Grain procurement and export financing. Where does the cash flow gap arise?

A new terminal can accelerate grain exports, but it does not finance the goods that must reach it. A company purchasing grain still needs to pay suppliers, test and prepare the lot, and cover storage and transport before receiving payment from a foreign buyer.

The first stage of the Gdańsk Agro Terminal opened on 27 July 2026. The new warehouse has a capacity of 30,000 tonnes and an annual handling capacity of 0.5 million tonnes. Once the second stage is completed, the terminal's total storage capacity is expected to reach 150,000 tonnes, with annual handling capacity increasing to 3 million tonnes.

The investment addresses a genuine market need. Poland produces approximately 35-36 million tonnes of grain annually, while domestic consumption amounts to around 25-26 million tonnes. The surplus must therefore find buyers abroad and be transported and handled efficiently. Grain and grain products accounted for 11% of the value of Poland's agri-food exports in the first half of 2025.

Greater port capacity can make it easier to handle growing volumes. It does not change the fact that the money is needed long before the vessel is loaded and the transaction is settled with the buyer.

Capital is needed before the grain reaches the port

A grain trading company does not finance only export transport. The largest share of capital may be committed much earlier, during procurement.

Grain is purchased from farmers, agricultural businesses, cooperatives or local collection points. Individual deliveries must then be combined into a lot that meets the required volume and quality. The goods may need testing, cleaning, drying, storage or separation according to specific parameters.

Only once the lot is ready can it be transported to the port by rail or road. The cost of the grain itself is therefore accompanied by handling, storage, transport, insurance, transshipment and documentation expenses.

When a foreign buyer pays only after loading, receipt of the required documents or delivery to a specified location, the cash flow gap extends further.

A company may therefore hold valuable goods and a profitable contract while financing the entire chain from its own cash for several weeks.

What is a grain procurement loan?

In the Polish banking market, a grain procurement loan is a purpose-specific working capital facility intended for companies involved in purchasing, storing, processing or trading agricultural commodities.

It may finance the purchase of grain from suppliers, the storage of inventory and other expenses connected with preparing the goods for resale or processing. Depending on the offer, it may operate as a revolving or non-revolving facility and be released against documents confirming the purchase of specific agricultural products.

A bank may require security over the purchased goods, assignment of proceeds from contracts, a mortgage over warehouse property or other collateral resulting from its assessment of the transaction. Grain procurement facilities offered by banks are commonly linked to seasonal purchasing needs and documents confirming payment for agricultural commodities.

The term grain procurement financing is broader than a grain procurement loan. A similar need may also be covered by a non-bank working capital loan, financing linked to a signed contract or a revolving limit used across successive trading cycles.

When the capital is provided by a non-bank institution, it is not a credit facility within the meaning of Polish Banking Law, even if it covers the same grain procurement expenses. From the company's perspective, however, it may perform a similar economic function.

Grain procurement financing applies to companies involved in purchasing, storing, trading or exporting grain. It is not the same as financing agricultural production at farm level, such as the purchase of fertilisers, fuel or machinery.

Procurement under a contract is different from purchasing grain for inventory

Simply stating that a company needs money to purchase grain is not enough to assess the transaction. What matters is whether the purchase is intended to fulfil a signed agreement or to build inventory for a later sale.

In both cases, money is committed before it is recovered from the sale. What differs is the amount of information available to the company at the outset and the risks financed together with the goods.

Procurement under a signed contract can be linked to a specific sale

When a company already has an agreement with a buyer before procurement begins, it can connect the planned expenses with a specific order and future payment.

The contract should make it possible to establish:

• the volume and type of grain
• the required quality parameters
• the price or method used to calculate it
• the settlement currency
• the delivery date and location
• the allocation of transport, insurance and transshipment costs
• the conditions for accepting the lot
• the documents required to release payment
• the buyer's payment deadline
• the consequences of delay, quality discrepancies or incomplete delivery

This information makes it possible to determine how much grain needs to be accumulated, which costs will arise before shipment, how long the goods will be stored and when the company should recover the committed funds.

For example, an exporter may agree to deliver a grain lot in mid-September. Procurement begins in early August because several weeks are needed to purchase the required volume, test the parameters, prepare the lot and arrange transport.

