MARKETING GRAIN AT COUNTRY POINTS. 27 



The burden of insurance and the loss by shrinkage sometimes lead 

 a manager to ship out the grain received for storage soon after de- 

 liver} 7 , selling it to the central market. In order to protect himself 

 against price fluctuations he goes into the future market and pur- 

 chases a hedge for a like amount. When the farmer informs him 

 that he is ready to sell the grain, which the farmer supposes is in 

 storage, the elevator manager closes out his hedge, pays the farmer 

 the market price for the grain, and bears the cost of the hedging sale 

 himself. By shipping out the stored grain, however, the manager 

 not only has relieved himself of the expense of insurance and the 

 loss by shrinkage, but he has also been enabled to use or to loan the 

 farmer's money, thus profiting by the interest earnings. 



Shipping out the grain delivered for storage is practiced also when 

 a storage charge is made. In this case the elevator derives a profit 

 from the storage charge in addition to the interest on the money 

 received from the grain. 



The hazard of storing grain in the country elevator, from the 

 standpoint of the farmer, depends upon the degree of integrity and 

 the financial standing of the elevator manager. Occasionally the 

 grain dealer announces a business failure with limited resources and 

 the farmers whose grain is supposed to be in store are the chief credi- 

 tors. While such cases are not general, they have sometimes been so 

 frequent as to result in the enactment of a State law placing the 

 storage business under State supervision and requiring the elevator 

 owner to give bond for the protection of his patrons. 



The United States warehouse act, recently enacted, authorizes the 

 Secretary of Agriculture to license warehouses for the storage of 

 grain, flaxseed, cotton, tobacco, and wool for interstate or foreign 

 commerce. This act is permissive only and no warehouse is re- 

 quired to be licensed. The act also authorizes the Secretary to in- 

 spect warehouses which are licensed under this law or which apply 

 for license. 



FARM STORAGE. 



From the standpoint of the producer the logical place to store 

 grain is on the farm. Several facts, however, must be considered 

 in determining whether such a procedure is profitable. In the first 

 place, it is necessary to provide suitable granaries and cribs, which 

 will require an original outlay of capital upon which interest and de- 

 preciation must be considered. It is necessary also to consider 

 natural shrinkage. The amount of shrinkage that may be expected 

 will depend of course upon the nature of the storage, the condition, 

 and maturity of the grain at the time of harvest, and also the length 

 of time it is held in store. As a general rule the small grains may 

 be expected to shrink from 1 to 3 per cent in weight, while the 



