Agribusiness

Barter and grain contracts · trade, pricing and delivery

In agribusiness the grower often pays for inputs with grain, and the grain price is only settled later. This page covers barter, which carries the physical grain balance and the financial balance of the inputs at the same time, the grain contract with partial price fixing, receiving with moisture and foreign matter discounts, and the credit line with collateral that underpins all of it.

The problem barter solves

In a barter deal, the dealer delivers inputs today and receives grain at harvest. That creates two debts at once, in different units: a physical volume of grain promised, and a financial amount matching the inputs. Tracking only one of the two is the classic mistake: the dealer thinks they have been paid because the grain arrived, but the amount does not add up, or the other way around.

The Barter tab holds both at the same time. Each deal records the committed grain volume, the commodity, the value of the inputs delivered and, if you use one, the parity price that serves as the reference for converting volume into value.

Opening and working a barter deal

On the Barter tab, pick the grower.
Create the deal by entering the commodity, the committed volume and its unit, the value of the inputs and the currency.
If you like, enter the parity price, the season and the linked credit line.
As the grower delivers, record each delivery with the volume received.
As the financial side is settled, record each settlement with its amount.
When the deal closes out, mark it settled. If it is not going ahead, cancel it.

Exposure in two units

At any moment you can check the deal's exposure. It shows the committed volume, the volume already delivered, the volume still to come, the physical coverage (delivered divided by committed), the value of the inputs, the amount already settled and the financial amount outstanding. Where there is a parity price, it also shows what the outstanding physical balance is worth.

Balances never go negative: delivering more grain than committed does not create a credit by accident, and the outstanding amount has a floor of zero. That holds in the calculation and in what is stored, it is not screen formatting.

Example: Grower Ana Kuhn closes a barter deal of 1,800 bags of soybeans against R$ 540,000.00 in inputs, at a parity of R$ 300.00 per bag. She delivers 1,200 bags and settles R$ 90,000.00 in cash. The exposure shows 600 bags still to deliver, physical coverage of 66.67 percent, R$ 450,000.00 outstanding financially and R$ 180,000.00 of parity value in the outstanding physical balance.

Grain contracts and partial pricing

The grain contract is the other path. It records the grower, commodity, total volume, unit, type (forward, spot or to be priced), base price, premium, currency and season. On a to-be-priced contract, the price is not settled all at once: the grower prices tranches over time, each with a volume and a price.

On the Grain tab, pick the grower and create the contract with the commodity, the total volume and the type.
Every time the grower prices a tranche, add a pricing with the volume priced, the price, the reference and the date.
Check the pricing summary at any time.
Adjust the contract status as it moves along: open, partially priced, priced, delivered, settled or cancelled.

The pricing summary calculates the volume priced, the volume left to price, the volume-weighted average price and the priced value. The status comes out of the numbers: no pricing means open; some priced means partially priced; nothing left to price means priced. With no pricing at all the average price is empty, not zero.

Example: A 3,000-bag corn contract, to be priced. The grower prices 1,000 bags at R$ 62.00 in March and 800 bags at R$ 68.00 in May. The summary shows 1,800 bags priced, 1,200 left to price, an average price of R$ 64.666667 and a priced value of R$ 116,400.00.

Receiving with quality discounts

At receiving you record the scale ticket: gross volume, moisture and foreign matter measured on the sample, date and notes. The system calculates the discount on the gross volume and returns the net volume, separating how much came from moisture and how much from foreign matter.

The quality standard is configurable and entered on the receipt itself: the moisture base above which the discount starts, the rate per percentage point above that base, the foreign matter base, its matching rate and an optional discount cap. There is no magic number from any one country baked in. With no standard entered, the discount is zero, because inventing a penalty would be worse than not calculating one.

Example: A load arrives with 1,000 bags at 16 percent moisture and 2 percent foreign matter. The standard entered has a moisture base of 14 at 1.2 percent per point and a foreign matter base of 1 at 1 percent per point. The discount is 2 points times 1.2 percent plus 1 point times 1 percent, that is 3.4 percent, and the net volume comes to 966 bags.

Credit and collateral

The Credit tab underpins both of the operations above. You create the grower's credit line with a limit and a status (active, blocked or expired), record the collateral and check the exposure: limit, used, available, total collateral and the coverage of that collateral over the amount used. Before closing a deal, the check tells you whether an amount fits inside the limit. A blocked line refuses any draw, and an amount above what is available is refused with the reason.

Permissions and cautions

Recording a delivery, a settlement, a pricing or a receipt requires write permission on the module.
Movements are history. Fixing a mistake means recording a new movement, not deleting the old one.
Deleting a grain contract takes its pricings and receipts with it. Prefer changing the status to cancelled.
Amounts never total across different currencies on their own. If you operate in more than one currency, keep contracts separate by currency.

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