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Leesburg, Ohio | Further comment on DP:
As i said above, I'm no fan of DP, but in answer to Dave's comment on why there isn't a law against it...in Ohio and most states, there are laws on the books specifically to allow it. DP was originally designed, in part, by my old grain marketing professor at OSU (that would be THE Ohio State University ;) The original purpose was to ease the harvest glut of grain in a time when there was far less on-farm storage. With elevator storage, when the local elevator gets full with farmer-owned grain, the only grain they can accept is grain sold on the spot. DP was designed to let the elevator take title to the DP grain so they can go ahead and move it on through the normal channels, but keep the price "open" for the farmer to set later. That way they can keep taking grain during the harvest "glut." Problem is, some of the demand gets filled, creating less of a reason for prices to increase for the farmer waiting to price after harvest, and there is no security interest at the elevator for the farmer in the case of an elevator financial failure. State grain indemnity funds have largely solved the security problem, but the demand issue is still there. | |
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Basis contract
