How Did We Get Here?
In the world of agriculture, where unpredictability is constant, the past year has been especially challenging for Agfinity. There has been a lot of speculation and rumors about how we ended up in our current situation, and it’s important to address these concerns transparently.
Agfinity’s mission has always been to facilitate the flow of grain through our channels. However, the landscape shifted considerably when a selloff from the fall harvest never materialized. The 2022-2024 crop years, coupled with dry conditions, saw the highest grain prices on record. Along with the impact of COVID-19 and rising interest rates, this created high inflation for farmers, who then expected higher prices for the 2023-2024 crop year. As a result, sellers held onto their grain, waiting for prices to rebound, which unfortunately did not happen.
From a feed grain perspective, which is predominantly what we trade, we also experienced the third consecutive year of corn imports from the US. These factors alone posed challenges, but every year brings its own set of difficulties, and in our 13 years of business, we have faced many.
To counteract these challenges, we focused on growing our trading teams, enhancing marketing, providing training, and continuing to innovate through technology with our app and trading platforms. As a leadership team, we tried various strategies to complete Grain Purchase Contracts (GPCs). Unfortunately, we were unable to generate enough trade volume to match our outgoing costs. This was a difficult situation because we always hoped the markets would shift and new opportunities would arise.
We are now in a very tight spot. We are late on GPC commitments, our reputation is tarnished, and trust has been broken with you, our customers. I take full responsibility for these errors and want to make clear that we are doing our best to solve this problem.
However, we cannot do this without your help. We have shifted most of our trades to Broker Notes (BNs), where the buyer pays the seller within 10-21 business days. This is how we have conducted trades for the past 13 years.
Our Plans Going Forward:
Our comeback plan involves several strategic initiatives aimed at stabilizing and revitalizing our operations. Our primary goal is still to continue connecting buyers and sellers to ensure a diverse and dynamic trading environment.
Currently, we are focusing on Broker Notes (BNs) as our primary strategy to keep the business functioning and support cash flow. However, it is also crucial for us to allocate 30% of our trade volume through Grain Purchase Contracts (GPCs). Despite the current delays with GPCs, they are essential for supporting our cash flow due to our narrow margins.
We have been diligently reaching out to both producers currently working with us and those who have done business with us in the past, who are still open to GPCs with deferred payments. This willingness to continue trading with us using GPCs is immensely appreciated and is a significant step toward overcoming our financial difficulties.
Trust has been broken, and we understand the need to rebuild it. To do this, we must work together. We have been partners with many in the agricultural community for 13 years, and we know the importance of mutual support in navigating these challenges. Just as farmers are crucial in growing grain, we, as Grain Traders, play a vital role in finding the best opportunities for you to market your grain.
The agricultural community has always rallied together during challenging times. We are calling on that same spirit of community support now.
Thank you to those who have worked with us and those who choose to continue working with us. Your support does not go unnoticed, and we will be here to return the favor when we are called upon for support.
Because Farming is Forever,
Joseph Billett
President | Agfinity
