We have seen in the sample lots that the buyer allowed approx 34 greasy c/kg for costs such as shipping, dumping, finance, profit etc. This appears to be one of the very basic terms available in the trade. While there are many other documents / references available that discuss the possible terms of trade conditions the common trades include:
- Indent - payment at auction cost.
- CIF - cost inlcuding freight
- FOB - 'free' on board
Now to provide a sample of what variations occur, we have traced down another potentail buyer of the sample fleece lot who had a cost structure based on Europe deliveries.
While the example buyer had costs predominately on a greasy c/kg, or bale basis, this new buyer has a more 'commission' cost structure. In this case the buyer had costs in excess of 116 greasy c/kg, or $154/bale. More than 3 times the original buyer. Both bidding on the same lot.
This does not mean the grower gets paid any less, just that the European mill needed pay more. The increased costs included items such as:
- Additional freight costs - and as stated, if shipped in undumped form, costs would be even higher.
- Additional Finance costs - the buyer may not get paid until - say - 120 days after arrival at the mill!
- Additional risk / credit insurance etc. - the contract could be cancelled while the bale are 'on the water'.