Suppliers are paid during the procurement period. The foreign buyer, however, pays only after loading and presentation of documents that comply with the agreement. The company therefore knows how the contract value will be determined and when the payment is expected, but it must cover the purchase, preparation and delivery costs for several weeks.

In this situation, financing may be linked to the performance of a specific export contract.

A signed agreement does not remove all risk. The buyer may question the quality, documents may fail to meet the agreed requirements, transport may be delayed and payment may arrive later than anticipated.

The contract provides a basis for calculating the transaction, but it does not replace a buffer for potential deviations.

Purchasing without a buyer means financing inventory and future price exposure

The situation is different when a company purchases grain during the harvest period without already having a sales agreement.

It does not yet know the final buyer, price, shipment date or the date on which the money will be recovered.

The capital does not finance the fulfilment of a specific order. It finances inventory intended for a later sale.

The outcome of such a transaction depends on factors including:

• the future grain price
• the time required to find a buyer
• the cost and duration of storage
• the ability to maintain the required quality parameters
• transport availability
• the cost of capital committed to the inventory

A company may purchase grain during a period of higher supply and later sell it at a higher margin. The price may also fall, while longer storage increases costs regardless of market movements.

Such a purchase may be a deliberate commercial decision, but it requires a different assessment from procurement conducted under a signed contract. In the first case, the cost can be linked to a specific sale. In the second, the company also finances uncertainty concerning the future buyer, price and recovery date.

Grain quality directly affects inventory value

One tonne of grain in storage does not always equal one tonne of goods that meets the contract requirements.

Before accepting, combining and shipping deliveries, the company may need to confirm their quality parameters. IJHARS lists tests covering moisture content, protein content, gluten quantity and quality, bulk density, falling number, the presence of pests and contaminants. The assessment may also include documents and storage and transport conditions.

When a contract requires a specific quality, the company needs to know whether the purchased lot already meets those conditions at the procurement stage.

Excessive moisture may create an additional drying cost. Incorrect parameters may reduce the selling price, require the addition of another lot or prevent the goods from being used for the intended contract.

The value of inventory should therefore not be calculated simply as number of tonnes multiplied by the purchase price.

The cost of bringing the goods up to the contractually required parameters also matters, as does the risk that part of the grain will have to be sold in a lower grade or to another buyer.

A larger terminal does not remove inland transport costs

Expanding port infrastructure may increase export capacity, but the goods still need to reach Gdańsk from the warehouse or collection point.

The cost and duration of transport depend on the location of the grain, the availability of trucks or railway wagons, the size of the lot, the terminal schedule and the terms agreed with the carrier.

The Gdańsk Agro Terminal is ultimately intended to integrate road, rail and sea transport. Its first stage can handle up to 120 vehicles a day and has a daily handling capacity of 8,000 tonnes.

For the exporter, greater terminal capacity matters only when the entire preceding chain is ready for the required date.

The company should therefore determine:

• when the lot will be complete
• where it will be stored until shipment
• when transport must be booked
• whether a delay buffer is required
• what happens if the vessel or terminal slot is rescheduled
• who bears additional waiting or storage costs

A delay at one point may extend the financing period for the entire lot.

How should the maximum cash requirement be calculated?

The total cost of the transaction does not yet show how much money the company will need from its own or external sources. The due date of each expense and the timing of payment from the buyer also matter.

The first step is to schedule expenses that need to be paid before the sale is settled:

• grain procurement
• testing and preparation of the lot
• storage
• transport, transshipment and freight forwarding
• documentation and insurance
• a buffer for changes in costs or the schedule

The company should then account for funds that will be available before the final buyer pays. These may include an advance payment under the contract, deferred payment terms agreed with suppliers or the company's own cash allocated to the transaction.

Not all costs arise on the same day. Grain may be purchased in stages, storage paid monthly, and transport and transshipment settled only shortly before shipment.

The company may therefore need a relatively high amount for a short period, even when the average monthly commitment to the contract appears much lower.

Is the transaction still profitable once timing is taken into account?

