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| Having handled millions of bushels of grain prior to DP and just as full trains became part of the picture & operating with 3 cent corn margins forcing us to be excellent custodians of the grain & even then had to have a skilled operator to be able to blend off the FM & heat damage you used to run into the farm batch dryers & getting, occasionally, some of this sample grade stuff from CCC bins—way before the experiences of some of the fellows on this forum…there is simply no management excuse to allow mass quantities of grain to go out of condition.
First, I have a strong philosophy about management & not a person who frequently (old days) gave many second chances for redemption for careless decisions. I was pretty hands-on and know I made a lot of employees nervous when I made my second or third trip through the facilities every day whether is was the mill or elevators & 40 or so years ago. I have some qualms about some of the industry managers themselves. Requires getting hands dirty crawling through areas to check & visiting the head house.
I had a cooperative manager visit me one afternoon pretty proud (late 70’s) of the new concrete grain silos & loading facilities they were building & he brought the financials with him…I spun a few numbers & took the wind out of his sails as told him “if your volume drops off by only a few percent & if you priced this investment money for a 10 year Paydown (investors at that time wanted 4 years-but I understand that is not possible in agriculture) I see your per bushel handle costs rising to about $1 per bushel. What are you going to do then?” As it turns out, they went broke in a few years.
I explained to him that agriculture is a residual marketing business. Higher ocean freight rates, we’ll start there, are paid for by the producers as is higher dockage, demurrage, trimming the cargoes, the elevation costs & all the other expenses which periodically increase, are all part of the basis. The bid for the grain. Same for rail & truck freight and the handling costs at the local elevator. The producer gets what’s left. The Residual.
Grain storage belongs on the farm. This allows the producer the flexibility to market where he/she chooses, he/she is then responsible for the quality & they will soon learn that game quickly. If they screw up a couple of times. If they don’t learn, they will soon too be out of business. Experience is the best teacher.
I told him, if he controls all of the storage and conditioning, that the producers in his area rely upon him for the eventual marketing decisions…his marketing skill, or lack thereof, dictates how much profit is left for his customers. The sizzle I recall adding was to the effect ‘If I sat on your board of directors and you brought this project to our attention, I would have fired you on the spot.”
Never saw him again.
DP began for several reasons….maintain the volume flow into facilities which cost too much to risk an interruption in volume…..and for the ease of marketing and permits those few inept (old days, not today) managers to slide through looking better than their skills would otherwise allow. Depending on your local deal—costs—DP has not helped the producer very much, but has helped the merchants.
As you might gather, inefficiency and waste irritates me.
Edited by SeniorCitizen 1/5/2008 11:53
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Don't want to offend anyone...but
