Top tips on contracts for oilseeds sellers
When selling oilseeds, it is important to have a contract that lays out the terms and conditions. The tips on this page will help you avoid the most common problems associated with oilseed sales contracts.
Contamination of rapeseed
With double-low (00), high oleic/low linolenic (HOLL) and high erucic acid rape (HEAR) varieties available for specific markets, it important to avoid mixing or cross contamination. Purity testing occurs after delivery and processing. If an issue is identified at this stage, it is likely to affect a considerable tonnage and result in high additional costs.
Most UK-grown OSR varieties are ‘double-low’ – also called ‘double-zero’ and ‘00’. The British Society of Plant Breeders (BSPB) publishes a list of UK hybrid double-low varieties registered with a glucosinolate level of 18 micromoles or lower. Such varieties also have a low erucic acid content, making seeds suitable for both human and animal consumption.
Oilseed crushers require that the crop is grown from certified seeds or, for open-pollinated varieties, from first generation farm-saved seed. Hybrid varieties are excluded from the farm-saved seed exemption under plant variety rights legislation.
Crushers may reject seed lots that contain more than 4% immature (green) seed. To check, crush the seed and examine the cotyledons inside, which should be yellow. Seed coat colour is not a reliable indicator.
It is also important to take measures to clean and disinfect the store between harvests. However, the use of actellic dressing (pirimiphos-methyl) on stored oilseeds is not permitted. Additionally, check with buyers about the use of inert diatomaceous earth (kieselguhr) to treat mites, as this material can cause issues with crushing machinery.
Clay pigeons contain pitch and can result in serious hydrocarbon contamination of rapeseed crops. All care must be taken to avoid contamination risks. In particular, clay pigeon shooting must not take place over an oilseed rape crop after growth stage 59 (‘yellow bud’ stage) or 31 March, whichever is later. Hydrocarbon contamination is also associated with poorly maintained/operated driers and oilseeds stored on bitumen-treated floors.
If growing for a fuel or energy market, ensure the crop and land on which it has been grown meet the requirements of the Renewable Energy Directive (RED) sustainability criteria, often covered by UK farm assurance standards.
Agreeing the contract terms and conditions
It is essential to know what contract is being used and that it is based on clear terms. Before signing the contract, negotiate, establish and accept all terms.
A well-prepared contract will cover all aspects associated with the delivery of the goods. In theory, everything is negotiable. However, bear in mind that the price obtained often reflects the level of risk accepted.
The FOSFA 26a contract sets out the rights and obligations of buyers and sellers. Moisture, admixture and oil content are the key components of contractual requirements. It states that provided the seed falls within the contractual specifications on delivery, it will be accepted without reference to the seller.
Some contracts are available for a given crop area, rather than a fixed quantity, which require specification of the field’s UK Ordnance Survey (OS) number(s).
Other things to consider include:
- The price, the calculation method and payment terms (how and when)
- Any special terms and conditions (e.g. on potential financial/rejection penalties if the load fails to meet the required specification)
- Including a clause on delivery point exclusions (e.g. to limit the distance travelled)
- Setting a clear delivery period, with potential provisions for extension or setting dates when grain cannot be moved
- As a seller, you need to be aware of any separate final receiver’s terms
Understand the adjustments scale
Any ‘adjustments’ scale for oil content, moisture content and admixture are included in the contract. Full details are available in the FOSFA 26a contract. Contract terms state a maximum of 2% free fatty acids (FFA). Any adjustments will be by mutual agreement.
Establish what feedback will be passed back after delivery (what, when and how) on both accepted and ‘problem’ loads. Ensure that sellers and buyers have exchanged contact details, so any problem can be addressed swiftly.
Keep a copy of the signed terms
Ensure you receive the written confirmation of the contract promptly. Check that all of the terms are as agreed. If they are not, tell the buyer immediately, otherwise your silence may be taken as acceptance. Obtain an amended confirmation before parting with any goods.
Delivering a contract
Understanding the quality and condition of grain that leaves the farm is crucial. Accurate sampling at each stage of the grain chain is required to develop that understanding. It should help to reduce waste and minimise charges, claims and rejections. Retain samples until payment has been received.
Always visually inspect the vehicle prior to loading and double-check each load (especially if you grow different types of oilseed). Get a receipt as a record of the nature of the goods loaded, including the approximate weight, the vehicle registration and trailer number, the name of the haulage company, the date and time, and the contract number. In addition, the document should be clearly named and signed by the driver. Many of these elements are included on the combinable crops (grain) passport, an essential part of grain assurance systems in the UK to track the movement of goods.
Handling claims and rejections
A notification of any claim/rejection should be made as soon as possible. If a claim/rejection is notified, sellers can dispute the first analysis results. Sellers have the right to request that a sample is sent for independent retesting within two months of the delivery date. If the retest result varies from the original by more than 0.8% in oil or moisture content and 0.4% in admixture, the cost of the test is to be borne by the buyer. If the retest result varies by or less than these figures, the cost is to be borne by the party requesting the analysis. Regardless of who pays, the retest result is final. Obtaining the results of the retest can take a considerable time and they are binding on both parties.