Pay for having the load reweighed if you are concerned the weight is not accurate.
- Ensure the invoice accurately shows the quantity received and payment amount outstanding.
- Stop unloading if there is a quality problem and call the seller immediately.
- Contact the seller immediately if you have made a down payment but did not receive product within the agreed time. Put a stop payment on any cheques to the seller if you are unable to resolve the problem.
