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2014 Fall Farm Outlook:
At the elevator …..
By Jim Youngquist
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[November 10, 2014]
LINCOLN - The grain elevator plays a
central role in the local ag economy. It is the source of necessary
services for most producers and will continue to play that role for
many years to come. The results of this year’s production came to a
focus at the elevator, and how the elevator deals with the crop
impacts the entire community.
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 Troy Bauer of Hartsburg Grain is a consummate professional as an
elevator manager.
Bauer talks about how big a role luck plays in managing a grain
elevator. The luck he speaks of, is the success that comes when
sound planning and management meet up with the timing you hoped for.
Alan Shew of Chestervale Elevator is a highly experienced and
respected guru of the industry. Both Bauer and Shew understand the
ins and outs of this complex picture, even when nature throws a
curve ball.
This production season was not like the previous three years in so
many ways. Shew said the crop went in a little late, but not as late
as some years. Rain was the major game changer. It was anticipated
that harvest would begin in late September, but because of all the
rain this year, harvest became an October activity and might stretch
out until Thanksgiving because of the anticipated wet weather in
November.
Projections said that we would have an incredible corn yield and an
unknown bean yield. Most thought that the bean yield would be hurt
because beans don’t like “wet feet.” And we certainly had plenty of
wet this year. Shew said the bean crop yielded much more than
expected and even when it was thought that the crop might be damaged
by late rains that crushed down beans still laden with leaves, the
yield has been spectacular.
Most producers who shared corn figures cited yields of 220 – 270
bushels per acre. Pre-planning for a sizable corn-crop made Bauer
decide to empty all his bins and ready his bunker for on-the-ground
storage at the beginning of the season. This meant that he would
deploy the bunker when conditions were right rather than as a last
minute emergency measure. The result could be less spoilage and less
shrinkage.
Because the harvest was delayed by wet corn in the field, storage
issues were not as severe as predicted. The glut of corn came in
slowly and allowed end-users to consume much of the product as it
came in from the fields. Many elevators put up new bins this year
but because of the slowed harvest rate little extra storage was
necessary. At this point in the harvest (October 28), Shew believes
that 90% of beans and 86% of corn had been harvested in his area.
Unlike the 2012 crop, there were few fungus problems this year even
though it was very wet. Some areas, according to Shew, produced
cob-rot due to moisture and the hybrid that was used, but for the
most part fungus was well under control.
Bauer compared the work load of the 2012 aflatoxin year to this
year: during the aflatoxin year three people slaved to keep up with
the loads coming in, examining and testing each load. This year one
person could manage the operation easily. Bauer said that he was
hopeful that the aflatoxin experience was a once in a lifetime
event.
Both Shew and Bauer agree that servicing their clients is the most
important thing in their business. Bill Sahs of Lincoln stated that
farmers will bring their crop to the closest elevator because it
makes the best financial sense to keep your transportation costs
low. But if service is lacking, those priorities might change.
Both Bauer and Shew mentioned that there were a few days when
elevators had to close early so that the dryers could catch up, but
it was limited to just a few days. Some elevators put in automated
scales and ticket printers to cut down on lines at the elevator only
to discover the next bottleneck in the process.
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In addition to handling the physical product, the elevator also serves as the
financial hub for most producers. Corn and beans are either stored at the
elevator for future sales or immediately sold to the elevator to resolve
cash-flow needs. The elevator serves as the buffer between the producer and the
end-user, managing storage and carry-over. That role as buffer was critical this
year.
Both Bauer and Shew mentioned that end-users have downsized their storage
facilities and have transformed their operations to be more “just-in-time”
oriented. The result of that downsizing is that prices have become more
volatile. That means the elevator manager must watch the volatile information
coming at a lightning pace across the computer screen and decide the best time
to sell. The solvency of the elevator and the community depend on it.
Corn prices this year have been lower because of the enormous production in Iowa
and Illinois. Bean prices have been sustained at a good rate because of the
worldwide demand for beans. Bauer cited that he thought few acres would convert
from corn to beans next year because it is still difficult to get enough money
out of beans to pay cash rent.
Most of the corn and bean crop have been consumed by local ethanol producers and
other local end users. Because of the worldwide markets that are closed to GMOs,
fewer loads went to Havana for the trip down the river.
Bauer said that he looked forward to the end of harvest, and thought everything
might be over before thanksgiving. He remembered a year when harvest ended on
Christmas Eve, and was glad it would not end that late this year.
What will the future bring? Bauer said that while most businesses have to plan
ahead five years, elevators have to plan fifteen years in advance. Sizable
costly infrastructure investments need to keep pace with the changes expected in
this industry. Both Bauer and Shew agree that the major changes will continue to
come in the size of both the corn and bean crop. Changes in genetics are
necessary to produce crops that will keep pace with the population of the world.
And because of good planning, the local elevator manager will be ready.
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