I. A. A. RECORD— July, 1933 



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Moving Grain By 

 i Truck And Water 



Farmers Elevators Can Meet the New Situation by Pro- 

 viding Patrons With Trucking Service 



I' *. 



INCREASING use of the motor 

 truck, and prospective expansion 

 of waterway service, in the trans- 

 portation of grain, not only has 

 aroused considerable discussion in Illi- 

 nois and other states bordering the 

 Mississippi river, but has led a few 

 persons with private axes to grind to 

 lay down a barrage of misinformation 

 upon country elevator managers. 



The purpose of this tirade obviously 

 is to check the development of na- 

 tional co-operative grain marketing. 

 That this effort has signally failed is 

 indicated by the tremendous growth 

 during the last year of Illinois Grain 

 Corp., and other stockholders in the 

 Farmers National Grain Corporation. 

 The statement has been made by 

 Lawrence Farlow of the Illinois 

 Farmers Grain Dealers Ass'n. that 

 the development of truck and water- 

 way transportation has been inspired 

 by the grain co-operatives with the in- 

 tent to destroy the business of farm- 

 ers' elevators. To any one of intelli- 

 gence the statement is as false as it is 

 ridiculous. For years the use of trucks 

 in hauling freight of all kinds, includ- 

 ing livestock, has been steadily in- 

 creasing. During 1932 trucks hauled 

 more than 40 per cent of all receipts 

 at seventeen principal livestock mar- 

 kets. Similarly, for many years wa- 

 terway transportation, lake and river, 

 has been used out of leading terminal 

 markets such as Chicago and St. 

 Louis, with railroads participating. 



Another Charge Nailed 



It has been further stated that be- 

 cause of humid atmospheric conditions 

 grain shipped south was subject to 

 hazards that the country elevator 

 manager could not afford to risk. As a 

 matter of fact, the atmospheric con- 

 ditions have not offered any serious 

 obstacles to skillful handlers of grain. 

 Of more concern to the country ele- 

 vator manager and Illinois grain 

 grower, however, is the fact that grain 

 purchased by Farmers National Grain 

 Corporation has been settled for on 

 point of shipment grades, so that re- 

 gardless of deterioration in shipment, 

 the elevator manager is paid for the 

 quality of com he delivers. 



One of the definite objects of the 

 co-operative marketing movement is 

 to bring to farmers the benefit of 

 every possible saving in the costs of 

 getting their products from the farm 

 to the market. One of the principal 

 items that enters into these costs is 

 transportation, for which the farmer 

 pays. Farmers National Grain Cor- 

 poration moves grain from points 

 along the Illinois river to New Orleans 

 as cheaply as it could be moved from 

 point of origin to Chicago. In export 

 years, through a movement of this 

 kind, the national co-operative places 

 the grain in a position where it has 

 only the ocean rate between it and 

 the world market, whereas had the 

 grain moved to Chicago, it would have 

 between it and the world market not 

 only the ocean rate but the inland 

 cost of transportation from Chicago to 

 tidewater. In many instances this adds 

 sufficiently to the cost of the opera- 

 tion to prevent our entry into the 

 world markets. ,, . , 



The Farmer Benefits 



Delivered prices to any destination 

 are calculated on the cost of the grain, 

 plus insurance and transportation, 

 therefore any saving on transportation 

 increases the possibility of larger vol- 

 umes of business. This is desirable 

 from the standpoint of the producer, 

 because it enlarges his outlet for grain 

 and lessens the chances of burden- 

 some surpluses at the terminals?. From 

 the standpoint of the co-operative, it 

 means lower handling costs per unit 

 by reason of the increased volume. 

 These savings result not only \n higher 

 price levels at country points, but in 

 increased earnings of the co-operative 

 and increased dividends to co-operative 

 membership. 



Within an actual operating period 

 of about three months Farmers Na- 

 tional Grain Corporation handled at 

 Havana, 111., more than a half million 

 bushels of corn for destinations on the 

 Pacific Coast via the Panama Canal 

 and for export. Present water rates 

 to the Pacific Coast from central Illi- 

 nois points offer distinct savings over 

 rail costs to Illinois shippers, in some 

 cases 50 per cent or more. Similarly, 



water rates from interior Illinois 

 points to consuming centers in nearby 

 states, offer even greater savings 

 over rail rates. Coarse grain rates 

 from St. Paul to New Orleans by 

 barge are lower by more than one- 

 half the rail rates between the same 

 two points. Numerous other similar 

 comparisons could be made. 



Dealt With Elevators 



In its waterway operations Farmers 

 National Grain Corporation has dealt 

 entirely with country elevators. Every 

 bushel of grain shipped via the river 

 was bought from a country elevator. 

 Thus the benefits of water transporta- 

 tion were shared by both producers 

 and country elevators. It is the policy 

 of the national co-operative to con- 

 tinue to market its members' grain 

 as economically as possible. To that 

 end it has acquired facilities in Chi- ' 

 cago for the unloading of river barges 

 and is planning facilities in connec- 

 tion with its terminal elevator at 

 Peoria, to make water transportation, 

 with its lower costs, available to grain 

 producers of central Illinois. 



Railroad rates, although reduced in 

 some instances, still are generally the 

 same as they were .when grain prices 

 were three to five times higher than 

 they are now. The result has been the 

 steady increase in the use of trucks to 

 haul grain from country points to 

 terminal markets and to river ports. 

 Trucks are hauling grain 100 miles or 

 more, in many cases direct to mills, 

 with a consequent threat to the ex- 

 istence of many country elevators. 



Everybody Is Trucking 



No organization is responsible for 

 this changing situation. Private grain 

 firms are accepting and handling such 

 business. Low prices of grain at the 

 farm are forcing growers, who must 

 pay the freight, to take advantage of 

 the cheapest forms of transportation, 

 just as low prices of all commodities 

 and decreased earnings in industry are 

 forcing increasing use of motor trucks, 

 causing tremendous revenue losses to 

 the railroads. 



The situation is both competitive 

 and evolutionary. Development of 

 motor trucking and of waterways is 

 changing the transportation map. 

 Railroads may adjust their rates and 

 meet this competition to some ex- 

 tent. However, there are those who 

 predict that in time railroad freight 

 business will be confined largely to 

 long-distance hauling. It is possible 

 that these developments may, in the 

 course of time, spell the doom of 

 many farmer elevators. Farmer own- 

 ers of these elevators, however, real- 

 ize that they were built to perform a 

 service in the marketing of grain, and 



