The buying and selling of cattle can be a complicated process where either side of the transaction can break down because of a lack of trust. In addition, the industry is looking for new ways to expand opportunities for buyers and sellers to offer added flexibility. Enter AgriClear, a new online cattle marketplace that went live in June.
"We saw the need to connect buyers and sellers and create a marketplace where they can negotiate one-to-one," says Nevil Speer, vice president, U.S. Operations, AgriClear. "This is not an auction. The buyer and seller have no time pressure or location pressure in the transaction."
Speer explains that AgriClear provides payment assurance so a buyer or seller can confidently deal with someone they don't know and be assured that the financial side of the transaction will work. "This is truly an online marketplace," he says.
How a transaction works
Speer explains that the transactional details between buyer and seller don't change much, using the online platform you would negotiate number of cattle, condition, delivery point, weigh-up conditions and other factors. "This is like any other deal. There are no central delivery points," Speer says. "Were facilitating a private treaty kind of sale."
However, with the online platform, you have more choices of buyers or sellers (whatever you seek) than in more traditional markets.
To do a transaction, a buyer must provide banking account information that is verified by AgriClear. The buyer puts the money for a specific transaction into a custodial account with AgriClear. "Before you ship your cattle to the buyer you will be notified that the money is in hand in our custodial account," Speer explains. "You never ship cattle without us telling you we have the money in hand."
On the delivery end, once the buyer is certain that the seller has delivered what was promised, the buyer can release the money from the account to the seller. However, if the buyer has a problem with a portion of the load, Speer explains that the buyer can hold back some of the cash and conduct a "post-deal transaction" over the AgriClear system. The two will work out their differences and the seller gets paid.
The cost for this transaction on a load of cattle is $6 on each side, or $12/head. That's an average based on number of cattle, and the price is a sliding scale. For example, if you did a single-animal transaction the cost could be $120.
Speer says the system was primarily set up for the feeder cattle market. And sellers can offer up animals including photos and video to convince the buyer they have quality on the hoof. However, another group has expressed interest.
"Purebred cattle producers are talking to us," Speer notes. The system could facilitate that type of transaction as well offering producers more potential buyers.
Just getting started->>>
Just getting started
Funding for creation for this new online marketplace comes from the TMX Group, owners of the Toronto Stock Exchange, and other trading properties, along with NGX. NGX provides the clearing and settlement expertise and the firm has a 20-plus year history working in the commodity market.
This kind of system enhances price discovery because you will be able to see what more buyers are offering and what sellers are asking for as part of the system. In addition, the system provides users with a way to negotiate. If a buyer makes an offer the seller can counter, and the software notifies the buyer of the counter-offer. The final transaction is also handled through the system.
Just two weeks old when Beef Producer talked to Speer, no transactions have been done yet, but registrations have been on target and he expects sales will start soon.
You can learn more about the system by visiting agriclear.com. You'll find a video and more information about the system. In addition, it costs nothing to register and check out what the program offers.