Document Type

Article

Publication Date

2-15-2010

Keywords

agricultural economics, transportation, commodity groups, marketing systems

Abstract

U.S. agriculture is going through a transition and agricultural policies are being modified to make production of farm commodities more responsive to market forces. In this competitive environment, efforts on the part of commodity groups for market development are becoming increasingly important. However, in order to devise any market development plan for a commodity, the understanding of the present status of the marketing system is important. At a minimum, one needs to know the methods of buying and selling, types of buyers, shipment destinations, and transportation modes for the commodity. Corn, soybeans, wheat, and sunflower seeds are the most important cash crops in South Dakota. Limited quantities of oats and barley are also raised in the state. Cash receipts to producers in the state from marketing of these six grains (and oilseeds) amounted to $2.11 billion, accounting for 93.3% of cash receipts from all crops in the state, during calendar year 2005. Country grain elevators provide an important link in transferring these commodities from farmers to processors or exporters. Information on the volume of these crops moving through country elevators, the destinations of grain moving through the elevators, and marketing practices adopted by these elevators are essential for evaluating and improving the operation of the grain marketing system. The last grain marketing patterns study for South Dakota was completed in 1997 (Qasmi and McDaniel). In 1997, there were 275 licensed grain elevators in South Dakota. During the marketing year 1994/95, these elevators handled 175, 81, and 98 million bushels of corn, soybeans, and wheat, respectively, accounting for 52%, 95%, and 98% of the quantity available in the state, respectively. It was estimated that about 72% of corn, 91% of soybeans and 93% of wheat handled by the elevators were shipped to the out-of-the state locations during the marketing year. During the marketing year, the elevators also handled 11 million bushels of oats (32% of the quantity available), 4 million bushels of barley (52% of the quantity available), and 872 million pounds of sunflower seeds (61% of the quantity available). It was estimated that 65% of the oats, 70% of the barley, and 97% of the sunflower seeds handled by the elevators were shipped to out-of-state locations during the marketing year 1994/95. Since the completion of the 1997 grain marketing patterns study, the grain sector in South Dakota has gone through phenomenal changes. There has been a large increase in the production of corn and soybeans, and a decrease in oats, barley, and sunflower seeds production in the state. The grain handling industry has been consolidating. There has been a decrease in the number of licensed grain dealers, and an increase in the average elevator storage capacity in the state. A large number of ethanol plants have been established in South Dakota. There is also an increased use of complete commercially manufactured feed and ethanol industry co-products by livestock producers. These changes are expected to have dramatic impacts on grain marketing patterns. Under these circumstances the need for updating and analyzing information on the grain marketing system in South Dakota cannot be overemphasized. The main objective of this study is to provide updated information on grain marketing patterns in South Dakota. Since a large proportion of the grain is handled by grain elevators, the data on grain marketing patterns were collected through a survey of grain elevators in South Dakota during fall 2007 and spring 2008. The specific objectives of the study were to identify: a) The quantities of different grains handled by the grain elevators, b) Alternative methods of purchase used by the grain elevators, c) Alternative methods of sale used by the grain elevators, d) Major types of buyers for the grain sold by the grain elevators, e) Major destinations of the grain shipped by the grain elevators, and f) Transportation modes used to ship the grain by the grain elevators. The study investigated the marketing patterns for spring wheat, winter wheat, oats, barley, corn, soybeans and sunflower seeds for the marketing year 2005/06.

Comments

Economics Research Report No. 10-1

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