What a biofuel and feedstock broker actually does

Brokerage is paid per tonne, by one side, agreed in writing before any introduction is made. If no contract is concluded, nothing is owed. That is the whole model, and any version of it that is more complicated deserves a question.

Which side pays depends on who has the harder problem. Usually it is the side that came looking. It should be stated openly at the start, because a broker who is vague about who pays him is telling you something.

What a fee does not buy is an obligation to accept the introduction. You are free to decline a counterparty for any reason, and a broker who treats a refusal as a breach is not brokering.

• Agreed per tonne, in writing, before the introduction.
• One side pays. Ask which, and expect a straight answer.
• No conclusion, no fee. Nothing is payable on an introduction that goes nowhere.
• No advance. A broker asking for money up front, for any reason, is the single clearest warning sign in this market.

The sequence below is what a real transaction looks like. It matters because most stalled deals are stalled at a specific step, and naming the step is usually enough to unblock it.

Two of these steps are where trades most often die. The first is the specification: a seller who cannot produce a recent analysis is not ready to sell, however firm the offer sounds. The second is the certification chain, where a certificate that does not cover the activity, or a declaration that does not match the consignment, stops a cargo that is otherwise perfect.

• Enquiry. What the material is, how much, where it sits, and what certification it carries.
• Specification. A recent analysis from a laboratory the buyer will accept. Not a typed sheet; an actual certificate of analysis.
• Indication. A price range against a published reference where one exists, with the basis stated: FOB, CIF, DAP, and which port.
• Counterparty. The broker approaches the other side without naming you, and only names both once both agree.
• Firm offer. Price, quantity, tolerance, delivery window, payment terms, inspection, and the contract rules the trade sits under.
• Contract. Signed by the two principals with each other. The broker is not a party to it.
• Nomination and loading. Vessel or truck nominated, independent surveyor appointed, samples drawn and retained.
• Documents. Bill of lading, invoice, packing list, certificate of analysis, sustainability declaration, and whatever else the payment terms name. Have the list agreed before loading, not after.
• Payment. Against documents, on the terms in the contract.

This market has a persistent problem with people who present themselves as brokers and are neither brokers nor connected to any cargo. The pattern is recognisable and it costs sellers real time, so it is worth writing down plainly.

The tell is almost always the same: a great deal of process before any verifiable fact. Real trades start with a specification and a location. Fake ones start with a document chain.

Ask the four questions below. A working broker answers all four without hesitating.

• Does the price arrive before the specification? Nobody can price a parcel they have not seen an analysis of. A firm number offered against a product name alone is not a real number.
• Is there a chain of LOI, ICPO, FCO, soft probe and NCNDA before anything concrete? In real trade these documents are rare, and a long sequence of them substitutes paperwork for a cargo.
• Can they name a step they have personally handled? Not a company name, which proves nothing, but a port, a surveyor, a laboratory, a certification body.
• Is money requested up front? Registration, escrow, allocation, tank reservation, the reason varies and the answer is always no.
• Four questions to ask any broker: Who pays your fee? Have you spoken to this counterparty yourself? What happens to my name before I agree to be introduced? And what would make you tell me this trade will not work?

Being clear about the edges of the role saves everybody time, and a broker who claims all of the below is worth less trust, not more.

What sits inside the role is narrower and more useful: finding the right counterparty, keeping both sides apart until they want to meet, getting the document set complete before it becomes urgent, reading the certification chain properly, and staying in the trade when something goes wrong.

• Not financing. A broker does not fund the cargo, open the letter of credit or carry the receivable.
• Not inspection. Sampling and analysis belong to an independent surveyor and an accredited laboratory. A broker arranges it; it does not certify it.
• Not certification. Scheme certificates come from a certification body after an audit. Nobody can sell you one.
• Not a guarantee of performance. The contract is between the two principals and their obligations run to each other.
• Not a market report. Where a published assessment exists it should be named as the reference; where none exists, that should be said rather than papered over with a confident number.

We broker. We do not buy for our own account and we do not take positions, which means we have no interest in where the price lands beyond the trade concluding on terms both sides will repeat.

Names do not travel until both sides agree to be introduced. That is not a courtesy, it is the condition on which anyone tells a broker anything useful, and it applies in both directions.

If a trade will not work we say so early, including when saying so costs us the fee. A specification that no European buyer will accept, a certification chain with a gap in it, or a volume too small to move economically, these are better said in week one than in month three.