Input Capital Marks 100th Canola Stream
Input Capital, the Canadian canola streaming firm, announced it has achieved the benchmark of having one hundred active canola streaming contracts established across Western Canada.
Input Capital has taken the royalty streaming business model pioneered in the metals markets and applied it to agriculture. The company provides financing for canola farmers for working capital needs in exchange for the right to purchase an agreed-upon amount of canola at a fixed price. The company provides farmers with professional agronomy services, and if the harvest exceeds certain parameters, the company is credited with additional canola. The additional credited canola helps Input hedge against lower commodity prices as a result of a larger harvest. Under this model, the company has invested $123.1 million since its launch four years ago.
"When we started Input Capital four years ago, many people said streaming wouldn't work in agriculture," said President & CEO Doug Emsley. "But look at the results. Input has gone from a standing start in late 2012 to 100 streams in place today, less than four years later.
Input’s first canola streaming contract was signed on January 15, 2013 with a farmer in central Saskatchewan. Under the terms of the contract, the farmer agreed to deliver a portion of their canola harvest to Input for the duration of the next six years. In 2013, deliveries equaled 700 tons plus 15% of any yield exceeding 30 bushels per acre. The farmer delivered 712 tons of canola to a grain elevator in Raymore, Saskatchewan, and Input received payment equaling $505 per ton none months after deployment of capital.
Canada produces 15% of the world’s supply of canola and accounts for 75% of its global trade, with the oil contributing $14 billion per year to Canada’s economy according to the Canola Council.
AgWeb reports that Canada’s canola output for 2015 was 17.2 million tons representing a 5% increase year on year with an average yield of 38 bushels per acre. Output last year was the second highest on record for the country, surpassing industry expectations that ranged between 14.5 million tons and 16.2 million tons.