GRAIN MERCHANDISING 

 PLAN OUTLINED 



7-'*'y'' 



^ W. p. SoHd^OJui 



THE board of directors of the Illinois 

 Agricultural Association, after numer- 

 ous conferences with interested groups 

 and persons and a two-year study by a 

 staff committee, has approved a plan for 

 moving forward into the vital field of 

 grain merchandising. Thus a new era 

 opens in cooperative marketing. 



The over-all plan takes into account 

 the economic trends that have brought 

 about vast changes in grain marketing. 

 Under the plan farmers would have their 

 own terminals company, operating as a 

 statewide agency, with facilities at Chi- 

 cago, St. Louis, and possibly Peoria; 

 river-point subterminal agencies strategi- 

 cally located to get the full benefit of 

 water transportation; and local coopera- 

 tives coordinating their activities with 

 the river and terminal agencies. 



Along with their merchandising ma- 

 chinery, farmers would retain the Illi- 

 nois Grain Corporation, which would 

 render its brokerage and commission 

 services as heretofore. Cooperation of 

 this company with Indiana and Iowa 

 state cooperatives, so fruitful of results 

 in the past, would likewise go forward. 



But with it would be the large enter- 

 prises which would be headed by the 

 new Illinois Grain Terminals Company. 

 This eventually would be a three-million 

 dollar concern, whose function it would 

 be to merchandise the farmers' grain in 

 the markets of the Midwest and of the 

 world. A system of barges and tow- 

 boats, operating between river subter- 

 minal points, and possibly trucking sys- 

 tem, would help realize for farmers the 

 full savings of water transportation. 



The whole enterprise, from county to 

 district to state levels, would be com- 

 posed of Farm Bureau-type cooperatives, 

 with the unifying effect of central man- 

 agement and of "B" control stock as- 

 suring Farm Bureau members that their 

 cooperative marketing system would al- 

 ways operate in their interests. 



Farm Bureau control is amply justified 

 on the ground that over 80 per cent of 

 all the grain raised in Illinois is produced 

 by the 1 1 5,00 members. 



"Merchandising" Pays 



The terms "merchandising" and "com- 

 mission and brokerage" are not always 

 clear to the layman. Under the latter 

 plan, Illinois Grain Corporation has 



served farmers by acting as the agent 

 of its 104 member-elevators on the 

 Boards of Trade, selling corn, wheat, 

 beans, etc., at the market. In a mer- 

 chandising operation, however, grains 

 are sold directly to processors, such as 

 flour mills, feed manufacturers, breakfast 

 food makers, distilleries, and the like. 

 Large scale operations, 50,000 bushels 

 and up, are the rule. Specific grades 

 are bargained for, and prices are set in 

 accordance not only with market condi- 

 tions, but with respect to the require- 

 ments of the purchaser. Water ship- 

 ment, direct from subterminal river 

 points, would be utilized wherever pos- 

 sible. In some cases, grain would be ac- 

 quired direct from farms, thence to move 

 by truck to water points, utilizing the 

 services of local elevators or count)- 

 grain companies owned by the farmers, 

 but not actually entering their elevators. 



The special grain marketing commit- 

 tee rejxjrted to the lAA board of direc- 

 tors November 17, 1944, that 'merchan- 

 dising operations have earned larger 

 profits per bushel than have commission 

 and brokerage. (In 1944 the average 

 net of 17 regional merchandising co- 

 operatives was 4c a bushel and of the 

 three commission type cooperatives Ic 

 a bushel.)" That these potential earn- 

 ings, already known to exist in grain 

 merchandising may be made available to 

 farmer-producers, and redound to their 

 benefit, is of course a basic reason for 

 entering this field of activity. , / 



Water Transportation Grows 



Opinion of the special committee was 

 unanimous "that the movement of grain 

 by water will continue to expand, al- 

 though the rate of expansion may not 

 be as great as in recent times." 



"Any grain merchandising project 

 would, of necessity, hinge on the Illi- 

 nois River, principal waterway flowing 

 through the center of the grain belt and 

 connecting principal grain markets at 

 Chicago, Peoria, St. Louis, Louisville, 

 Kentucky, Decatur, Alabama, and other 

 southern outlets," the report continues. 

 The Mississippi is similarly important. 



Already, beginning in 1937, the vol- 

 ume of grain movement by the Illinois 

 waterway has grown. There are now 



nineteen barge loading points on this 

 channel. When long-range trucks again 

 become available, grain moving by water 

 will increase, it is predicted. Grain ship- 

 ments may originate as far as fifty miles 

 from river subterminal points, some man- 

 agers believe. 



It is this revival of water shipment, 

 coupled with truck transportation, that 

 has basically changed grain marketing in 

 Illinois. It means that many small eleva- 

 tors within 30 miles of the rivers may 

 find their former volume, shipp)ed by 

 rail, dwindling rapidly; indeed, this has 

 already occurred. The grain committee 

 believes that this tendency should be 

 recognized and that farmer-owned co- 

 operatives should meet the shift to river 

 traffic. 



Details of the Plan 



Study of the changed economics of 

 grain marketing by the special lAA com- 

 mittee was followed in February, 1945, 

 by a general conference of Farm Bureau 

 presidents and Farm Advisers from coun- 

 ties likely to be affected by river move- 

 ment of grain. After discussion, the 

 delegation named a small committee to 

 draft a report on the conference, to work 

 out minor details, and to submit the re- 

 port to a second river area conference. 

 This was done on March 26. After ap- 

 proval, the over-all plan was presented 

 to the lAA board of Directors in July, 

 and given its sanction. . 



M. B. Thompaon — new Fiilton Co. Fatm 

 Bureau member regiatera at conTention. 



DECEMBER, 1945 



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