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Canola ‘streaming’ firm eyes mortgage business

Input Capital launches 'mortgage stream' pilot

Canola south of Ethelton, Sask. on Aug. 3, 2017. (Dave Bedard photo)

A Saskatchewan company that offers farmers cash up front for canola to be grown later is now tentatively bringing its model to the farm mortgage business.

Input Capital, which sources canola from Prairie growers through multi-year “streaming” contracts, announced Tuesday it has launched a “mortgage stream” as a pilot project.

Input, which set up in Regina in 2012, today offers Prairie growers “capital streams,” which pay cash up front for canola yet to be seeded. In January last year it also began offering “marketing streams,” featuring up-front payments to growers taking part in the company’s canola marketing programs.

Typically, for streams in which the company pays a grower a cash deposit, Input requires a mortgage registration on a grower’s farmland, as security against “non-delivery” on the canola contract.

As Input CEO Doug Emsley described Tuesday, the company has now also developed a pilot for “a conventional farmland mortgage product that uses canola streaming as a payment vehicle.”

The company said it wrote its first mortgage stream last week under the pilot program, providing a $400,000 mortgage for an “existing client” farming in Saskatchewan.

The client “was attracted by the idea of making mortgage payments using a canola stream,” Input said, noting it has a “growing list of clients” also indicating interest in the idea.

“Our intention is to use this pilot period to assess market demand for this product and fine-tune product features prior to formally launching mortgage streams later this year,” Emsley said.

The company said it currently manages over 300 capital stream and marketing stream contracts for over 455,000 tonnes of canola, mainly in Saskatchewan and Alberta, with a few in Manitoba and plans to expand into British Columbia.

Input, which in June obtained a grain dealer license from the Canadian Grain Commission, contracts to a maximum of 25 bu./ac. per producer, if said producer is using both types of streams — up to 10 bu./ac. on a capital stream and 15 bu./ac. on a marketing stream.

The marketing stream is billed as a way for growers to market their canola on a multi-year basis with access to better pricing opportunities; the capital stream is marketed toward farmers seeking cash for expansion, succession planning, on-farm projects or up-front purchases of inputs.

The company has previously accepted farmland from participating growers to settle streaming contracts.

Input in early 2017 reported accepting, and later selling, 4,320 acres of land from a partial streaming contract buyback the previous year. Last spring it also signed a separate agreement for sale on 5,000 acres of farmland received from a contract terminated in November 2015. — Network

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