Capital Stream

 

Capital Stream

So, what is a CAPITAL Stream?
A Capital Stream is a multi-year, pre-paid delivery agreement to sell up to 10 bushels per acre of canola to Input Capital.  The Capital Stream outlines an annual volume and guaranteed price that you will receive for your canola for the life of the contract.  In addition to locking in price and volume, the Capital Stream is unique in that it provides for a substantial portion of the multi-year contract value to be paid to you as a deposit, at contract signing, usually within 2-3 weeks of initiating the agreement.  The deposit can be as much as 50 percent of the entire contract value, with the remaining amount being paid out each year after harvest.  Unlike delivery contracts from other companies, our Capital Streams pay the farmer years in advance – often before the first crop is even seeded. 

 A Capital Stream is about funding some of your capital needs today with future production.

As a farmer, how do I benefit from a Capital Stream?

  • Risk management: Price a portion of your future canola today; get paid today for canola to be grown in future years. Eliminate the down side and keep exposed to high prices through price split points.
  • Expand your farm: Funds to purchase additional land; optimize the size and scale of your farm.
  • Succession: Helps the next generation of farmers get established and grow their operation.
  • Use the cash to your advantage:
    • Buy your inputs off-season when the prices are the lowest.
    • Take advantage of discounts on large cash purchases.
    • Savings on equipment; cash in your pocket for auction sales.
    • Sell your remaining crop when the price is high, not when you have to.
    • Eliminate high-interest loans.
  • On-Farm Pick Up: We pick up the canola on your farm, saving you delivery costs and saving you the cost associated with additional storage.
  • Guaranteed Basis level: For the life of the contract, no fluctuations.

How much canola can I sell to Input Capital on a Capital Stream?

Every contract is unique, however, in a standard Capital Stream, Input Capital will buy between 40 MT (one semi-truck load) to the equivalent of 10 bushels per acre each year.

How are streaming prices established for a Capital Stream?

Capital Streaming prices are a reflection of long term prices for canola.  Specific contract prices are adjusted according to the size of the upfront payment of the contract.  Upfront payments are generally between 30 and 50 percent of the value of the contract, with the balance being paid out in each year over the length of the contract.  We build the contracted amounts with you, the upfront payment percentage is determined by your farm’s individual needs. 

What happens if canola prices climb drastically during the contract period?

A Capital Stream with Input Capital provides for additional canola payments to the farmer if canola prices in a crop year exceed $550 per tonne.  Your upside is protected – when Input achieves prices above $550 per tonne the amount over $550 is shared 50/50 with you.

What happens if canola prices fall drastically during the contract period?

A Capital Stream guarantees the price for the entire term of the contract.  Input Capital takes all the risk if the price drops.

What happens if I have a crop failure?

Input Capital requires that our streaming clients carry crop insurance at the 70% level of coverage.  Input has several options to help ensure that our farm clients are able to continue farming in the event of a crop failure.

Does everyone qualify for a Capital Stream?

There are certain production and financial metrics that our partners require for a Capital Stream.  We will take a snap-shot of your farm’s finances, look at historic production yields and future production estimates to help us determine the size of Stream that works for you.

What risks does Input Capital take on in this agreement?

Input Capital takes on the price risk and the basis risk for the canola contracted within a Capital Stream. You keep upside exposure through price split points.

 

 

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INPUT CAPITAL CORP.
300 – 1914 Hamilton Street,
Regina, Saskatchewan S4P 3N6
General Inquiries: 1-844-715-7355

GRAIN MARKETING AND LOGISTICS:
(306) 347-3022
Fax: (306) 352-4110
info@inputcapital.com

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