NGFA Seeks Legal Clarity on Cash Contracts

WASHINGTON - Mar 9/05 - SNS -- The National Grain and Feed Association (NGFA) urged the U.S. Congress to provide legal clarity cash contracts used in agricultural trade because at the moment there is a risk "that either the CFTC or the courts may review a particular contract and declare it to be illegal and unenforceable, even after it has been duly executed by a willing buyer and seller."

NGFA Second Vice Chairman Tom Coyle made the comments in testimony before the House Agriculture Committee's Subcommittee on General Farm Commodities and Risk Management.

The NGFA noted several examples of cash grain contract features that provide flexibility to producers - by offering multiple pricing opportunities, the option to extend the contract, and the right to cash-settle the contract (rather than require delivery of the grain).

These contract features provide "real economic value" to both buyers and sellers of agricultural commodities, including producers, Coyle said.

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