6 BULLETIN 558, U. S. DEPARTMENT OF AGRICULTURE. 



ers from whose grain account the outstanding obligations may be 

 deducted. 



The collection of claims does not influence the interest item in its 

 relation to the cost of operation. The opinion is generally expressed 

 that side lines increase but slightly the cost of operating an elevator, 

 since the grain business requires constant attention only at certain 

 seasons of the year, and both men and equipment may properly be 

 employed in handling them during slack periods. Nevertheless, 

 many elevator managers feel that, unless the volume of business jus- 

 tifies the employment of a force giving its entire time to their man- 

 agement, side lines detract from the success of the grain business. 



In certain sections of the country the grain business is conducted 

 as an adjunct to some other enterprise, a bank, grocery, lumber yard, 

 or general merchandise store furnishing the chief source of revenue. 

 When this arrangement prevails the elevator usually is regarded as a 

 collection agency for the principal enterprise. A merchant handling 

 such a side line usually pays relatively high prices for grain, con- 

 ducting his business on a narrow margin, with little or no profit, 

 but depending upon the customer to expend his surplus money in the 

 purchase of other articles of merchandise on which a larger profit is 

 expected. The advantage of this arrangement, from the viewpoint 

 of the merchant, is in obtaining the good will of the producer 

 through the practice of paying high prices for grain that additional 

 patronage may be secured for the principal line of endeavor. For 

 the producer this arrangement is satisfactory provided he is able to 

 purchase as judiciously from the merchant-grain-dealer as elsewhere. 

 Independent grain dealers in competition with an elevator run on 

 this basis, however, are seriously handicapped, as they are forced to 

 meet the prices paid for grain by elevators which are operated with 

 little or no direct profit. 



METHODS OF PURCHASE. 



There are several methods open to the farmer when he is ready to 

 dispose of his grain. It may be sold to a local elevator or, if a car- 

 load is available, it may be shipped direct to a terminal market, mill, 

 or other consumer. If the grain is marketed locally, it may be sold 

 a load at a time at the prevailing price or arrangements may be made 

 with the elevator operator to sell it at a fixed price, a date being 

 named when delivery must be completed. Sometimes the dealer 

 places the grain in storage until such time as the grower wishes to 

 sell his crop or the farmer may sell it for delivery at some stated time 

 in the future. Regardless of the manner in which a sale is made, 

 the price usually is established in one of four ways: (1) By a flat 

 rate, (2) by grade, (3) by grade subject to dockage, or (4) by grade 

 after cleaning. 



