With special debt for clarifying many such issues to David Giovanni Andrew
Papa, CEO of FTN Exporting and one of the world’s most knowledagble physical
commodity traders, in particular in areas pertaining to intermediaries and agency.The purpose of this report is simple, and short.To familiarize you, dear reader, with some critical concepts that will shed light on
the matter of “proof proof of product”, and put it to rest
- for good.These issues have popped up (no pun intended) in the course of private coaching andconsulting provided to certain agents who were unsure what to do with request frompotential clients who found an offer very attractive, but who wanted, before starting
“pouring resources into it” (essentially, just passing it on to their end buyer) greater
assurances.They wanted to ascertain that the Intermediary seller, the Trading Company who issuedthe offer, has a written confirmation from a refinery that such product would beproduced and allocated to them. But they also wanted written assurance of this from therefinery in question.
Often similar requests will be seen, for example a buyer might want “verifiable pop fromseller’s banks for verification” or “This is why my buyer is careful.. He asks for POP andcertificate of origin authorizing to sell our side..” or a similar variant.
What does this all mean for you? A catch 22. On the one hand the buyer states whatthey claim to be a reasonable request
“we need some assurance, we don’t want to
deal with time wasters, how do we know what you are selling is real? But on the otherhand, basically what their buyer is asking for is information that can and usually will leadto circumvention.This is no
t to accuse the buyer’s agents directly of attempting circumvention, but either
his buyer wanted reassurance that he's not dealing with utter jokers
there is a
contingency in FTN’s procedures that addresses this
- or he wants to circumvent theseller entirely and directly purchase from the supplier, which obviously cannot beallowed to occur.
In Short: the buyer’s agent was politely advised that our group has our own specific procedures regarding what some called “Proof of Product”, these procedures allowing
our principal (in this case FTN Exporting) to demonstrate what is termed PPI: PolicyProof of (Product) Interest. PPI is an old marine insurance term, Policy Proof of