MARKETING GRAIN AT COUNTRY POINTS. 5 



ery usually have the advantage over competitors not so equipped, 

 for obviously they are the only ones that can handle a low-grade crop 

 and market it in proper condition. Ordinarily the farmer will fare 

 better if he cleans his grain on the farm before marketing and retains 

 the screenings for feed. 



HANDLING SIDE LINES. 



The sale of coal, salt, cement, and other side lines may not be listed 

 properly as a function of the country elevator, nevertheless many of 

 them seek such patronage. Side lines are handled by the country 

 elevator as a source of additional profit, the exact amount of which 

 depends upon several factors. Generally speaking, the greater the 

 volume of business the less will be the cost per unit for handling; 

 therefore it is necessary to consider the expected volume of business. 

 This will depend upon several things, especially the demand of the 

 consuming trade and the competition from other merchants. The 

 margin demanded by the dealer to cover cost of handling and profit 

 should depend upon whether the commodities are disposed of on a 

 cash or credit basis. A wider margin must be exacted if sold on 

 credit to cover the interest on the increased capital required to 

 finance the business. Moreover, the difficulty experienced in collect- 

 ing every claim injects a hazard that must be protected. Many coun- 

 try elevators, particularly those of the cooperative associations, have 

 failed to consider the credit losses, and, as a result, the side lines not 

 only fail to yield a profit but frequently suffer an actual loss, which, 

 in turn, is borne by the profit derived from the handling of grain. 



Many elevators attempt to do business on too narrow a margin, 

 particularly those which extend credit. Thus, if flour worth $2 

 per bag is handled on a margin of 10 cents, a common practice, the 

 failure to collect for a single bag counteracts the profits from 20 

 bags. The important item frequently overlooked in handling side 

 lines on a credit basis is the interest on outstanding accounts. Thus, 

 if $25,000 is invested in an elevator and its equipment and its books 

 show an outstanding credit of $10,000 or $15,000, interest should be 

 charged against the entire amount. 



In some sections farmers frequently sell and deliver their grain to 

 the elevator but do not request payment for some weeks. The ele- 

 vator operator who immediately sells the grain has the use of the 

 proceeds Without interest pending settlement with the farmer. 



The interest on outstanding credit is an important item to be con- 

 sidered in determining the cost of operating the elevator and in arriv- 

 ing at the profits derived from the business. Frequently the money 

 employed to carry credit accounts is borrowed from the local bank 

 or from other sources at the regular interest rate. The elevator is 

 fortunately situated, in that many of the credit customers are farm- 