The result of the entire transaction requires a separate calculation. The difference between the grain purchase price and the selling price is not yet the actual margin.

All costs associated with preparing and delivering the lot must be deducted from the sales proceeds, together with the cost of capital committed until payment is received.

The result may also be affected by quantity losses, deductions for quality parameters and currency movements when the buyer pays in euros or US dollars.

If the lot remains in storage twice as long as planned, the additional cost is not limited to the storage fee. The company also finances the grain purchase and all other expenses already incurred for a longer period.

For a contract settled in a foreign currency, the result may change between the date the price is agreed and the date payment is received. Currency risk arises from the possibility that the future exchange rate moves against the company and reduces its return or creates a loss.

From shipment to payment - when does an export receivable arise?

Loading or delivering grain does not always result in an immediate cash inflow.

The agreement may make payment dependent on the presentation of transport documents, test results, confirmation of acceptance or the expiry of an agreed payment period.

Before delivery is completed, capital finances grain procurement, preparation of the lot and logistics. In a contract with a foreign buyer, this stage may be described as export prefinancing. BGK defines it as short-term working capital financing intended for the performance of an export contract or the conduct of export activity.

Once delivery has been completed and the sales conditions have been met, the economic focus of the transaction shifts. The company is no longer primarily financing the purchase, storage and transport of grain. It is waiting for payment of a receivable from the buyer.

When an invoice has been issued with a payment term of, for example, 60 days, export receivables financing or export factoring may be considered.

This is no longer financing the purchase and preparation of grain. It is accelerating access to funds resulting from a completed sale.

A company may therefore first need capital for grain procurement and delivery under a contract, and later financing for the issued invoice. These are successive stages of the same trading cycle, but they rely on different documents and finance different assets.

When determining the duration of the entire cycle, the company should establish:

• which documents release payment
• whether the buyer may raise quality objections after delivery
• when the receivable becomes due
• which currency will be used for settlement
• whether the receivable is insured
• what happens in the event of delayed or missing payment

Which documents may be required for grain procurement financing?

The scope of documents depends on the type of financing and the stage of the transaction. Different information will be needed when purchasing inventory without a buyer and when prefinancing a signed export contract.

For procurement conducted under a specific agreement, the financing provider may request:

• the contract, purchase order or confirmation that the buyer has placed an order
• information about the volume, price and quality parameters
• the procurement, preparation, transport and payment schedule
• the transaction budget and projected margin calculation
• invoices, agreements or offers from grain suppliers
• warehouse documents and information about the storage location
• test results or other documents confirming grain quality
• transport and insurance conditions and the allocation of responsibility between the parties
• financial information about the company and its track record in similar transactions
• the rules governing assignment of future proceeds from the contract

In export prefinancing, particular importance may also be attached to information about the foreign buyer, the exporter's financial statements and security linked to the future payment.

When the sale has already been completed, the main documents will usually include the invoice, evidence confirming delivery and information about the buyer and payment deadline.

How can PaveNow approach grain procurement and export financing?

At PaveNow, we can assess contract financing when a company has a signed B2B contract and needs funds to cover costs arising before payment from the buyer.

For grain procurement, the starting point is the agreement, transaction schedule and budget. The assessment may also cover the company's experience in trading the relevant commodity, the margin remaining after all costs, the financial position of the business and the possibility of assigning future contract proceeds.

After delivery has been completed and an invoice has been issued, financing of the existing receivable may also be considered.

Purchasing grain without a confirmed buyer, price and payment date requires a different assessment from the performance of a signed export contract.

The English PaveNow product page currently uses this address and presents both invoice and contract financing.

Larger exports begin before the terminal gate

The Gdańsk Agro Terminal increases the capacity available for storing and handling agricultural products. For a trading company, however, the cycle still begins when grain is purchased and ends only when payment is received from the buyer.

Procurement under a signed contract allows costs to be linked to a specific sale and an expected payment date. A purchase without a buyer means financing inventory as well as price, quality and storage-duration risk. Once delivery has been completed, the subject of financing may become an export receivable.

The financing amount should therefore result from the schedule of the entire transaction - from the first payment for grain until the sales proceeds actually reach the company's bank account.